The Do’s and Don’ts of Foreclosure

Facing a foreclosure is a scary thing, but there are things you should do – and shouldn’t do – to avoid making the situation worse. As more and more homeowners face the possibility of foreclosure, so much information is available.  But, not all of it is good…or correct.  If a foreclosure is about to happen to you, be smart by following these tips.

  • DO answer the phone and read your mail. Avoiding your lender won’t make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.
  • DO realistically assess your situation. Are your financial problems temporary? If you are temporarily out of work and will be fine once you find a new job, call your lender. Lenders may be able to offer a forbearance or repayment plan.
  • DO consider your options. If you are not in a position to keep your home, consider selling it before you face a foreclosure. If you have already missed a mortgage payment, call your lender. There may be purchase options, like a short payoff or assumption (see sidebar) that help avoid foreclosure.
  • DO be aware of certain financial responsibilities. Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. It is also important to realize that you may be responsible for certain taxes when a lender forecloses on your property. However, the IRS does provide tax relief in certain situations .
  • DO protect your wealth. Recognize that you may have significant equity in your property that must be preserved.
  • DON’T move out of your home. In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.
  • DON’T ignore the problem. It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions. Talk to a lawyer or legal aid organization, since your rights vary from state to state. Most states and large cities have legal aid organizations; to find one near you, go to the Legal Services Corporation , a government-sponsored organization that provides high-quality civil legal assistance to low-income Americans.
  • DON’T convince yourself you can afford a home if you can’t. Most lenders will only lend what a borrower can afford, but some less scrupulous lenders will allow borrowers to get in over their heads. In some cases, a home that was affordable becomes unaffordable due to changes in your life circumstances. If your mortgage is truly beyond your means, consider selling your home and purchasing a less expensive home or renting for a period of time before the only option left is foreclosure. Call your mortgage company; they may be able to help you avoid foreclosure by agreeing to an assumption or a short payoff.
  • DON’T fall victim to a scheme. Some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf – for a fee. View a helpful video Freddie Mac posted YouTube titled “Foreclosure Scams 101.”

If you need help to save your home from foreclosure, click here to GET HELP NOW!

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Save Your Home When You Understand Your Foreclosure Alternatives

If you are one of the many homeowners facing tough choices in today’s economy, we understand. We know that looking for assistance with your mortgage and deciding where to go for help can be confusing and frustrating. And we’re here to help.

Whether your financial hardship or current situation is temporary or more permanent, options are available. Even if you have decided you want relief from the responsibility and the burden of your mortgage payments, now’s the time to take action before it’s too late. The last thing you want is to have a foreclosure on your credit report.

To help, Fannie Mae has created KnowYourOptions.com — so homeowners can understand their options. That website will also help you learn more about how you can avoid foreclosure and so you can have a more informed discussion with your mortgage company or housing counselor about your options.

Know Your Options To Avoid Foreclosure.

There are many options for homeowners who are struggling with their mortgage payments. Below is just an overview of some options that may be available to you:

Refinance
A new loan — with new terms, interest rates and monthly payments — that completely replaces your current mortgage. Even if your home value has decreased, you may be able to refinance your loan as part of the government’s Home Affordable Refinance Program (HARP). Refinance benefits:

* Make your payment more affordable by lowering your interest rate or adjusting the terms of your loan
* No negative impact to credit score
* Stay in your home and avoid foreclosure

Repayment Plan
An agreement between you and your mortgage company that lets you pay the past due amount on your mortgage payments over a specified time period in order to bring your mortgage up to date. Repayment plan benefits:

* Catch up on your past due payments over an extended period of time
* Less damaging to your credit score than a foreclosure
* Stay in your home and avoid foreclosure

Forbearance
An offer by your mortgage company to temporarily suspend or reduce your monthly mortgage payments for a specified period of time. Forbearance benefits:

* Have time to improve your financial situation and get back on your feet
* Less damaging to your credit score than a foreclosure
* Stay in your home and avoid foreclosure

Modification
An agreement between you and your mortgage company to change the original terms of your mortgage — such as payment amount, length of loan, etc. You may be eligible for the government’s Home Affordable Modification Program (HAMP) created to help struggling homeowners. Modification benefits:

* May reduce your monthly mortgage payments to a more affordable amount
* Less damaging to your credit score than a foreclosure
* Stay in your home and avoid foreclosure

Short Sale
A short sale is the sale of a home for less than the balance remaining on your mortgage. If your mortgage company agrees to a short sale, you can sell your home and pay off your mortgage balance with the proceeds. Short sale benefits:

* Eliminate or reduce your mortgage debt
* Assistance for relocation may be available
* May be able to recover your credit score — and get another mortgage — faster than if you went through foreclosure

Deed-for-Lease™
A new program that allows you to temporarily lease your home. You first transfer the ownership of your home to the mortgage company (called a Deed-in-Lieu of Foreclosure, see below) in exchange for release from your mortgage loan and payments. You can then rent the property back — at an affordable rate — and remain in the home as a tenant. Deed-for-Lease benefits:

* Stay in your home and neighborhood — no need to move or relocate
* May be able to recover your credit score faster than if you went through foreclosure
* Assistance for relocation may be available at the end of your lease
* Avoid foreclosure

Deed-in-Lieu of Foreclosure
With a Deed-in-Lieu of Foreclosure (DIL), transfer the ownership of your property to your mortgage company in exchange for a release from your mortgage loan and payments. DIL benefits:

* Eliminate or reduce your mortgage debt
* May be eligible for relocation assistance
* May be able to recover your credit score — and get another mortgage — faster than if you went through foreclosure

To discuss your options with the Certified Professionals at The HomeFetchers Team, click here: Get Help Now

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