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Avoiding Foreclosure

If you are a homeowner at risk of foreclosure you need to know there are programs and services that can help. It’s important to act quickly and preferably immediately that you face hardship.

The key is to not ignore letters from your lender. There are ways to work through a bad situation if you act quickly. A certified foreclosure intervention counselor can also negotiate with a lender, servicer or private mortgage insurance provider to restructure the loan if it can be determined the homeowner has the financial wherewithal to keep the home in the future.

Other options for people facing foreclosure include:

“Forbearance” whereby a lender lets a borrower pay less than the full amount of the mortgage or skip a few payments if there is a reasonable plan to become current on the loan.
“Reinstatement” is another option if the homeowner is able to make a payment that covers all of the previous late payments.
A “repayment plan” from a lender will allow a borrower who has fallen behind to make additional payments each month until the amount past due is paid.

At-risk homeowners are encouraged to ask a local REALTOR® or a HUD-certified financial counselor to find out where to go for help including these:

U.S. Housing and Urban Development homeowner counseling, 1-800-569-4287, www.hud.gov
Neighborhood Works America Center for Foreclosure Solutions, 1-888-995-HOPE (4673), www.nw.org, HOPE NOW
This Web site provides information on federal mortgage modification and refinancing programs: MakingHomeAffordable.gov
HopeNow

Another option for the homeowner is to sell the home. Oftentimes in these situations the sale will be a “short sale in lieu of foreclosure.” A “short sale” is an industry term for when the owner of the home does not have enough equity in the property and not enough cash or liquid assets to be able to sell the property, pay off liens and selling expenses (e.g., property taxes, transfer taxes, real estate commissions) and provide a clear title to the purchaser. Many consider a “short sale” better in the long run for the homeowner because it avoids foreclosure which will damage a person’s credit score and make it much harder for the owner to buy another home in the future.

Things to remember for Arizona foreclosures:

Don’t ignore letters from your lender. Some of the information will include foreclosure prevention options.
Address the problem immediately and before the loan is turned over to foreclosure attorneys and fees mount up.
Find your mortgage paperwork and read it to understand the terms.
Contact a HUD-certified counselor who is trained to help and provide information on foreclosure prevention options, 1-888-569-4287 or the Neighborhood Works America Center for Foreclosure Solutions at 1-888-995-HOPE (4673).
Know that you may qualify for options such as working with the lender to restructure the loan or a repayment plan.
Find a Specialist Trained REALTOR to help you negotiate with the lender to place the property on the market if selling your home is the option you choose.
Avoid foreclosure scams. Make sure you protect yourself by working with a HUD-approved counselor, professional REALTOR® and/or an attorney.
Learn more: www.hud.gov, www.nw.org, www.fha.gov, makinghomeaffordable.gov.
Foreclosure should be your action of last resort since it will stay on your credit report for at least 7-10 years and greatly affect your ability to obtain a home loan in the future.