You are facing foreclosure because you are behind on your mortgage payments by two months, soon to be three.  You do not know how or when you will bring your mortgage current.  Who can you trust?  Who can you turn to?  You are trying to hold it together for your family and continue to go to work everyday. 

The mortgage company calls six, seven, even eight times a day and that is just from 5 pm to 8 pm.  You have stopped answering the phone because the Mortgage Representatives are rude and ask the same questions every time:   "Sir/Ma'am will you be making a payment today?  Do you know that you are now behind on your mortgage and may face foreclosure?"  You just want to yell, "I DON'T KNOW - LEAVE ME ALONE!!"

You just received a letter informing you that the rate on your ARM (adjustable rate mortgage) is increasing in 60 days.  The increase will raise your mortgage payments almost $800.   

At the time you bought your home, six months, one or even two years ago, you knew that the interest rate on your ARM (adjustable rate mortgage) would increase your payment.  You planned to refinance before the rate increase, because you had equity in your home. 

However, you did not count on the market change and overwhelming number of foreclosures, which caused prices to drop, leaving you with little or no equity. 

Two days later you receive a letter for "notice of foreclosure or default."  You see those words in bold and begin to panic, thinking that maybe you read the letter wrong.  You continue to read and when you are done you go back to those words, "notice of foreclosure or default."  Now the panic really sets in and anger overcomes you.  It was hopeless before, but now you have no idea what to do or who you can trust.  After about an hour you collect yourself and make a short list of your options: 

•  Move immediately to your parents or a friend's and put your things in storage.  If you move, you decide to take any appliances that you can to sell them for some quick money. 

•  Move immediately to an apartment if you credit will allow you.

•  Stay until the Police or Sheriff comes to put you out.  You decide not to, because you live in a nice community and what would your neighbors think -   BAD IDEA.

•  Just move without taking anything but your clothes, leaving all your belongings and furniture.

I received my foreclosure notice April 2006 due to a major illness and to make matters worse I am a Realtor.  By no fault of my own, I was not able to refinance because of my illness.  The value on my investment property dropped because another builder was selling similar properties for $100,000 less a quarter mile away, leaving me with no equity.  My options were limited.

My first instinct was to seek out the organizations I knew that were reputable:  HUD, Freddie Mac and Fannie Mae.  I also found information about the foreclosure process and the laws in my state with the following links:

•  http://www.hud.gov/foreclosure/index.cfm
•  http://www.hudclips.org/sub_nonhud/cgi/pdfforms/pa426h.pdf
•  http://www.freddiemac.com/corporate/buyown/english/owning/avoid_foreclosure.html
•  http://www.fanniemae.com/housingcommdev/resourceshomeed/lossmitigation.jhtml?p=Affordable%20Housing%20&%20Community%20Development
•  http://www.foreclosurelaw.org/

There are organizations that offer  assistance to homeowners facing foreclosure.  Often times these offers sound too good to be true and often times they are.  There are reports of homeowners who were too trusting and not only lost their home to foreclosure but lost any equity they may have had.

Be an educated consumer, just as you were when you purchased your home.  Ask questions and do not sign any documents or agreements until you have read and understand everything.   Consult an Attorney or other professionals qualified to advise you of your rights.  I did not let my shame, anger or stress take my focus away from my ultimate goal - saving my home.  

The first step I took to saving my home was to determine why I got behind on my mortgage.  Did I spend money on items that were not in my budget?  Did I plan to save the extra money I saved on a lower mortgage payment?  Was there a major life change such as an illness, layoff or divorce?  Once I completed the analysis, I determined if there was a pattern or a one time occurrence for my financial set backs.    

The second step to saving my home was to determine how to fix the problem and what resources were available.  The third step to saving my home was how to fix the problem so I would never face foreclosure again.  I will discuss the second and third steps I took in the second and third parts of "I Am Facing Foreclosure - Now What?".

For more information or assistance with setting up a real estate investment team (REIT), mortgage planning options or property management, contact Jennifer Johnson, your trusted Real Estate Investment Advisor. 

Copyright© 2007 by Jennifer V-E Johnson.  Others may not copy this material without written permission of Jennifer V-E Johnson.  The views expressed in this RE News are those of the author(s).  If you are currently working with a Realtor® to sell or purchase real estate this is not intended as a solicitation.