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Tips for Avoiding Foreclosure

By
Real Estate Agent with Aksland Real Estate

Being in the foreclosure capital of America,  I thought the following tips might come in useful for people in San Joaquin, Stanislaus and Merced Counties. 

Here are some tips for avoiding foreclosure:

  • If you are unable to make your mortgage payment, don't ignore the problem. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
  • Contact your lender as soon as you realize that you have a problem. Lenders do not want your house, and they have options to help borrowers through difficult times.
  • Contact a counseling agency for information and advice.
  • Open and respond to all mail from your lender. The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in court. In addition, the companies will feel you are ignoring them and will be less willing to work with you.
  • Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and time frames. In California, borrowers are considered in default the second day after the second missed mortgage payment is due. A notice of default typically is recorded 40 to 90 days after the first missed payment. The house can be sold at a trustee foreclosure auction on the courthouse steps 150 to 200 days after the first missed payment. Homeowners can stay in the home up to 30 days after the foreclosure auction before being evicted.
  • Contact a HUD-approved housing counselor. The U.S. Department of Housing and Urban Development funds free or very low-cost housing counseling nationwide. Counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need it.
  • Prioritize your spending. After health care, keeping your house should be your first priority. Review your finances and see where you can cut spending to make your mortgage payment. Look for optional expenses - cable TV, memberships, entertainment - that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
  • Use your assets. Assets such as a second car, jewelry or a whole life insurance policy can be sold for cash to help reinstate your loan. Members of the household can get an extra job. Even if these efforts don't increase your available cash or income significantly, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
  • Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help - use that money to pay the mortgage. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three times your mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free.

    Don't lose your house to foreclosure recovery scams. If any firm claims it can stop your foreclosure immediately if you sign a document appointing it to act on your behalf, you may well be signing over the title to your property and becoming a renter in your home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.

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