What should you do if you can't pay your loan? Foreclosure is not the only answer. Here are some steps that can help prevent foreclosures.
- Call your lender immediately, the number of your lender should be on your statement, and ask for the loan mitigation department.
- Get a hold of a reputable credit counseling agency. You may want to call the Homeownership Preservation Foundation (888-995-HOPE) or contact your local HUD- approved counseling agency (800-569-4287) or www.hud.gov
- Look into loan modification options. The following modifications could be available to you-
- Forebearance: an agreement to temporarilylet you pay less or nothing for a agreed upon time
- Reinstatement: pay the total amount you're behind in a lump sum by a certain date
- Repayment plans: a fixed amount of time to repay the amount you are behind by combining a portion of what's past due with your current payment
- Loan modifications: a written agreement that permanently changes one or more of the original terms, such as extending loan term or lowering interst rate
As you can see there are ways to avoid foreclosure if you are willing to make the effort. The lender does want to foreclose on your property and will work with you if you make yourself available to work with.
Now if your financial circumstances have changed that your are no longer able to afford your house, your mortgage company may offer some other options, like-
- Loan assumption: Even if your mortgage isn't assumable, your lender may allow someone else to take over the payments
- Short sale: This allows you to sell your house for less than the amount of the loan
- Deed-in-lieu- of foreclosure: The bank may be able to transfer title to your property to the mortgage company in exchange for the complete cancellation of your mortgage debt. In most cases, your lender will have required you to try to sell the house for 90 days before a deed-in-lieu will be considered.
