If you are at a point where your loan is not yet due and you have the ability to catch up on your payments, you can follow these steps.
For starters, there are a few options that may be available to borrowers who are unable to keep up with their mortgage payments and wish to avoid foreclosure.
These options are as follows:
The U.S. Department of Housing and Urban Development (HUD)
The U.S. Department of Housing and Urban Development (HUB) funds free or very low cost housing counseling nationwide. To get the HUD pamphlet on foreclosure avoidance click: Avoiding Foreclosure. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance.
Also you can find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339. You may find other alternatives on the HUD website including articles on "Tips for Avoiding Foreclosure" by going to the following web site at: https://www.hud.gov/topics/avoiding_foreclosure/foreclosuretips
Refinance
Depending on your financial situation, you may be able to refinance your loan with your lender or with another lender. At this time, there is no guaranty that you will qualify for a refinance, so you should consider all of your options even if you decide to try to refinance.
Pre-foreclosure sale of property
If you can not refinance your property, you may be able to sell it before it is foreclosed. However, time is important so you may want to investigate this option and other options right away.
On the other hand, you should also be aware that, depending on your financial situation and subject to the lender’s policies and agreement, you will need to arrange for the following to avoid or delay foreclosure on your property:
- A forbearance agreement or settlement agreement: Here the lender and borrower agree, in writing, that the lender will postpone foreclosure as long as the borrower does certain things, including making the agreed-upon payments after default.
- A loan modification: where the lender and borrower agree, in writing, to modify the terms of your loan.
- If you have not been able to sell your property and have no lien junior to your lender’s deed of trust, your lender may accept a deed-in-lieu of foreclosure in satisfaction of the amount of your loan.
- Where the current fair market value of your property is less than the amount you owe on your loan, the lender may agree to a short sale allowing your property to be sold for less than the amount of the loan balance.
The borrowers should collect and be prepared to present financial documents to the beneficiary or authorized agent when discussing options for avoiding foreclosure. Suggested Documents may include, but are not limited to, the following:
- Hardship Letter – Explain your hardship situation and explain your resolution to bring your account current.
- Tax Returns – Last two (2) filed tax returns with all schedules.
- Paystubs – Last two (2) months.
- Alternate Income – Unemployment, Social Security, Disability, Death Benefits, Pension or Public Assistance last two (2) months.
- Optional Income – Spousal and child support payments (If requesting income to be included to qualify), last two (2) months.
- Bank Statements – Complete with all pages, the last two (2) months.
- Monthly Household Expenses – Review, complete and return the attached expense worksheet for further review.
- Property Liens – Proof/Status of any other liens on the property.
- Property Taxes and Insurance (If Applicable ) – Declaration page and copy of current payment plan in place.
The above documents, in addition to the authorized form, must be completed and provided as your initial request for your lender to evaluate foreclosure prevention alternatives.
If you need assistance in discussing foreclosure prevention options with your mortgagee, beneficiary or authorized agent, please contact us at FCI Lender Services toll-free at 1-800-931-2424. Fax: 714-282-5775. Hours of operation are 8 a.m. to 5 p.m. Monday through Friday.
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