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Things to Know About Foreclosure Things to Know About Foreclosure

Bronze medal Reporter Adv. John Posted 15 Jun 2019 Read More News and Blogs
Things to Know About Foreclosure

Foreclosure is a situation in which a homeowner is unable to make mortgage payments as required, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. 

Step one: communicate with your lender

As soon as you realize that you are going to have trouble making your mortgage payments, contact your lender and tell them about your financial difficulties.  This gives them the opportunity to work with you to create a plan.  Do not stop paying your bills, and do not wait until you cannot make payments before you act.  Though you may feel scared or embarrassed, immediately begin working with your lender to avoid foreclosure on your home.

Step two: work with the MHA program

You can get help through the Making Home Affordable (MHA) program, which provides free counselors for advice and assistance with keeping you in your home or getting out safely. Visit the MHA website to read about the options and what you’ll need to prepare.

MHA has a hotline you can call anytime: 1-888-995-HOPE (1-888-995-4673) and TTY users should call 1-877-304-9709.  You can also find a counselor in your area.

Your state's housing agency might have a foreclosure avoidance program as well.

If you have an FHA loan, call the FHA National Servicing Center at 1-877-622-8525.

Beware of mortgage relief scams.  One sign of a scam is when they ask for a fee in advance.  

Foreclosure Scams

Scammers sometimes contact homeowners who are having trouble making their mortgage payments to offer them “help.” Criminals like this promise to help you keep your home or sell your home without having to go into foreclosure, for a fee — but they’re just out to take your money, not help you.

These scam operators find potential victims in several ways:

  • Advertising online and in local publications
  • Distributing flyers
  • Contacting people whose homes appear in the foreclosure notices (they can easily find these notices online or in a local newspaper)
  • Targeting specific religious or ethnic groups


Report Foreclosure Scams

  • File a complaint by contacting the Federal Trade Commission (FTC).
  • If the scam involves bankruptcy, contact a local U.S Trustee office.

How to Protect Yourself

Get reliable foreclosure help and counseling through the government's Making Home Affordable program or find a government certified housing counselor near you.

Do

Be aware of these tricks that scammers use:

  • Offering to act as a go-between with your lender or to negotiate with your lender to refinance your loan
  • Advising you that they can stop foreclosure by ”helping” you file for bankruptcy.
  • Encouraging you to sign fake foreclosure rescue or mortgage documents
  • Claiming that they can perform a forensic mortgage loan audit to help you hold onto your home
  • Offering you fake legal help
  • Learn about your legitimate government-approved mortgage and foreclosure help options.

Don’t

  • Don’t send mortgage payments to any company that is not your loan servicer.
  • Don’t sign any documents without having them reviewed by a lawyer or independent expert.
  • Don’t stop making mortgage payments.
  • Don’t forget that real help from the government is always free.
  • Don’t give anyone your personal information, Social Security number, or bank information without confirming their identity and that they represent a legitimate company.  
  • Don’t fall for rent-to-buy schemes or other mortgage fraud schemes.

After a Foreclosure

After a foreclosure, the road to recovery can be challenging, but there are steps you can take to get yourself and your family moving forward to new housing, revitalizing your credit, and buying another home in the future.

Your immediate need is finding a new place to live. Reach out to the U.S. Department of Housing and Urban Development’s Office of Housing Counseling. Local HUD-approved counselors can help you work through your housing options. Your other immediate need is your children. If you’re staying in a new area, get them enrolled in school as soon as possible. And check your city or state department of social services if you need additional support such as SNAP benefits (food stamps).

Moving forward both financially and emotionally will take time. To help you organize those next steps, use

  • The Starting Over After Foreclosure Toolkit - These handouts and worksheets will help you learn to manage stress, consider housing options, and explain money to kids.
  • A Resource Guide for Foreclosure Recovery  - Learn ways to gracefully exit home ownership, how foreclosure affects your taxes, how to avoid rental scams, and ways you can rebuild your credit.


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