Find Yourself in A Pre-Foreclosure Situation? Don't Give Up Hope!

Lynnette Phillips
July 09, 2008
Life is full of ups and downs. Any of us can suffer from a financial setback for any number of reasons...unemployment, illness or injury, divorce. But there ARE options to help you get back on track. The first and possibly most important thing to remember in this situation is time is crucial. If you have already received a Notice of Default you usually have only 90 to 120 days (California foreclosure timeline—please make yourself aware of the foreclosure laws for your state).

To help put your thoughts in order keep these important points in mind.

  • Respond to letters or calls from your lender.

  • Analyze your budget and financial situation.

  • Be prepared to share details about your finances and circumstances.

  • Get all "promises" in writing.

  • Check with your lawyer, lender, tax professional or Realtor before entering into any venture involving your home.

  • Be cautious of any transaction causing you to sign over your deed of trust. Signing the deed over to someone else does not necessarily relieve you of your loan obligation.

  • Watch out for any buyer who tries to hurry you through the sale process.

  • Be wary of any credit counseling or credit repair company that offers to perform services for a fee that you can perform yourself for free. And never pay for services not yet completed upfront!

  • Above all, don't abandon your home. Walking away may not be the simple solution it seems.

    Call your lender immediately. Unless you are in a position to pay a lump sum to bring the payments current reinstatement is not an answer. Any foreclosure workout, such as a formal repayment plan (forbearance) or loan modification plan will be initiated in the Loss Mitigation Department. YOU'LL be the one who has to get the ball rolling, though.

    Refinancing your mortgage will allow you to cash in on any equity in your home and wrap late payments, interest charges and fees into a new loan, putting you back in charge. It may take time to find financing. Contact a home loan professional to ask any questions regarding a refinance immediately.

    Another alternative would be the sale of your home. Waiting to put your home on the market can mean the chances of getting a fair price for your home disappear. Waiting may also mean putting off any repairs or simple sprucing up and offering your house in "as is" condition at a discounted price. Consult a real estate professional experienced in distress sales as soon as possible.

    You should be conscious of any tax implications attached to a short sale of your home. Please contact a qualified tax advisor.

    Lenders DO NOT want your home. The foreclosure will cost any lender tens of thousands of dollars (at least). Understandably they would rather avoid foreclosure as much as you.

    If you talk to someone in this situation, please refer them to the HUD list of approved non-profit housing counselors. They can request the list by calling 1-800-569-4287 or on the web at http://www.hud.gov/local/index.cfm

    Don't let time become your enemy. Act Now!

    © 2008 by Lynnette Phillips