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Facing Foreclosure? Four Steps to Help Yourself

by: April Dykman
01 Dec 2010

In 2009, a record 2.8 million households faced foreclosure as homeowners fell behind on their mortgage payments. According to RealtyTrac Inc., the number of households that received a foreclosure notice grew 21 percent from 2008, with one in 45 homes receiving default notices, scheduled foreclosure auctions, and/or bank repossessions.

If you're in danger of losing your home, it's important to know your options. Be proactive to try to avoid foreclosure.

1. Create a household budget, avoiding unnecessary expenditures.

Write down all expected income and expenses for the next six months or so. What can you cut? Make your mortgage the top priority, even if it means paying less toward other debts. Skipping other payments is an option, but be sure you fully understand the consequences of doing so. If a friend or family member can give you a loan, agree upon and write down the terms of repayment.

2. Get counseling.

Don't go through the foreclosure process alone. Evaluate your options with the help of counseling services associated with the Association of Independent Consumer Credit Counseling Agencies, the National Foundation for Credit Counseling, or approved by the Housing and Urban Development Department.

3. Get organized for optimal counseling services.

Make your counselor's job easier by organizing your housing paperwork. The counselor can give you better service if you gather the following items:

  • Mortgage loan number
  • If house is for sale, the name of the real estate agent
  • A list of all assets, including value and amount owed
  • Income, including two recent pay stubs and proof of any other income or benefits
  • Monthly expenses
  • Communications from your lender
  • Foreclosure notices
  • Court or sheriff's sale complaints
  • Two most recent mortgage statements
  • Two most recent tax returns
  • All bank account statements for the previous two months

4. Can't save the house? You still have options.

If a refinance or loan modification is not possible, you still can try a quick sale, a deed in lieu of foreclosure, or a short sale. A counselor can help you determine which options are possible and what is the best way to proceed.

Try to avoid foreclosure, but if it comes to that, there is a light at the end of the tunnel. Once your financial situation gets better, there's a good possibility of getting a mortgage loan at a decent rate after a few years.

U.S. Department of Housing and Urban Devleopment • U.S. Department of Housing and Urban Devleopment • http://hud.gov/http://portal.hud.gov/portal/page/portal/HUDRealtyTrac • Foreclosure Overview & Foreclosure Process • http://www.realtytrac.com/http://www.realtytrac.com/foreclosure/overview.html

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