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Avoiding Foreclosure: Know What Help You Can Get While There Is Still Time


by: Laura Horwitz
01 Dec 2010

Foreclosure can creep up on you faster than you think. While the exact time frame varies among the states, it always begins with one missed payment. Then another. After that second absence, your lender will probably call you to find out what's going on. Although it may not feel like it, you want to take your lender's calls. At this stage, you may be able to work something out with your lender. A housing counselor may be able to help.

After your third missed payment (depending on the state), you may receive a demand letter or Notice to Accelerate from your lender. Now you're probably going to have to pay the total amount due within 30 days, although your lender may still be willing to discuss payment options with you. The fourth missed payment tends to mean your lender will refer you on to their attorneys. You have to pay those attorney fees yourself since you're late on your payments.

The actual day of foreclosure occurs when the lender's attorney schedules a sale of your house. You still have time until the actual date of sale to either pay the amount you owe (including those new attorney fees) or to work something out with your lender.

Before those final steps happen, get counseling through the U.S. Department of Housing and Urban Development (HUD). These counselors are available throughout the U.S. for very low fees or even for free, and they can help you negotiate with your lender, understand foreclosure law, and even organize your finances.

What You Should Know about Foreclosure Law

Certain companies prey on the desperate, which typically includes anyone losing their home. If anyone contacts you about foreclosure rescue, offering to negotiate with your lender on your behalf, be careful. Do not give this person any money whatsoever or sign any documents that may transfer ownership of your property to a company you haven't thoroughly checked out, even if they offer it as a rent-to-buy option.

Declaring bankruptcy only stops a foreclosure temporarily. You do not owe any money while your case is in bankruptcy court, but then you need to resume making payments. Furthermore, declaring bankruptcy damages your credit score for the next decade.

Government Options for Avoiding Foreclosure

President Obama signed into effect the Homeowner Affordability and Stability Plan (HASP) to help people in danger of losing their homes. Through this plan, you might be eligible for loan modification, refinancing, or payment reductions. Find an HUD-approved counseling agency in your area to help you understand this new foreclosure law and how it may be able to help you.

Sources:
Avoiding Foreclosure • http://portal.hud.govhttp://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure • U.S. Department of Housing and Urban Development