How to Fight a Foreclosure

If you're behind in your mortgage payments, there are things you can do to keep your home. To avoid the dreaded foreclosure--here are some steps you can take to keep the wolves at bay.

Instruction

1. Most lenders begin the foreclosure process anywhere from 3 to 6 months after you miss a payment. Therefore, the first step that you need to take is to talk to your lender and modify your loan terms. In some cases, lenders will be willing to modify the terms of the loan so that you can skip a payment or give you additional time to pay off your delinquent balance

2. When you contact your lender, do so in a timely manner so as to appear responsible and proactive. If your loss of income is temporary, your lender will most likely be willing to work with you, at least for a while. Sometimes you can get a forbearance for a period of time to be repaid later. You may also be wise to hire a certified housing counselor to negotiate for you.

3. If the lender is not amenable to changing the terms of your loan, you may want to consider a short sale. This is where you sell your house for less than the amount of your mortgage. The lender then eats the difference. Your real estate agent can tell you more about this type of transaction

4. In November, the government unveiled the Hope Now Coalition that will help borrowers who are at least 3 payments behind and haven't filed for bankruptcy. Another program to look at is FHASecure, which allows FHA homeowners to refinance on favorable terms. Fannie Mae also said that they are now willing to help borrowers as soon as they see trouble coming, instead of waiting until they become delinquent. See links in Resources below

5. If you are or have been in the military, servicepeople and veterans have special rights not available to civilians under the Servicemembers Civil Relief Act. Go to the U.S. Dept. of Veterans Affairs website (see Resources). Homeowners over age 62 may want to consider a reverse mortgage that pays them monthly income as an alternative as well.

6. If all else fails, you may be able to hold on to your home by filing for either chapter 7 or 13 bankruptcy, or a deed in lieu of foreclosure. But these should only be last resorts. If you think that you will be financially able to make up the payments later, then chapter 13 may be a viable alternative.