Has your divorce and subsequent financial situation put your home in danger of foreclosure? As the number of foreclosures rise, there are steps you can take to prevent foreclosure.
Respond to the Lender
If you mortgage payment is getting too much for you, talk to your lender. In about half of of cases of foreclosure, the borrower never talked to the lender. The problem will not go away by ignoring it. Respond to your mortgage company's calls and letters.
You need to get advice from another party.
Talk to one of the following:
- housing counseling agency
- consumer credit counseling service
Ask if they will help negotiate with the lender for you as well as providing advice.
How long will the problem last?
Decide if you have a short term cash shortfall or a long term problem. For short term problems, talk to your lender about a forbearance. The lender will delay or reduce the payments for a set period of time and there will be an agreement on how to make up that money later in a repayment plan.
If you have a long term problem, it can be solved by loan modifications. Theoretically, any term of a mortgage may be modified: The rate can be lowered, the final payoff date can be moved back, and even the amount owed can be reduced.
Document, document and document
Document everything. Keep a note of every phone call including time, name and title of person you spoke to and a summary of the conversation. Keep all correspondence including the envelope as the date stamp can be important.
Organize your own financial documents. Keep anything that documents why your income and cash has been reduced.
DOCUMENTS YOU WILL NEED INCLUDE
Talking to the right people
You will be contacted initially by the collections department but the people you need to talk to are in loss-mitigation department. These are the people who negotiate forbearances and modifications. Request an application for forbearance or modification.
Often the lender will try to get you to enter an agreement immediately. Don't agree to anything right away. Let the lender make an offer and talk to your advisor. If the offer isn't a good one, then make a counter offer.
Make sure you can afford any agreement you enter and make any payments consistently on time. This is a tough time but there is light at the end of the tunnel. Fulfil your agreement and get yourself back on your financial feet again.