If you’ve encountered temporary financial difficulties and are behind on your mortgage payments, you’re likely starting to panic that your mortgage lender will foreclose on you. Before things get too far out of hand, however, there are some things you definitely should do.
You do have options available to you, but you must be proactive about finding them and availing yourself of them. Here are the top four things you should do.
1. Contact Your Lender
Contact your mortgage lender as soon as possible. Believe it or not, (s)he has a vested interest in your ability to stay in your home. (S)he does not want to foreclose on you, and likely will offer you one or more options. For instance, have you ever heard about a Mortgage Forbearance Agreement? Many banks and other mortgage lending institution have them, and an MFA could be a good option for you if you know your financial difficulties are only temporary. The way an MFA works is that your lender agrees to refrain from exercising its legal right to foreclose in exchange for your agreement to bring your payments current over an agreed-upon period of time. In addition, most MFAs give you between four and 12 months of no payments before you begin making higher payments again.
2. Apply for a Loan Modification
Another option that your lender may offer you is a loan modification; i.e., reducing both the amount of principal you have left to pay on your home and the interest rate you’re currently paying. This substantially reduces your monthly mortgage payments. If your lender refuses to give you a loan modification, you can apply to other lenders for one. Contacting the Making Home Affordable program, a/k/a the MHA program, or your state’s housing agency is your best strategy. They’ll provide counseling to advise and assist you.
3. Beware of Foreclosure Scams
Whatever you do, don’t fall for one of the numerous foreclosure avoidance scams that are all too prevalent nowadays. Beware of any supposed foreclosure avoidance company that does the following:
- Advertises online or in one or more of your local newspapers or other publications
- Hangs a flyer on your front door
- Contacts you by phone or snail mail
- Purports to help specific religious or ethnic groups
Under no circumstances should you ever send your mortgage payments to anyone that is not your actual mortgage lender. Nor should you ever sign any documents unless and until your attorney reviews and approves them. And it goes without saying that you should never give your personal information such as your Social Security number or your bank information to anyone who requests it by phone, email, or snail mail unless you’re absolutely sure you know who you’re talking to and that they’re legitimate.
4. File for Bankruptcy to Save Your Home
If you know your financial difficulties aren’t going to go away any time soon, your best option may be to file Chapter 13 bankruptcy. This will stop any foreclosure proceedings dead in their tracks. Foreclosure lawyers in Flint, Michigan can give you all the advice and help you need.
Once you file your bankruptcy petition, neither your mortgage lender nor any of your other creditors can take any collection action against you. Nor can they harass you by phone or otherwise to pay your overdue bills. In addition, unlike a Chapter 7 bankruptcy that’s a discharge proceeding, a Chapter 13 bankruptcy is a reorganization procedure. It allows you to renegotiate all your debts, including your mortgage, with your respective lenders, thereby receiving better terms than you now have. Then you devise a repayment plan that the court will approve. Under this plan, which generally lasts for three or five years, you make your agreed-upon payments and thus work your way out of debt.
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