The term ‘foreclosure’ describes the legal process where creditors can repossess/sell property as a means of repayment for the debt owed on that specific property. Threats of foreclosure come when homeowners fall behind on their mortgage payments, and, unfortunately, in our economy, that possibility is more common than not. However, receiving a foreclosure notice does not mean that one loses their place of residence immediately. While this may be a scary and stressful time, there are steps you can take as a homeowner to prevent losing your home. During this process, you have rights as a homeowner, and knowing these rights and fully understanding them can play an essential role in one of two things: keeping your home or alleviate the damage that can occur to your credit score and financial health.
Steps to Take After Receiving a Foreclosure Notice
In the event of a foreclosure notice, there are a few important steps that homeowners can take to protect themselves and their home. Here’s what you can do:
- Immediately call your bank: Whether you received your mortgage from a lending company or from your bank, you need to make a call to them as soon as you get notice of your foreclosure. It may not be an easy conversation, but your lender is in the most optimal position to help you.
- Write a letter of hardship: In order to get the help you need with your foreclosure, you must be able to prove that you suffered or are currently suffering financial hardships. The best way to do this is to compose a letter. In this letter, you will need to specify your financial problems and how these problems have made it highly difficult for you to make your mortgage payments. From there, your lender will take this letter into consideration when deciding if they will reduce and modify your monthly payments.
- Send in your paperwork: In addition to writing a letter of hardship, you will also be required to make copies and send essential financial paperwork. You will need your last two paycheck stubs, your last two federal income tax returns, current credit card statements, and current statements for other financial debts (i.e., student loans, car loans, etc.). These pertinent documents have to show your lender that your monthly obligations have remained the same, yet your gross monthly income has reduced significantly. The paperwork combined with the letter of hardship will help your lender make the decision on whether or not they will help you with the terms of your current loan.
- Seek help from the government: Under the Making Home Affordable program, the federal government offers the Home Affordable Modification. This is a special program that provides incentives to lenders to negotiate with homeowners for more affordable mortgage payments. In addition to the Home Affordable Modification, the government also offers the Home Affordable Foreclosure Alternatives program. In this program, financial incentives are provided to mortgage servicers who will complete short sales or deeds-in-lieu of foreclosure for homeowners who would lose their homes.
By taking these actions, you will have a stronger chance of keeping your home in light of a foreclosure notice. Before taking these actions, be sure to check if your lender takes part in any of these programs. Losing your home doesn’t have to be the only option in light of a foreclosure. With the right steps and preparations, homeowners can protect themselves, their finances, and their homes.
This post was written by Loan Lawyers. Loan Lawyers is a team of experienced and aggressive consumer rights litigation and trial attorneys in South Florida helping clients throughout the state of Florida.