AVOIDING FORECLOSURE

Not being able to pay your home mortgage can be a result of an
illness, job loss, death in the family or some other sort of
unexpected life changing crisis. No matter what the circumstance is
the consequences of not paying your mortgage are extreme. Your
credit will be impacted and you run the risk of your home going into
foreclosure. This means your lender will take over ownership of your
residence. A foreclosure will leave a negative impression on your
credit for many years; making it difficult to get approved for any
type of new credit or loan. Outlined below is information that will
help you avoid foreclosure.

Dealing with a foreclosure letter

If you receive this type of letter, your situation is very
serious and needs to be addressed immediately. Get in
touch with your lender and explain to them why you have not made
your payments. They will likely be able to help you work out some
sort of payment plan. In order for them to assist, you will probably
have to provide financial information including your monthly
expenses and income.

What are the alternatives to foreclosure?

Consumers in financial trouble have several options:

Mortgage Modification - Your lender will
permit you to refinance your mortgage and blend your debt into your
new loan. You can also choose to extend the term of your home
mortgage. Mortgage modification helps create a lower, more
affordable payment which will allow you to 'catch up'.

Special Forbearance - Your lender will offer you
a temporary reduced repayment plan. It is even possible that
you will be allowed to stop making payments for a short period of
time.

Pre-foreclosure sale - Foreclosure is
avoidable if you sell your home, typically for an amount that is
less than what you are obligated to pay. You must be 2 months
delinquent and be able to sell your home within 3 - 5 months in
order to qualify for a pre-foreclosure sale.

Deed-in-lieu of foreclosure - Utilizing this
alternative results in you giving your home to your lender. Yes, you
lose your home, but your credit is not as adversely affected as if
you experience foreclosure. If you are already in default on your
mortgage and can not qualify for any of the options listed above,
then you may
qualify for a deed-in-lieu of foreclosure. You can also achieve qualification if you
are unable to sell your home before the foreclosure was instated.

How do I know if I qualify for any of these foreclosure
alternatives?

Contact your lender. They will help you figure out what the best
option for your situation is.

Identifying 'avoiding foreclosure' scams?

There are many companies out there that are going to look to
take advantage of you during your time of financial duress. The most
important thing to remember is 'if it is too good to be true, then
it is!'.

'Equity skimming' is one of the most common types of scams. This
occurs when you are approached by a company or even an individual
claiming that they will help you by paying your mortgage or by
providing you with cash once your home is sold.
They will then propose that you move out of your residence and transfer the deed to
their name. They do not pay the mortgage and the home
goes into foreclosure. Just because you sign the deed over to
someone else, you are still obligated to pay your loan!

You can avoid becoming a victim of a foreclosure scam by considering
the following:

- Never sign anything unless you are 100% clear about what it is your are
committing to.

- Every promise or guarantee made to you should be obtained in writing.

- Any contract of sale or loan assumption needs to clearly indicate that
you are being released of your responsibilities of the home
mortgage debt.

- All potential deals need to be presented to your lawyer to ensure that
they are fair and valid.

- Get in touch with your State Real Estate Commission, your state's
Attorney General

and/or local District Attorney to make certain that the buyer of your
property has no complaints issued against them.

In conclusion....

A foreclosure is very serious and should be taken care of
immediately. You don't want to lose your home and/or further damage
your credit.

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