Foreclosure myths, debunked
Although there are a number of programs available to help homeowners who have defaulted on their mortgages keep their home, the large amount of misinformation tends to result in troubled homeowners failing to contact their lender until it is too late.
Making sense of the story
- Some homeowners believe, incorrectly, that contacting their lender
early in the process will draw attention to their situation and result
in a quicker foreclosure. In reality, contacting the lender or servicer
is an important first step, and the sooner, the better. Contacting the
lender provides the homeowner with an opportunity to explain their
situation and the steps necessary to deal with it.
- It is a common misconception that missing one mortgage payment will
lead to foreclosure. However, the foreclosure process doesn’t begin
until payments are 90 days delinquent. Lenders generally have a
financial interest in keeping homeowners in their homes, so making
contact as early as possible could help lenders modify terms of the
mortgage or devise a repayment plan.
- Once homeowners are behind on their mortgage payments, it becomes
challenging to dig out of the hole. Some homeowners try to solve this
by depleting their savings or dipping into their retirement accounts to
become current on the loan. Most financial experts advise against this.
- Delinquent homeowners may think they should stop making mortgage
payments to get their lender’s attention, which often isn’t the case.
When possible, homeowners should stay current on their mortgage payments
and continue to contact their lender on a regular basis.
- Homeowners who have applied for assistance or loan modification
programs in the past and were turned down are advised to reapply.
Program parameters are constantly changing, so the rules might have been
liberalized since the last time the borrower sought help.
- A number of free, government-sponsored housing services are available through the Dept. of Housing and Urban Development (HUD). A list of HUD-approved agencies can be found at http://www.hud.gov.
Leave A Comment