Unfortunately, over the past 3-4 years loan products that were available were not necessarily the right type of products for the average consumer. Unless they were properly advised, many home owners now find themselves in unenviable situations.



The big question is: What is Foreclosure?

The Answer: This is the legal means that your lender can use to repossess or take back your home. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued. If that happens, you not only lose your home, you may owe an additional amount. Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if possible.

The foreclosure downwind begins when your loan payment becomes 16 days overdue. At that point, your mortgage lender will try to contact you to work out a repayment schedule to bring your loan current.

If your first payment becomes 30 days delinquent the assumption is the next month's payment will be delinquent as well, collection attempts begin to be more aggressive. If your payments fall 90 days behind, the lender will likely refer your mortgage to an attorney or other entity that will initiate formal foreclosure proceedings.

With a foreclosure, the lender takes possession of the house, evicts the tenants, and puts the property up for sale.

Effect of a foreclosure on your credit record: Devastating and long-lasting. It remains on your credit record for at least seven years. Avoid foreclosure if possible.

Don't worry. There is help out there for those that are in foreclosure. There are many companies and individuals that will provide education and assistance at no cost. During the process, be sure not to avoid the letters from your lender. The more time you wait, the harder the situation will become and the more likely it is that you will lose your home.

Believe it or not, lenders do NOT want to foreclose on your home. They are in the business of lending money, not owning homes. They will work with you and do everything they can in order to assist you in keeping your home.

When you first become aware that you are having problems making your payments, call or write to your lender's Loss Mitigation Department without delay. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.

Although it may be disheartening, be sure to open all of your mail from your lending company. The initial mailings should provide information that will help you. The latter mailings may be legal action that you must be aware.

Contact your State Government Housing office. You must know your rights to be successful and each state is different. Be sure to ask questions. Gather your lending documents and read them thoroughly as they should explain the process to you as well.

The main thing is to make sure you stay in your home. If not, you may not qualify for assistance if you abandon your property.

During this stressful financial time, it is also very important that you prioritize your spending and look at what other assets you have that may assist you in keeping your family home. Do you have extra cars, jewelry, stocks or other investments that you can sell in order to keep your home?

Research all options that will help you in keeping your home. Let's discuss some options that may be available to you.

Repayment Plan: You repay what is behind and promise to stay caught up. This is usually when you are 16-30 days late.

Forbearance: Forbearance isn't for an indefinite period; it might be for one or three or six months, and after that, you'll be expected to make full payments on time.

In most cases, you'll be expected to catch up within a year or 18 months.

Loan Modification: A loan modification is similar to a refinance: The lender agrees to alter the loan, but with few or no fees. The lender might reduce the interest rate, change the loan from an ARM to a fixed-rate mortgage, or raise the monthly payment by a few dollars so you pay off the entire loan, including the past-due amount, by the loan's original end date.

Deed In Lieu Of Foreclosure: This option often is referred to as a "deed in lieu." The borrower offers to hand over the deed to the property so the lender can take possession of the house and sell it.

Shore Sale: In a short sale, you sell the house for less than you owe. You can't do a short sale without the lender's permission. With a short sale, you make necessary repairs to the house; pay the real estate commission, taxes and government fees; and give the lender whatever money is left over -- a partial payment.

Again, remember to not procrastinate while going through this stressful time. Seek assistance so that you are able to explore all of your options.