Yielding Wealth | Personal Finance

Can You Keep Your Home While In Foreclosure?

by miranda on May 19th, 2008

When the bank sends you a notice of foreclosure, it may seem like a done deal. But, what if it isn’t? Kelly over at Taxgirl forwarded me an email that offers some great advice on how to work through the foreclosure process. The advice comes from Jacob Benaroya, president and managing partner of Biltmore Capital Group, an institution that purchases problem loans from mortgage lenders.

Here are 10 things  Benaroya suggests when your home is in foreclosure:

1. Don’t hide. Respond to mail and phone calls directly.
2. Be proactive. Contact the lender and talk about your financial situation.
3. Realize that the mortgage lender isn’t in the real estate business. The lender wants the payment (and the fees, of course!).
4. Understand that your mortgage lender may be more willing to negotiate in the current climate.
5. Know your rights. Review all mortgage loan documents and understand what your lender can (and can’t) do if you fall behind in payments.
6. Do not turn to companies that promise to prevent foreclosure. They charge fees that could be better used to make a mortgage payment. There are free resources that can help you.
7. Contact a counselor that has been approved by HUD. You can receive free or very low cost counseling about what to do about your foreclosure.
8. Watch out for foreclosure recovery scams. Mortgage fraud is growing. Watch out for scammers who claim to negotiate terms, but are really out to get your house — or just walk away with a “fee.”
9. Prioritize spending. Look over your finances and prioritize your expenses. Make sure that your home payment is close to the top of the list. Even credit card payments can be delayed if your home is in danger of foreclosure.
10. Use other assets. Do you have items that you can sell for money? Jewelry, a second car, a loan against a life insurance policy and even a garage sale can be sources of money you can use to hold off foreclosure.

Personally, I think it is very important to work directly with your lender. You can enlist the help of a trusted adviser to help you negotiate. Many lenders, if you show them that you are doing your best, are willing to work with you. Avoiding foreclosure is in your lender’s best interest as well. But it has to be a negotiation that lenders can live with, as well as something that works for you.

I also think that prioritizing your spending and cutting out unnecessary expenses, as well as doing what you can (including selling some items) to raise the funds are important items.

image credit: sxc.hu

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