Tips on Avoiding Foreclosure
If You Are Unable to Make Your Mortgage Payment
1. Don't ignore the problem
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state by contacting the State Government Housing Office. Foreclosure laws vary by state.
5. Understand foreclosure prevention options
Valuable information about foreclosure prevention (also called loss mitigation) options can be found at portal.hud.gov or the other websites listed at the base of this page.
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances, and represent you in negotiations with your lender should you need this assistance. Find a HUD-approved housing counselor near you by visiting www.hud.gov or calling (800) 569-4287 or TTY (800) 877-8339.
7. Prioritize your spending
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses (cable TV, memberships, entertainment, etc.) that you can eliminate. Delay payments on credit cards and other unsecured debt until you have paid your mortgage.
Use your assets
Do you have assets, a second car, jewelry, a whole life insurance policy, that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
Avoid foreclosure prevention companies
You don't want to pay fees for foreclosure prevention help. Use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide for free if you contact them.
Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD-approved housing counselor.
Tips to Avoid Scams
Beware of anyone who asks you to pay a fee in exchange for a counseling service or modification of a delinquent loan.
Scam artists often target homeowners who are struggling to meet their mortgage commitment or anxious to sell their homes. Recognize and avoid common scams.
Beware of people who pressure you to sign papers immediately, or who try to convince you that they can "save" your home if you sign or transfer over the deed to your house.
Do not sign over the deed to your property to any organization or individual unless you are working directly with your mortgage company to forgive your debt.
Never make a mortgage payment to anyone other than your mortgage company without their approval.
Additional Government Resources
U.S. Department of Housing and Urban Development - Avoiding Foreclosure
Avoiding Foreclosure: Pennsylvania
Making Home Affordable: Help for America’s Homeowners