Know the Foreclosure Facts
What Is Foreclosure?
Foreclosure is the sale of a mortgaged property in order to pay the loan of the defaulting borrower. Foreclosure is a legal process and the laws governing the process are based on the statutes of the state in which the property is located. If you are in danger of missing more than one mortgage payment, you should become familiar with the foreclosure laws in your state.
Tips to Avoid Foreclosure
If you are unable to make your mortgage payments — or anticipate that you might be unable to do so soon — take action now. Putting it off only lessens your chances of finding an alternative to foreclosure.
Here are 6 recommended actions to take as soon as you realize you are at risk:
Organize your financials.
Take the time to collect the personal financial information you will need to have a discussion with either your lender or a nonprofit housing counselor. The Mortgage Options Assessment tool on this site can help you get organized.
Talk to your lender.
Lenders can offer options to help you weather financial difficulties. But first, you need to pick up the phone. The sooner you make arrangements to become current on your loan, the greater the chances of getting your loan reinstated – and the greater the chances of holding on to your home. Since your options may change over time, be sure to check back with your lender periodically to see if new options have opened.
For a list of lenders and their loss mitigation contact information, go to Get Help. If your loan is insured by your lender with PMI, learn how our Home Preservation Program might be able to help.
Don't just let the mail stack up.
It is in your lender's best interest that you keep your home, and the initial notices they send typically include valuable information on foreclosure prevention options. Your failure to respond means that your delinquency status only deepens — and future notices will likely alert you to pending legal action.
Contact a HUD-approved housing counselor
The U.S. Department of Housing and Urban Development (HUD) supports housing counseling services nationwide. These nonprofit resources can help you get back on track by providing financial and foreclosure assistance at a nominal cost or free of charge. Go to Get Help for a list of reputable nonprofit resources.
Know your rights.
Pull out your loan documents and learn what steps your lender can legally take if you are delinquent on your mortgage loan. It is also very important to become familiar with the foreclosure laws in your state (every state's laws differ).
Understand the possible alternatives to foreclosure.
Read through our brief primer on foreclosure prevention options. Options fall into two categories: those that allow you to retain ownership of your home and those that do not. They have one important thing in common: helping you to avoid the “black marks” of foreclosure.
