Dos and Don’ts of Foreclosure

Facing foreclosure is a scary thing, but there are things you should and should not do to make the situation more worse:

• DO answer the phone and read your mail: Avoiding the lender will not make the problem go away and will make it worse.  The lender may be able to help you so be sure to answer the phone and read their mail.
• DO assess your situation, realistically:  Are your financial problems temporary?  If you are only temporarily out of work and will be ok once you find a job, call your lender.  They may be able to offer forbearance or a repayment plan.
• DO consider your options:  If you are not in a position to keep your home, consider selling it before you face foreclosure.  If you have already missed a mortgage payment, call your lender.  There may be purchase options, like a short payoff or assumptions.
• Do be aware of your financial responsibilities:  Even if the lender sells your property, you may still be held liable for the difference in the sale price and what you owe.
• DO protect your money and equity: Recognize that you have significant equity in your property that must be preserved.
• DON’T move out of your home: In order to qualify for assistance, homeowners are often required to be living in their home.  Be sure to speak with your lender before moving.
• DON’T ignore the problem: It may be possible to keep your home, but if you wait, fewer options will be available.  You only have a limited amount of time to assert those rights.  Talk to your lawyer or legal aid organization, since your rights may vary state to state.
• DON’T convince yourself you can afford a home that you cannot: Most lenders will only lend what a borrower can afford, but some scrupulous lenders allowed borrowers to get in over their heads.  If your mortgage is truly beyond your means, consider selling your home and purchasing a less expensive home or renting for a period of time before the only option left is foreclosure.
• DON’T fall victim to a scheme: Some people want to profit from your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf, for a fee.  Avoid foreclosure scams.

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