Quick Guide: How to Avoid Foreclosure in Times of Trouble

It’s the nightmare scenario all of us pray will not happen: You have finally
purchased the home of your dreams, and your mortgage is high, but with
hard work you are managing to make ends meet. Then suddenly, you
become unemployed, or there is an unexpected serious illness in your family.
You are no longer able to make the monthly mortgage payment, and what
was once a manageable credit crunch has turned into a nightmare that you
fear will lead to a foreclosure.

This nightmare scenario can happen, and has happened to many of us. What
can you do to avoid this and keep your home?

One important thing to realize is that lenders hate foreclosures and would
prefer to avoid them if possible. For lenders, foreclosures mean the sale of
the home at a lowered price, increases in administrative costs and loses in
profits. On the other hand, lenders cannot allow borrowers to not make their
payments, so they are faced with a difficult choice. Sometimes foreclosure is
the only way lenders can ensure that they get any money at all.

So what can you, the borrower, do? As soon as you realize that you will not
be able to make your payments, you need immediately start communicating
with your lender. We understand that talking to the lender is difficult for
many people, but avoiding communication is the surest way to foreclosure.

So it is essential that you get in touch with the lender right away and explain
your situation. Tell the lender honestly what your financial problems are,
and see if any arrangements can be made to help you. Again, the lender
would rather avoid foreclosure, so they will do their best to compromise with
you on a temporary solution to your problems and give you some breathing
room. This will greatly reduce the risk of your property being subject to
foreclosure.

Of course, every lender has different rules for dealing with missed payments
and making agreements with the borrowers. It is important to have realistic
expectations for the negotiation with the lender and to avoid making
schemes to try and take advantage of the situation. When talking with the
lender, make sure to propose realistic solutions to the problem and
emphasize how temporary they will be. Then see how far you can get the
lender to compromise and what helpful arrangement you can come up with
together.

In this difficult time, remember that the situation is a temporary fix intended
to help you save your house and satisfy the lender at the same time.
Eventually, you will be able to make your payments in the amount that they
were in before it happened. With this attitude and approach, the threat of
foreclosure can be minimized.