Mortgage Advice Corner


Foreclosure Causes



Many homeowners already are at the financial edge:

  • 16 percent have problems paying taxes, utilities or property insurance
  • 12 percent have high-cost auto or consumer loans
  • 10 percent have problems with overspending - average American household carries $8,000 in revolving credit card debt; $18,600 in consumer debt
  • 43 percent of American households spend more than they earn each year

Tipping points that put these people over the edge:
  • 32 percent have experienced a job loss
  • 25 percent have experienced a health crisis
  • 10 percent have a physical disability
  • 10 percent have experienced a death in the family
  • 85 percent have already missed one mortgage payment
  • 50 percent have already missed two payments, most have no savings, no available credit and their extended families have limited resources

For many, they may have refinanced two or three times already.

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8 Tips for Avoiding Home Foreclosure

If you are delinquent on your mortgage payment and are unable to make your payments:
  • 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.

  • Most of all, 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.

  • 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 notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

  • 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 to eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
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  • Use your assets. 

Do you have assets – e.g., a whole life insurance policy - that you can sell for cash to help reinstate your loan? Can anyone in your household obtain an extra job? They demonstrate to your lender that you are willing to make sacrifices to keep your home.

  • Know your mortgage rights.
 Find your loan documents and read them so you become familiar with what your lender may do if you can't make your payments.

  • Contact a HUD-approved housing counselor.

 The U.S. Department of Housing and Urban Development (HUD) funds free or very 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 if you need this assistance. Call (800) 569-4287 to find a HUD counselor near you

  • Avoid foreclosure prevention companies. 

Don't pay fees for foreclosure prevention help, instead use that money to pay the mortgage instead. Don't lose your house to foreclosure recovery scams. The HOPE for Homeowners program, created by U.S. Congress in July 2008, is designed to help homeowners at risk of default and foreclosure on their mortgage refinance into more affordable mortgage loans.



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