How to prevent foreclosure
The current economy, current unemployment rates, and the ill housing market. All play a huge role to the
foreclosure rate increase that we have seen the last couple of years. The government stepped in last year trying
to bail out banks and help people faced with foreclosure by offering programs for Fannie Mae and Freddie Mac
insured banks. Although not all banks qualify for the government programs, most banks will have their own loss
mitigation departments set up to help people keep their homes. The first thing to remember is that foreclosures
are very expensive for the bank and the last thing the bank wants you to do is foreclose. In another words, the
bank wants you to stay in your home, just as much as you do.
Before the house goes into foreclosure, the owners first fall behind on their mortgage payments. The bank will try
to contact you asking when you anticipate to make your missed payment. The most important thing to remember
is not to ignore your bank. Make sure the representative is aware of your situation, they will most likely try to help
you by mailing out a mortgage hardship packet that would be completed by you and mailed back to the bank.
The hardship packet for most banks is the same in a sense that they want the same information (although the
forms may look different from bank to bank). Most banks want a hardship letter to be written by you explaining
your circumstances. The letter should be honest, should explain your particular financial hardship, no longer than a
page, and should have your signature on the bottom. The second thing that is usually required is the financial
statement. This document lets the bank know where you stand including loans that you may have (i.e.second
mortgage) and your monthly income. The third document is the monthly expense and income worksheet. This
worksheet lists all of your monthly income minus all of your bills (including utilities, credit cards, insurance, car
payments, etc). The bottom of this expense sheet will show your surplus or deficit after all bills have been
deducted. Most banks would like to see a surplus, even if its only a few hundred dollars.
If there are any junior liens on the property (i.e.second mortgage), the bank will usually require additional
documents such as the most current loan statement from the junior lien and a written release of information
allowing the mortgage company to discuss information with the lenders or lien holders. All of the completed
documents should be accompanied by current month's pay stubs for all borrowers and mailed to the risk
management or loss mitigation department. Your hardship packet is reviewed one to two months after the bank
has received it. Most banks will offer various repayment options to you to help you keep your home. They may
defer your payments, lower your interest, convert your variable mortgage to a fixed mortgage, temporarily re-write
the loan for a six month period and collect only the interest, drop the value of your home to market value, or offer a
deed in lieu of foreclosure. Every bank has their own programs that they offer and not all offer the same ones.
This process takes time and a lot of work on your part, but the end result will be worth it- you won't loose your
home. Just remember, you can prevent foreclosure by communicating with your bank. They will try to help you! As
a last piece of advice, don't fall victim to companies who claim they can save your home from foreclosure and
charge you to do so. They will just be a middle man in between you and the mortgage company. You will still need
to fill out the same forms and speak with a representative at the bank- the only difference is that you will spend a
lot of money paying the middle man to do the job you can do yourself.
foreclosure rate increase that we have seen the last couple of years. The government stepped in last year trying
to bail out banks and help people faced with foreclosure by offering programs for Fannie Mae and Freddie Mac
insured banks. Although not all banks qualify for the government programs, most banks will have their own loss
mitigation departments set up to help people keep their homes. The first thing to remember is that foreclosures
are very expensive for the bank and the last thing the bank wants you to do is foreclose. In another words, the
bank wants you to stay in your home, just as much as you do.
Before the house goes into foreclosure, the owners first fall behind on their mortgage payments. The bank will try
to contact you asking when you anticipate to make your missed payment. The most important thing to remember
is not to ignore your bank. Make sure the representative is aware of your situation, they will most likely try to help
you by mailing out a mortgage hardship packet that would be completed by you and mailed back to the bank.
The hardship packet for most banks is the same in a sense that they want the same information (although the
forms may look different from bank to bank). Most banks want a hardship letter to be written by you explaining
your circumstances. The letter should be honest, should explain your particular financial hardship, no longer than a
page, and should have your signature on the bottom. The second thing that is usually required is the financial
statement. This document lets the bank know where you stand including loans that you may have (i.e.second
mortgage) and your monthly income. The third document is the monthly expense and income worksheet. This
worksheet lists all of your monthly income minus all of your bills (including utilities, credit cards, insurance, car
payments, etc). The bottom of this expense sheet will show your surplus or deficit after all bills have been
deducted. Most banks would like to see a surplus, even if its only a few hundred dollars.
If there are any junior liens on the property (i.e.second mortgage), the bank will usually require additional
documents such as the most current loan statement from the junior lien and a written release of information
allowing the mortgage company to discuss information with the lenders or lien holders. All of the completed
documents should be accompanied by current month's pay stubs for all borrowers and mailed to the risk
management or loss mitigation department. Your hardship packet is reviewed one to two months after the bank
has received it. Most banks will offer various repayment options to you to help you keep your home. They may
defer your payments, lower your interest, convert your variable mortgage to a fixed mortgage, temporarily re-write
the loan for a six month period and collect only the interest, drop the value of your home to market value, or offer a
deed in lieu of foreclosure. Every bank has their own programs that they offer and not all offer the same ones.
This process takes time and a lot of work on your part, but the end result will be worth it- you won't loose your
home. Just remember, you can prevent foreclosure by communicating with your bank. They will try to help you! As
a last piece of advice, don't fall victim to companies who claim they can save your home from foreclosure and
charge you to do so. They will just be a middle man in between you and the mortgage company. You will still need
to fill out the same forms and speak with a representative at the bank- the only difference is that you will spend a
lot of money paying the middle man to do the job you can do yourself.