Learn About... Foreclosure Prevention

Your house is more than likely the largest asset you have. We want property owners to know that there are options available to avoid foreclosure.  The materials and links below could be the help you need to keep your home.

Foreclosure is a legal process by which a bank, mortgage company lender, or other creditor takes property which has been mortgaged in order to satisfy a debt.  A foreclosure will result from the nonpayment of the mortgage (including second mortgages and home equity loans) or the property taxes on the real estate used as security on the mortgage.  As a result of foreclosure, at the end of the redemption period, the owner loses the rights he or she had to the real estate.

Tips to Avoid Mortgage Foreclosure

  1. 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 home.
  2. Contact the lender as soon as you realize that you have a problem.  Lenders do not want your home.  They have options to help borrowers through difficult financial times.
  3. Open and respond to all mail from your Lender.  The first notices will offer good information about foreclosure prevention options that can help you.  Later mail may include important notices of pending legal action.  Failure to open mail will not be an excuse in foreclosure court.
  4. Stay in your home.  You won’t qualify for certain types of assistance if you move out.  Keep the house in good presentable fashion.
  5. Know your mortgage rights.  Find your loan documents and read them so you know what your lender may do if you can’t make your payments.  Learn about foreclosure laws by contacting the Michigan State Housing Development Authority at 517-373-8370.
  6. Understand foreclosure prevention options.  Valuable information about foreclosure prevention (also call loss mitigation) options can be found at the Federal Housing Administration website.
  7. Contact a HUD-approved housing counselor.  The U.S. Department of Housing and Urban Development (HUD) funds free or 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 assistance.  To find a HUD approved counselor call 1-800-569-4287 or TTY 1-800-877-8339.
  8. Prioritize your spending.  Review your finances and see where you can cut spending in order to make your mortgage payment.
  9. Don’t underestimate the importance of preserving your good credit.  Your future ability to purchase certain items, rent or buy another home, and complete certain transactions depends on your good credit.
  10. Beware of predatory lending schemes and scams.  Don’t lose your home to recovery scams.  If any firms claim they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf you may well be signing over title to your property and becoming a renter in your own home.  Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved counselor.
  11. Avoid foreclosure prevention companies.  You don’t need to pay fees for foreclosure preventions help, use that money to pay the mortgage instead.  Many for-profit companies will contact you promising to negotiate with your lender.  While these may be legitimate businesses, they often charge a hefty fee.  Contact your lender or a HUD-approved housing counselor to find out about free help that they can provide.

REMEMBER:

  • Don’t lose your property and damage your credit history.
  • Call or write your bank immediately and be honest about your finances.
  • Stay in your home to make sure you qualify for assistance.
  • Arrange an appointment with a housing counselor (most are free).
  • Explore every alternative to keeping your property.   
  • Beware of scams and predatory lenders.
  • Don’t sign anything you don’t understand.

Once you are in foreclosure, you retain control of your property for 6 months, 12 months if you have more than 3 acres.  During this time you can refinance or sell your home.  Everyone has choices.  When faced with foreclosure you must take advantage of all your choices.

Resources:

For a list of other counseling services, visit http://portal.hud.gov/hudportal/HUD

Save the Dream, visit

http://www.michigan.gov/documents/gov/SavetheDream_brochure_230522_7.pdf

HUD Tips for Avoiding Foreclosure

http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure

HUD Avoiding Foreclosure in Michigan

http://portal.hud.gov/hudportal/HUD?src=/states/michigan/homeownership/foreclosure

VA Loan – Avoiding Foreclosure

http://www.vba.va.gov/ro/cleveland/Foreclosure_Alternatives.htm

Home Lending and Foreclosure Rescue Scams

http://www.michigan.gov/ag/0,1607,7-164--134533--,00.html

Foreclosure Prevention Tool Kit

https://www.fdic.gov/consumers/assistance/protection/mortgages/fc-prevention/toolkit.html

Step Forward Michigan

https://www.stepforwardmichigan.org/

 

This page last updated on 7/11/2019.