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7 Things You Should Never Do When Facing Foreclosure

Going through foreclosure for most homeowners is a new experience. In most cases, new experiences carry some form of uncertainty and anxiety.

That’s a reason why homeowners are more like deer’s caught in headlights, not knowing what to do.

One of the first things you should do, is take action and control of the situation.

To help you navigate the foreclosure process, we have compiled seven things you should never do when facing foreclosure.

Don’t Sit Around and Do Nothing

As we said above, facing a foreclosure can be difficult, but sitting around waiting for something to happen won’t make the situation better.

Even if you plan to let the home foreclose, you need to figure out your new living arrangements.

There are going to be things that you need to do, so get moving and start solving your problems before they stack up.

Don’t Ignore Your Mortgage Provider

I know many people think ignorance is bliss, but thinking like this will put you in a tougher circumstance.

When your mortgage provider starts reaching out to you, it’s time for you to answer and not ignore them.

Remember, your lender doesn’t want to foreclose on the property. They are in the business of making money through loans, not selling houses.

Typically the lender is reaching out to you to explain any options you have to avoid a foreclosure. So, it’s wise to hear what they have to say.

Don’t Pay Shady Companies to Help You

Foreclosure rescue companies who require hefty fees upfront to help you, are mainly trying to scam you out of your money.

Because the rising rates in foreclosure due to the coronavirus and other factors, many of these companies will be growing in number.

They use a wide variety of scams that target people of all ages and communities.

They claim to be able to “save your home” but are more interested in generating a quick profit by taking the equity out of your home or evicting you from it.

If you need counseling or help to understand the foreclosure process, you can contact a HUD-approved housing counselor in your area.

Don’t Move Out Early

If you leave your home abandoned, you forfeit the chance of living for free during the foreclosure process.

Living in your home can be a great way to save some cash for the future.

Also, you are still responsible for the property until the foreclosure process ends.

The last thing you need on your plate is a professional squatter taking residence in your home.

The bad thing is, you can find how-to and self-help videos online on how to be a professional squatter.

Don’ Make Payments to Anyone Besides Your Lender

This one is self-explanatory. You shouldn’t make payments to any third party, no matter how trusting you think they are.

You have been making payments directly to your lender, so continue to do so.

Don’t Wait to Try and Save Your Home

Don’t wait till the last minute before you try to save your home. The longer you wait, the harder it will be for anyone to help you.

The foreclosure process can be long, anywhere from three months to a year in some cases.

There is plenty of time to get the information you need to execute the best plan for you.

Don’t Give up

There are many resources available to you. Reach out to your lender to see what options you have. Also, contact your HUD-approved counselor for help.

Here is a short list of options that may work for you.

  • Forbearance: This is when your mortgage servicer or lender allows you to temporarily pay your mortgage at a lower payment or pause paying it.
  • Repayment: If you are currently up to date paying your mortgage but you have a past due amount. You could qualify for loan repayment, where you spread out your past due amount over several months in order to bring your mortgage current.
  • Loan modification: This is a change made to the terms of your current loan by your lender. This may include a reduction in your interest rate, repayment extension, a different type of loan, or a combination of them.
  • Reinstating the loan: This occurs when the lender brings the delinquent loan current in one payment.
  • Refinance for better terms: This occurs when you refinance your current loan to get favorable terms.
  • Short Sale: When a financially distressed homeowner sells their property for less than what is owed to the lender.
  • Deed In lieu of foreclosure: This is a document that transfers the title of your home to the lender in exchange for not having to pay the mortgage debt.
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