How to Prevent a Foreclosure On Your Home

Foreclosure Process

After you miss one payment, your mortgage is in default.

Foreclosure proceedings can legally begin if the mortgage is unpaid for 90 days.

Notifications will arrive in the mail, including a Notice of Intent to Foreclose. 45 days after the notice is mailed, the legal foreclosure filing can happen.

The sooner you get help with mortgage problems, the more likely the home will be saved.

Mortgage Payment Options

Generally, mortgage lenders do not want to foreclose. Foreclosure rarely benefits anyone because of the costs involved. Try to work out a payment plan with your lender until your finances improve.

The key is to ask for help early and persistently and get advice from a state-approved housing counselor. They can help you understand your mortgage documents, explain the options you have, and help you negotiate a “Workout Plan” with your lender.

Come to the appointment prepared with settlement paperwork, tax returns, and any notices or invoices from your lender, along with your household budget and list of creditors.

Possible Workout Plans could include:

• Repayment Plan – Catch up by adding a portion of the past-due amount to your monthly payments.
• Forbearance Plan – Your monthly payments are temporarily reduced or suspended. You usually owe more when payments resume.
• Loan Modification Plan – The lender agrees to change your terms in some way. They might reduce your interest, extend the loan payment period, or negotiate the prepayment penalty.
• Partial Claim – The lender may offer a low-interest or interest-free loan through the insurer (FHA or private mortgage insurance) to catch up on the arrearage. There may be small monthly payments. The loan is due when you sell the property or when you pay off your first mortgage.
• Recast Plan (not available with Fannie Mae or Freddie Mac) – You put missed payments at the back end of the loan.

If your lender rejects your proposal, try to negotiate and find out what they might be willing to accept. If it seems unreasonable or unfair, ask to speak with a loss mitigation specialist or supervisor.