Foreclosure Looming? Here’s How to Avoid It

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The foreclosure clock is ticking for Patricia Jennings. She has missed three months of mortgage payments on her Pontiac, Michigan, home. She owes $1,800, but she has been out of work since November.

So she put up a For Sale By Owner sign on her home. And recently, Jennings tried to get more answers on the foreclosure process during a seminar run by the Detroit branch of the Federal Reserve Bank of Chicago and others.

Tamara Orza-Ramos, resource-development coordinator for the Oakland Livingston Human Service Agency in Michigan, told homeowners at the seminar that the first step to avoiding foreclosure is to work out an emergency budget by cutting spending — and if possible, increasing your income.

“At this time, your priority should be to keep your home,” she said.

Homeowners need to keep up with the mortgage payment, utilities, auto insurance, health insurance and groceries.

Another option: If you have a student loan, you may apply for a deferment for economic hardship or un-employment to suspend making payments for a limited time. See salliemae.com for details.

You do not want to just skip a student-loan payment. Instead, get a deferment. The quicker you act, the easier it may be to prevent foreclosure.

Alert the mortgage lender immediately. Be as pleasant as possible. Talk to someone in the loss-mitigation department, not collections.

Here are some other tips for avoiding foreclosure:

Make an appointment with a housing counselor approved by the U.S. Department of Housing and Urban Development at 1-800-569-4287.

Go to www.hud.gov/foreclosure for a brochure that explains how to avoid foreclosure.

Stay away from foreclosure scams. Don’t sign up with a service that charges you upfront to fix the problem.

If you’re selling the house yourself to avoid foreclosure, check out the buyer. Scam artists offer to buy homes, too. Don’t fall for a buyer who rushes you into signing over a deed. HUD warns that the so-called buyer might collect rent for a while, not make any mortgage payments and then allow the lender to foreclose. Remember, signing over your deed to someone does not necessarily relieve you of your obligation on the loan.

Go to aarp.org for tips for reverse mortgages — one possible option for those 62 or older who have equity in their homes but trouble paying their bills. The Web site also offers tips on avoiding predatory lending.

via Orlando Sentinel
Syndicated with permission.