How Not to Lose Your Home to Foreclosure

How Not to Lose Your Home to Foreclosure

The most obvious way not to lose your home to foreclosure is by always making your payment on time.  That’s a given, but sometimes, things happen.  As a growing number of borrowers fall behind on their mortgage payments.  If you fall into this ever-growing category of homeowners, the smartest move you can make is to contact your lender.

These days, there’s more incentive for companies to work with borrowers to avoid foreclosure: Regulators and lawmakers, prompted by troubles in the mortgage market, are encouraging companies to assist troubled borrowers.

Major lenders in the subprime mortgage market have agreed to a set of principles calling for servicers to try to modify loans before the interest-rate reset if borrowers will be unable to afford the new payments, among other actions.

Lenders also have a financial incentive to keep you in your home: They can lose tens of thousands of dollars for each loan that goes into foreclosure.

Contacting your lender before your situation seriously deteriorates will improve the chances that you keep your home. Consider this: Half of borrowers whose homes go into foreclosure never talk to their servicer.  How crazy is that?

Call your loan servicer:  By doing so, you can try to arrange workout options that will keep you in your home. A lender may be able to modify the loan to make it more affordable in the long term.

The very LAST THING you should do is just not contact anyone and continue to get further and further behind on your mortgage payments.

We welcome your comments or reaction to this advice.  If you have any experience in this category, or advice for any other readers at this site, please leave your comment below.