Contact your lender or loan servicer as soon as you realize you may have a problem and may have missed a payment. Studies show that at least 50 percent of all consumers that have defaulted on a mortgage or missed payments never contact their lender. This is a mistake. Lenders can discuss options with you to help you work through payments during difficult financial times. Lenders prefer to have you keep your home and most will work with you. Be honest with your lender about your financial circumstances. For more information about contacting your lender, refer to www.hud.gov/foreclosure.
Gather information. Learn all that you can about your mortgage rights and foreclosure laws in Florida. Review your loan documents to determine what your lender may do if you can’t make your payments. Review Florida laws, particularly Chapter 702, Florida Statutes and Section 45.031, Florida statutes to learn about foreclosure proceedings. Attend a foreclosure prevention information session. Information on local sessions may be available on http://www.freddiemac.com/avoidforeclosure/workshops.html#FL.
Contact a nonprofit housing counselor. Help and information is available to you free of cost. The HOPE NOW alliance provides a 24-hour hotline to provide mortgage counseling assistance in multiple languages. 1-888-995-HOPE. You may also obtain a list of HUD-approved counseling services in Florida at http://www.hud.gov.
Understand the relevant terms: If you are working with your lender or an approved housing counselor to keep your home, there are several options:
- Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund, or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
- Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.
- Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
- Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable.
If you and your lender agree that you can not keep your home, there may still be options to avoid foreclosure:
- Short Payoff: If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.
- Deed-in-lieu of foreclosure: A deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors, or tax liens.
- Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
- Refinancing: While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.
Avoid foreclosure prevention or loss mitigation companies. If you fall behind in your mortgage payments, many for-profit companies will contact you promising to help you avoid foreclosure. Some may even appear to be affiliated with your lender. Many also list their services on the internet and ask that you fill out a referral form online. It is best to avoid dealing with these companies. Most will charge you a hefty fee upfront for information that your lender or a HUD approved counselor will provide to you for free. You can obtain the same workout plan or a better plan for free by contacting your lender or a HUD approved counselor. Use your money to pay the mortgage instead.
Do not fall victim to a foreclosure recovery scam. If any business or individual offers to help you stop foreclosure immediately by signing a document authorizing them to act on your behalf or to set up financing for you, do not sign without consulting a professional (an attorney or HUD-approved counselor). This may be a trick to get you to sign over title to your home. You are then vulnerable to losing your home and all of your equity in your home to the so called “rescuer.”
Carefully examine your finances. Can you cut spending on optional expenses, delay payments on credit cards or other unsecured debt until you have paid your mortgage? Do you have assets that you could sell to help reinstate your loan? Can anyone in the household get a second job to help with income? These efforts to manage your finances may help you find income to apply to your outstanding payments and will demonstrate to your lender that you are willing to work on your finances and make sacrifices in order to keep your home.
For more information contact the AG consumer hotline at 1-866-966-7226 or visit http://www.hud.gov for these and other helpful tips.