While the economy is starting to recover from the economic crisis that swept the globe several years ago, the effects of the housing bubble are unfortunately still lingering. Many individuals are still under water on their mortgages, and unemployment or lower incomes are causing some people to miss mortgage payments. The further you get behind on a mortgage, the more likely your lender will issue a Notice of Default, which is the first step to foreclosing the property and removing you from your home. If you are already having trouble meeting your mortgage obligations and you think you might be heading into foreclosure, here are some steps you can take.
Talk with your bank. Take control of the process and be proactive in reaching out to your lender. If you explain your situation, they might be receptive to modifying your loan or putting together another solution that will allow you to stay in the house while you rebuild your financial foundation. A foreclosure is painful and messy for the bank, too, and they will try to work with you to help avoid it.
Document everything. While personal connection and friendliness are great, you need to back them up with documentation. Proper documentation will help immensely with a foreclosure defense, should it become necessary. Be sure to note the date and time of each call to your bank, who you spoke with (including any kind of employee code), what you spoke about, and what the stated next steps were at the end of each call. Additionally, things like loan modifications require documented financial hardship before the process can begin. Gather any documentation you can that shows you are in worse financial position than when the loan was originally drawn up. Things like job loss notices, medical bills, unemployment forms, divorce papers, and other such forms are all good examples of documented financial hardship.
Review your options. In addition to loan modifications, there are other options that you can use to avoid foreclosure. You could enter into a short sale, which is a good option if your home is currently worth less than what you owe on it. You might consider a deed in lieu, which basically transfers ownership of the property back to the bank in return for releasing you from any further payment obligation. Many times, deeds in lieu will also include occupancy provision that allow you to remain in the property while you secure another living situation.
Get an attorney. Perhaps the most important thing to do when faced with potential foreclosure is hire an experienced real estate attorney. You need someone who can read and understand the complex language that goes into these financial documents. You need someone who will fight for your rights and your best interests. You need someone who can advise you as to your best course of action, as well as what the pros and cons of each option are. An attorney will be your best line of defense against a foreclosure.
This post was written for Cahn Roundup by Stephen Hachey. Stephen is real estate attorney specializing in loan modifications, foreclosure defense, short sales and much more. He is also the owner of his own practice, The Law Offices of Stephen K Hachey. This article is for general purposes only and does not establish an attorney-client relationship. Please contact a licensed attorney in your area. You can follow Stephen on Google, Twitter, LinkedIn, and FaceBook.