Avoiding Home Foreclosure

Foreclosure is the process by which a lender takes a home because the borrower is not paying their mortgage. Foreclosures are at an all-time high; in fact, they increased 42% last year. Some is due to life events - the loss of a job, death of a loved one, or divorce, for example. Most is likely due to predatory lenders. However, one thing I'm certain of is that many foreclosures could be avoided if people had any idea what to do when this situation presents itself. As a Realtor, I admit it's not exactly something I'm wild about explaining when people are in the excited stage of buying a new home. "Oh, by the way, if you both lose your jobs in a year and can't pay your mortgage anymore, here's what to do!" However, if the loan officers are not doing this, then maybe we need to be.l

The following article is a good synopsis of steps to take when facing foreclosure:
http://biz.yahoo.com/weekend/foreclosure_1.html

The keys seem to be:
1. Call your lender. It may seem obvious, but it's human nature to hide from people you owe money to that you can't pay. Lenders don't want to foreclose - it's costly and a pain in their rear. If you call them and let them know the situation, many will work with you.
2. Call your real estate agent. If you have equity in your home, you may be able to sell and get out ok. If you financed 100% of the home and haven't built any significant equity, you still may be able to sell and get out. Often, a lender will accept a "short sale" or a "short payoff," meaning they will take less than they're owed if you can sell the home rather than them having to go through the foreclosure process. Make sure your Realtor knows how to orchestrate a short sale.

Hopefully this information is helpful. If you know someone in this situation, have them call me for more.