Home Loan Advice

If your financial situation is leaning toward a pre-foreclosure situation now is the time to take action to preserve your home and your finances. Sometimes you can negotiate better terms and sometimes you can’t but if you don’t make the effort to repair what you can then your situation will be much worse.

Perhaps the most important thing you can do when you’re facing a pre-foreclosure is to contact your lender. This can be difficult for people to do because of the shame and stress associated with a difficult financial situation. When you contact your lender about your financial situation you will probably start with the customer service number on your mortgage statement. However, this may just be a service company who’s acting on the behalf of the actual lender. Make sure that you ask them if they’re the actual company who holds the loan or if they’re simply servicing the loan. If they’re a service company, try to get a number for the loss prevention department at the actual mortgage holder and contact them. Sometimes you may need to speak with a supervisor to obtain this information. If it’s the loan holder that you’re speaking with, start with customer service although you may need to move up the corporate ‘food chain’ as your case progresses.

If you’ve received a default or intent to foreclose notice it is quite important that you deal with it as soon as possible. Contact the number on the notice after you gather all the information you need. You don’t want to be on the phone with them unprepared or stressed out. Get organized and put yourself in a calm frame of mind. When speaking with them, keep your voice low and calm as best you can. This will help you stay calm even though you’re sure to be stressed and will make them less likely to try collection intimidation tactics on you.

Before calling make sure that you have a game plan in place to explain how you will deal with the pre-foreclosure situation that you find yourself in. You should have complete knowledge of your current income and expenses. You’ll need to know how much equity, if any, you have in the home. Be prepared to explain to the lender why you missed your house payments. If you’ve had a temporary setback, like a health problem or job loss, explain this to them and let them know what steps you’re taking to get back on your feet financially.

Also, try to come up with a reasonable plan to present to the lender prior to your call. If you can afford to pay for your home, make a reasonable payment proposal that’s feasible for both you and the lender. If you feel that you can’t afford to pay the mortgage as it is, let them know this as well. Then you can work through the alternatives to foreclosure that might be available to you. For example, the “Making Home Affordable” government program, that went into effect on March 4, 2009, provided $75 billion in incentives for lenders to assist in refinancing loans for troubled borrowers. Mortgage lenders may have other options too and are more willing to work with borrowers in today’s economy. Even though you may still lose your home the financial and credit repercussions will be less.

You will want to keep a record of all contacts you have with your lender. You should note the date and time of the call as well as the name of the person you spoke to and their title and department. Having good documentation of your communication is essential to getting a good outcome in a pre-foreclosure situation.

If you feel that you can’t handle this situation well yourself, then you should enlist the aid of a legitimate housing credit counselor. These counselors are trained to assist borrowers who’re facing foreclosure with sound financial advice and are certified by the Department of Housing and Urban Development. You can find a list of certified counselors at the HUD web site. Other national groups that can assist borrowers with credit problems include the National Foundation for Credit Counseling, Neighborworks America and Hope Now. Make sure that you deal with a certified, non-profit, housing credit counselor and be careful about scammers posing as such.

I hope that this article will help you if you’re facing a pre-foreclosure.

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