At the time you’re facing foreclosure, the primary step you ought to take is to contact your bank. It is considered to be the best option if you do this prior to actual foreclosure proceedings. However, when this occasion arrives, it is not too late to have a meeting with the loss mitigation department with your bank or institutional mortgage holder. Should you be able to establish that your intention is to get your mortgage loan back in good standing your lender may decide to delay any foreclosure actions by offering a forbearance agreement or connecting you with government sponsored loan modification programs. This is especially likely if you can show that your financial troubles are just momentary.

Still, even if your lender seems eager to work with you, keeping your home may not be in your best financial interests. If you are experiencing extended economic hardships, it may be in your best interest to put your house up for sale prior to it entering into foreclosure. It is important for you to speak to your lender prior to reaching this decision. They may have the same opinion based on your situation and may be able to assist you in working out the details of a pre-foreclosure sale. As a matter of fact, they may choose to delay the process of seizing your home while you try to find a buyer. Think about it, they want somebody in the house who can make the payments more than they want a empty house making them no money at all. When listing your home as a pre-foreclosure, you can put it up for sale yourself as a “for sale by owner” if you want. However, it is best to find a local real estate professional who specializes in pre-foreclosure and short sales.

Also, you can expect to be contacted by prospective buyers and investors. When you are delinquent on your mortgage and your mortgage holder begins foreclosure procedures this information is placed in your local legal notices newspaper. A number of savvy investors who are specifically specialized in investing in pre-foreclosure properties find and contact troubled homeowners using this information. Although having a stranger show up on your doorstep or call you on the phone offering to buy your home may seem strange it is a choice that you may wish to seriously consider if the offer is good enough. Unfortunately, some of these people can be quite discourteous and ill-mannered and some can be scam artists so be cautious in dealing with them.

An additional option that a homeowner has during foreclosure to employ an attorney who specializes in helping troubled homeowners manage this situation. A lawyer can counsel you on what steps you should take given your particular situation. They can aid you in recognizing and understanding the pros and cons of pre-foreclosure sales, short sales, foreclosure and bankruptcy. In some cases, they can help you find mistakes made in your original home loan paperwork that may give you a way to avoid or at least significantly delay foreclosure.

Some states’ laws include a redemption period provision. These are intended to assist homeowners when it’s necessary to provide them with an opportunity to avoid foreclosure. These laws offer you a grace period to regain your home. If you are able to get your mortgage payments caught up, the foreclosure proceedings will come to an end. States that have these laws on the books frequently allow you to reclaim your property although it has been sold at a foreclosure auction. This is, of course, provided that you take the appropriate action within the legally mandated time frame.

If you live in a state that does not have a specified grace period or a redemption period, you could have the option of purchasing your house yet again. Anyone can place a bid at a foreclosure auction, however, it is important to note that you will have to have a significant amount of cash on hand in order to purchase your home at a foreclosure auction. And there could be other bidders present who will bid up the price. Sometimes your financial institution will be represented there as well. Provided the bids received are not sufficiently high to cover their costs, they might purchase the house themselves and place it on the market as a REO home.

I hope this article has given you a good overview of some of your foreclosure options. As always, if you have any questions concerning foreclosures, feel free to ask below.

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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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