SACRAMENTO, Calif.--(Feb. 12, 2007)--Homeowners in financial trouble can lessen the chances of losing their property to foreclosure with a few simple steps.
It all starts with talking to their lender. “If you run
into financial trouble and have trouble meeting the monthly
mortgage payment, call up your lender. Talk about it with
them,” says Alexis McGee, president of ForeclosureS.com
a California-based real estate investment advisory firm
that has been analyzing housing markets, providing foreclosure
lists and learning programs, and assisting investors since
1992. “Lenders often are willing to put together a workout
plan, especially if someone has good credit and/or a good
job. Even if they don’t, there are other options to losing
everything at a foreclosure auction on the courthouse steps.”
“You would be amazed at the number of people who fall behind on their mortgage payments and lose their homes to foreclosure that never bothered to call their lender until it was too late,” says McGee, author of the upcoming book, “The Foreclosures.com Guide to Investing: Making Huge Profits Investing in Real Estate – Without Selling Your Soul” (John Wiley, Spring 2007).
In fact, 61 percent of late-paying borrowers were unaware of workout options with their mortgage, according to a 2005 Freddie Mac/Roper Public Affairs and Media survey of delinquent borrowers.
Among the options that may be available to a homeowner in default:
- Working with a real estate professional to find a homebuyer.
- Working with a mortgage broker to get a new loan.
- A workout plan with their present lender.
- Rewriting their existing loan with the same lender.
- Selling their home to an investor before the foreclosure auction to provide
cash for their equity and a new start, and repair their
- Filing bankruptcy to defer the foreclosure (beware long-term negative credit
- Doing nothing, losing their home along with their equity at the foreclosure
auction, and destroying their credit.
Don’t wait to the last minute to think about selling your home, either, says McGee. “If you run into financial difficulties and after contacting your lender a workout or new loan doesn’t materialize, get serious NOW about selling. You’re more likely to get full market value for your home if you have time to sell it--generally a minimum six weeks assuming no delays or hassles with a buyer’s financing.”
Beware the scam artists and sharks who prey on unsuspecting homeowners in default, too. Often they demand cash for their services upfront, promise the moon, change their tunes regularly, and leave you with nothing. Talking to your lender—or any other lender--is a homeowner’s right and it’s free. All it takes is a phone call.