Facing foreclosure is a scary proposition. Foreclosure is not something your average person deals with many times in their life. Most people have no idea what to do. The first thing you need to do is take a hard look at the situation and make sure that you really want to keep the home.
There may be any number of reasons that you are facing foreclosure. It could have been caused by a temporary situation, such as a job loss, that has since been corrected leaving you currently able to make the payments but unable to pay past due amounts. Or maybe you had unexpected medical problems and expenses which are all now past. In situations like these, saving your home may very well be the best option. However, if you have incurred a permanent loss of family income, or you owe substantially more than the home will be worth again for many decades, saving the home may not even make sense.
If you have decided to try to keep the home, your first step is to try to negotiate with your lender. Keep in mind that your lender does not want to foreclose on your home if they don’t have to. Lenders are not set up to own and manage homes. Every time a lender forecloses money and time and effort is lost.
So if you have made the decision to work to keep your home, you will need to begin negotiations with your lender. Most lenders or servicers have whole departments devoted to carrying out these negotiations. Most of the time this department is referred to as the “Loss Mitigation Department”.
As the numbers of foreclosures are hitting record highs, the loss mitigation departments of most lenders are completely swamped right now. You need to be completely prepared for the process before you start negotiating.
The very best way to get prepared properly for negotiating with your lender is to locate a HUD approved housing counselor. You can find them through the HUD.gov website. When providing foreclosure counseling, the HUD approved counselor’s services are free. This counselor will help you analyze your budget and determine if you are eligible for any of the government sponsored foreclosure prevention programs. If you are eligible, the counselor will help you put together your application and get the process started.
Even if you are not eligible for any of the government foreclosure prevention programs, the counselor can help you put together the financial case you will use to negotiate with your lender. Remember, the lender does not want to foreclose on your home. However, the loan mitigation specialists who work for the lender see hundreds, if not thousands of cases every month where desperate homeowners are attempting to avoid foreclosure and keep their homes. The numbers make the difference for them. As much as they might want to care about your personal pain, they are simply overwhelmed by the sheer volume of desperate people they must deal with.
The loan mitigation specialist wants to see the case made that you can realistically afford to the payments over the long haul if they agree to change the terms of your loan. This is the real key to negotiating with your lender to avoid foreclosure.