How to Avoid Foreclosure and Talk to the Bank

Perhaps you have recently been laid off, you are facing a debilitating disease or you have some other reason for not having the money to pay your mortgage. Even the most patient of lenders will eventually foreclose on your home--that is, unless you talk to them about your predicament and make other arrangements.

Instructions

1

Talk to your lender before you miss the first payment if at all possible. Too often, borrowers wait until they have missed a payment or two before they get enough courage to talk to their lender, and by then it may be too late. Discuss ways to forestall foreclosure, such as making the payments you have missed come due at the end of your mortgage, which will bring you up to date.

2

Always take a call from your lender, particularly if you have been late making payments. If you don't, most lenders have no choice but to foreclose on the property because you have not given a reason otherwise. Besides, by not taking his call, you have missed an opportunity to talk about alternatives.

3

Have a plan. For example, agree to pay only the interest on your mortgage until you have righted your financial state. If the lender has assessed penalties because you have missed payments, ask her whether she is willing to waive them. Or, if the prevailing interest rate is less than when you first took out the mortgage, talk to the lender about refinancing. By doing so, you'll be starting fresh, and your monthly payments will be lower.

4

Put your plan in writing and ask your lender to also put his response in writing. Finding alternatives to foreclosure is often a complicated process, and not every lender will keep his end of the bargain.

5

Be knowledgeable about your state's laws involving foreclosure. Some states allow lenders to foreclose based on a clause in the note where you waived the right to be notified. There are also some states that allow lenders to come after borrowers if the sale proceeds of the property are less than the note's current value.

6

Get credit counseling and other help from your state and federal government. See the Web site of the Department of Housing and Urban Development (HUD) for counselors in your state. In addition, there are likely some state programs available that can help you avoid foreclosure.