Prevent Foreclosure

If you fall behind in your monthly house payments, the seller or lender may try to take the house back. This is generally called foreclosure. If a house is foreclosed, you may lose not only your house, but also all of the money you've invested. A foreclosure or a deficiency judgment could seriously affect your ability to qualify for credit in the future. Avoid this if at all possible.

Ways That You Can Prevent Foreclosure

• Early intervention is the key! If you’re having trouble making your monthly mortgage payments, contact your lender immediately. Don't wait!
• Don't ignore letters from your lender.
• Clearly explain your situation. Write down who you spoke to, the date, and what was said.
• Be prepared to provide your lender with your current financial information, such as your monthly income and expenses.
• You can stop the foreclosure by making up any delinquent payments plus any costs related to the foreclosure.
• Remember to use registered or certified mail in all your correspondence on legal matters.

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What Are Your Alternatives?

• Special Forbearance. Your lender may be able to arrange a repayment plan that would be based upon your current financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you've recently experienced an involuntary reduction in income or an increase in living expenses.
• Mortgage Modification. You may be able to refinance the debt and extend the term of your mortgage loan. This will help you catch up by possibly reducing the monthly payments to a more affordable level. You may qualify if you've recovered from a financial problem but your net income is less than it was before the default.
• Partial Claim. Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current, if you qualify.
• Pre-Foreclosure Sale. This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating. If you're unable to afford the house long-term, you may sell the house yourself before the foreclosure sale and save some of your equity.
• Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but may help your chances of getting another mortgage loan in the future.

TIP:

If you're a senior citizen or are disabled and are facing a foreclosure action because of unpaid property taxes or special assessments, you may be eligible to postpone payment of your property taxes or special assessments under two programs in Washington. Contact your local County Assessor’s Office or an attorney for more information.

TIP:	Lenders don't have to accept all proposals and are not obligated to do so. So don’t wait till the last minute to contact your lender.

TIP:	If the lender refuses to take partial payments, you should put this money aside to help negotiate with the lender later.

TIP:	The foreclosure process will continue despite the possibility of a workout agreement. Therefore, you should not wait to hear back from the lender, you should contact the lender early and try and come up with a solution as soon as possible.

How Do You Know If You Qualify For Any Of These Alternatives?

Contact your local housing counseling agency for help in determining which, if any, of these options may meet your needs. You should also discuss the situation with your lender.

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Should You Be Aware Of Anything Else?

Beware of scams! Solutions that sound too simple or too good to be true usually are. If you're selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty. Be especially alert to the following:

• Equity skimming. This type of scam involves a “buyer” approaching you and offering to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, doesn't make any mortgage payments, and allows the lender to foreclose. Remember that signing over your deed to someone else doesn't necessarily relieve you of your obligation on your loan.
• Phony Counseling Agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your lender, or pursuing a preforeclosure sale. If you have any doubt about paying for such services, call a HUD-approved housing counseling agency. Do this BEFORE you pay anyone or sign anything.

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Precautions You Can Take

Here are several precautions that should help you avoid being “taken” by a scam artist:

• Don't sign any papers you don't fully understand.
• Make sure you get all the "promises" in writing.
• Signing over the deed to someone else doesn’t necessarily relieve you of your loan obligation. If your name is still included on the documents, you’re still liable for repaying the loan.
• Check with your lawyer or your mortgage company before entering into any deal involving your home.
• Check to see if there are any complaints against the prospective buyer if you’re selling your house. You can contact Washington State’s Attorney General’s Office or the Real Estate Commission for this type of information.

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Points You Should Remember

• Don't damage your credit rating by losing your home.
• If you get behind on your payments, call or write your mortgage lender immediately.
• Stay in your home to make sure you qualify for assistance.
• Arrange an appointment with a housing counselor to explore your options.
• Cooperate with the counselor or lender trying to help you.
• Explore every alternative to losing your home.
• Beware of scams.
• Don't sign anything you don't understand.
• Remember that signing over the deed to someone else doesn’t necessarily relieve you of your loan obligation.
• Act now! Delaying can't help. If you do nothing, you will lose your home, the money that you've put in your home, and your good credit rating.

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