The Do’s and Don’ts when Facing Foreclosure
Facing foreclosure is a stressful and heart wrenching situation. Homeowners caught in this difficult position come to my office daily for assistance. Though each client”��s case is different, I have distilled some do”��s and dont”��s for anyone who is (or may soon be) facing foreclosure.
1. Don’t Wait to Talk to Your Lender
This advice is no different from the common wisdom that our parents tried to instill in us. If you are a homeowner who cannot pay your next mortgage payment in full, contact your lender immediately. Most lenders will be happy to work out a payment plan for you if you have fallen slightly behind or are about to. Burying your head in the sand and denying the situation will only make matters worse. Surprisingly, most lenders are very cooperative at this early stage if you reach out to them. If they are not cooperative, you may want to move to the next step.
2. Do Act Quickly
If you are facing foreclosure and wish to apply for a loan modification, short sale, or deed in lieu, your chances are always easier when you act quickly.
If the foreclosure process has begun, keep in mind that it is usually lengthy. Foreclosure laws in many states require ample written notice and a waiting period to proceed with a foreclosure sale. Take advantage of the early warnings; contact your lender or a professional for assistance; whether it is free or paid. The earlier you begin, the earlier you will know if your lender”��s response is positive or negative. Many of your options (such as a loan modification or short sale) can take several months. If the answer is “��No”��, then you can move on as soon as possible onto your next option.
3. Do Not Try to Negotiate with the Trustee
Once the foreclosure process has begun, you will receive written notice from the Trustee (aka “��the foreclosure attorney”��). The trustee”��s contact information is usually on the first document you will receive once you are more than 30 days delinquent.
Though trustees hold themselves out to be open for communication, they are hopelessly non responsive to the homeowner. The trustee”��s client is the bank, not you. The trustee”��s conduct will make this reality very apparent. I urge you to contact your lender directly and only contact the trustee to confirm that they have received the proper instructions from the bank.
4. Don’t Think the Foreclosure Will Not Go Forward Just Because they are Reviewing Your Request
This point could be the big exception to the last piece of information.
If you are in workout for a loan modification or a short sale, many lenders will very often tell you that the foreclosure sale date has been cancelled or suspended. However, I have seen far too many cases where homeowners are told this only to later rudely find out that their home went to foreclosure anyway. The reason for this awful situation is simple yet profound. Oftentimes, a bank will instruct the trustee to hold off on a sale when a homeowner applies for a loan workout or short sale. However, rather than actually suspending the foreclosure process, the trustee will actually just postpone the sale date.
If the bank does not provide proper instructions every time a new sale date comes up, then the trustee will proceed with the sale. Far too many homeowners are losing their homes to sale because the bank fails to provide proper instructions to the trustee in time. Sometimes, the banks will claim that they sent the instructions while the trustee claims not to have received them. Welcome to foreclosure hell, where the lenders pass the buck, and the mess becomes everyone else”��s problem!
It is in your best interest, while in a loan workout or short sale, to obtain the current trustee sale date and urge the lender to provide timely instructions to the trustee. taking it one step further, contact the trustee and ask if they have a new foreclosure date. when that date approaches, make sure that the trustee has received instructions from the bank to postpone. if the trustee shows no such instruction, contact the lender and make sure that they provide such instruction.
The right hand is not communicating with the left hand; that job has been left to the homeowner.
5. Do Respond Quickly to Requests from Your Lender
If you apply for a loan mod. Or short sale and your lender asks for additional documentation, don”��t delay. Move quickly to get your lender what they need. You will only cause further delay by waiting, or worse, your lender could cancel your application for assistance.
6. Don’t Do it Yourself
Working with your lender is a full time job. Get help, whether it’s free or paid. A large part of seeking cooperation from your lender will involve simple persistence on your part. Persistence is time consuming (and personally consuming). Don”��t do it yourself, find help.
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