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Foreclosure – Tips for Dealing with Lenders and Creditors
Just a few years ago, families all over the
country were jumping for joy as they happily moved into new homes financed by some form of adjustable rate or sub-prime mortgage. For far too many of them, that joy has become worry and fear of losing their homes. According to a widely published report in June, up to 20% of homeowners with sub-prime mortgages are 60 or more days delinquent on their payments. Sub-prime borrowers are not the only ones facing foreclosure, either. There’s a growing number of homeowners at all credit rating levels who are 60 or more days behind on their payments.
If you’re one of those who is falling behind on payments and possibly facing foreclosure, there are some things that you can do to slow or even forestall the process. Here are several tips for dealing with lenders and creditors when you are facing foreclosure on your home.
Know your rights when dealing with lenders.
Learn about your rights as guaranteed by the law. Creditors must follow specific guidelines that dictate when they may call you, how often they can call you, with whom they can discuss your situation and what they may say to you. Understanding those rights will arm you against abusive collectors.
Open all mail from your lender.
The problem will not go away if you refuse to acknowledge it. Often, the first mails that you receive from your lender will offer information on steps you can take to avoid foreclosure or help you get through a difficult financial time. Some lenders are even willing to “forgive” a month’s payment by extending the term of your loan an extra month, which lets you focus a month’s mortgage payment on catching up other bills.
Try to have your loan modified.
Call the company that takes your loan payments, called your “servicer”, and try to work out a modification to your mortgage. With home values dropping all over the country, many creditors are far more willing to work out alternative terms than they were just a few years ago. You may be able to have the loan extended, get a lower interest rate or switch from an adjustable to a fixed rate mortgage. Most companies would rather find a way to work things out than deal with the expense and hassle of a foreclosure.
Contact a HUD-approved housing counselor.
Housing counselors approved by the U.S. Department of Housing and Urban Development can explain your mortgage rights and loss mitigation options to you, help you understand your options and even represent you in negotiations with your lender. You can get a list of HUD approved housing counselors at the HUD web site.
Turn to for-profit “foreclosure prevention” companies only as a last resort.
A HUD approved housing counselor will offer all the same services that you can get from a foreclosure prevention company for free. Don’t pay for those services unless you have no other choice to avoid imminent foreclosure.
Basic Tips for Dealing with Creditors and Lenders
- ALWAYS get the full name of any person with whom you speak at your lender’s firm.
- Keep copies of all communication between you and your creditors.
- Try to remain calm and firm when discussing your situation, but don’t allow yourself to be bullied by collectors.
If you believe that you were a victim of predatory lenders, or that collectors are bullying you with threats, don’t hesitate to contact a local lawyer who deals with foreclosure and mortgage abuse cases.
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