If there’s one thing we believe in at Fair Property Brothers – it’s that you can always turn a negative into a positive. So – can you stop your foreclosure from happening? Of course you can – in certain circumstances and at certain times in the process. Remember – a foreclosure doesn’t define you – and it doesn’t define your future.
Once a homeowner starts to have difficulty paying their mortgage, a peculiar thing happens: they freeze, very much like a deer in the headlights. Often, because they don’t know what to do or where to turn, they simply do nothing at all. If we can impart one bit of wisdom to people it would be this: do something. Don’t ignore the situation hoping it will go away. It won’t. And what we advise first is to go and talk to your lender.
One of the biggest mistakes a homeowner can make is simply not communicating with the institution that holds their mortgage. When a homeowner goes silent, and doesn’t acknowledge the letters or calls they may be getting from their lending institution, they automatically send out a signal that they have no intention of repaying the loan – ever. Silence from you will likely cause your lender to get tougher with you more quickly, rather than try to work out any kind of compromise.
What to do instead? Be open. Be honest. And most importantly – be proactive. This means that – scary as it is – you need to speak with someone at your bank at the very first sign of trouble. In fact – if possible, you should schedule an appointment before you even miss the first payment.
I know this seems counter-intuitive. Speak to your loan institution before you miss a payment? Why and how is that possible? No one can predict the future, who knows what’s going to happen, etc., etc., etc. When it comes to their finances, denial is where most people go first. But if you’re honest with yourself, you actually do have an idea of what your financial picture is, and how grim things really are.
In fact, many homeowners say they actually knew they were in trouble long before they missed their first payment. If you think about it – there are almost always signs of financial trouble ahead. A couple of people may have been laid off at your job, and rumors are circulating that more may follow. A family member may be sick; in fact – it may be more serious than anyone thought at first. Treatment is taking longer than expected – and costing more. Your business may be falling off; profits are down, or your overhead goes up. You keep thinking things are going to improve, but they don’t.
Don’t be afraid to go into your bank and sit down with someone. You will be surprised at how relieved you will feel, and usually surprised at how relieved and helpful your loan officer will try and be as well. The truth is that your lending institution just wants you to pay your mortgage. It doesn’t want your house, and it certainly doesn’t want to go through the trouble of foreclosing on your home and evicting you. When you speak to someone in your loan department – you show good faith, you show commitment, you show that you are someone who wants to turn it around, and a bank can do a lot with that kind of currency, more than you know.
It is always – always in your favor to step up to the plate and level with your bank. Early and quick action on your part will give you an advantage when it comes to negotiating alternatives to foreclosure. Alternatives that may include making different payment arrangements, modifying or renegotiating the terms of your loan, or finding help to bring you current on delinquent payments so you can catch up.