Top 5 leading causes of foreclosure
a. temporary job loss
b. illness or injury
d. expensive repairs
TO AVOID FORECLOSURE IN 2017:
1. Do not ignore the “default” letters in the mail, because the further behind you become, the harder it will be to reinstate your loan. Open and read and respond to all mail from the lender.
2. CA Senate Bill 1137 requires that the lender call you if you are late on your payments. Expect a call from your lender.
3. Contact your lender as soon as possible. Explain your situation.
4. Make your mortgage payments on time to avoid late charges.
5. Read, read, read, your promissory note and deed of trust so that you know what the lender can do if you default.
6. Understand foreclosure prevention options by talking to the HUD approved housing counselor at 1.800.569.4287.
7. Do not pay fees/money to credit repair services, because most are scams. Instead get free advice - go to Federal Trade commission at www.ftc.gov/bcp/conline/pubs/creditrepair.shtm
8. Do not pay fees/money to any "foreclosure rescue company" (scammer) because
they will not pass on the payment to your lender. Instead get free advice at http://www.ftc.gov/bcp/edu/pubs/consumer/credit/cre42.shtm
9. Help yourself prevent a foreclosure from occurring, using FHA Secure that allows homeowners with a history of on time mortgage payments under their original interest rates, but who missed payments after their rates reset, to refinance into FHA’s mortgage insurance program. Other homeowners with high cost mortgages & mortgages that are due to reset, but who are still current on their loans may also be able to refinance through FHA Secure. Call an FHA lender who can help you keep your home by calling 1.800.225.5342.
10. Take advantage of the free home loan counseling opportunities made available at 1 888 995 HOPE (4673) by the Homeownership Preservation Foundation.
11. Ask your boss for a raise.
12. Get a job, or a 2nd job to pay your mortgage.
13. Cut down on restaurant lunches & save money for mortgage payments.
14. Get rid of the stuff you don’t absolutely need: extra phone line, extra TV channels you never watch, magazines subscriptions...
15. Get rid of your gas guzzling car and buy an energy efficient car.
16. In the summer, raise your home thermostat, and in the winter, lower your home thermostat, to save energy.
17. Cut your own grass, clean the house yourself...
18. Ask the lender to allow you to skip 1 to 3 payments; most lenders will allow this.
19. Ask the lender to allow you to pay 1/2 of the loan payments for 6 months. After paying 1/2 payments for 6 months, start paying 1 1/2 payments for 8 months, to get back on track; some lenders will allow this.
20. Ask the lender to allow you to pay interest only (no principal) for the next 12 months.
21. Ask the lender to add your missed/defaulted back payments to your loan.
22. Ask the lender to let you skip 3 payments, & pay them at the end of the loan; many lenders will allow this.
23. Ask the lender to let you spread out the repayment of the missed/defaulted payments over a year or until you catch up.
24. Give to your lender a “catch up plan” or “forbearance plan”, meaning offer to lender to pay 1.3 loan payments when each payment is due, to eventually catch up and reinstate the loan & thereby stop foreclosure.
25. Ask the lender to postpone the foreclosure while you keep property tax & fire insurance up to date & pay 1.3 loan payments each loan payment, until you eventually fully reinstate the loan & thereby cancel the foreclosure status.
26. Refinance the loan at a cheaper interest rate, to lower your payments.
27. If you are over 62 years of age and have equity in your home, get a reverse mortgage.
28. Convince the lender to take a discount or loss on the loan and list your property with a Realtor to do a short sale.
29. List & sell your property with a Realtor, before the foreclosure auction occurs.
30. Do a “deed in lieu of foreclosure”, meaning transfer the deed of your house to the lender & walk away free & clear of debt, liability, & property.
31. Prevent foreclosure on one property by borrowing cash on another property you own, if it has enough equity in it.
32. If you have enough equity, get a new loan and pay off the defaulted “in foreclosure” loan.
33. Use your savings account money to reinstate the loan in foreclosure.
34. Get cash from your life insurance and use that cash to pay the defaulted loan.
35. Learn how to budget your finances to prevent foreclosures. Learn how to balance & reconcile your checking account and avoid writing bad checks.
36. Prioritize your debts (rank them in a list by importance) and put your home mortgage loan payments at the top of the list.
37. Stop entertainment expenditures, unused memberships, manicures, movies, night club, restaurants, gambling, lottery...
38. Sell all your stocks and apply the sales proceeds towards paying your property taxes & fire insurance & mortgage loan payments.
39. Ask your family or friends for a loan.
40. Ask your spouse and teenage children to get a job to help with the mortgage.
41. Sell your jewelry or unused gold at home, & use the sale proceeds to pay the mortgage payments.
42. Have a garage sale and sell everything you do not use regularly.
43. Rent out rooms in your home.
44. Prioritize your spending and after health care, do not spend any extra money on anything except your mortgage.
45. Sell your second car.
46. Do not pay fees to any foreclosure prevention companies; instead use that money to pay your defaulted mortgage loan.
47. If you live in an area declared a disaster by the President (such as flood or fire) you may qualify for special government aid. Ask the HUD counselor.
48. If you are in the military, you may qualify for a reduction in your interest rate, resulting in lower payments, as stated in federal laws.
49. Be aware that lenders do not want to foreclose, because foreclosure usually results in lender losing much money, so contact your lender as soon as you have a problem.
50. Do not sign anything that your do not understand and do read & understand everything you sign.
51. Establish a savings reserve to cover at least 8 months of home debt payment in case of emergency.
52. If you are going to be laid off in the future, then start now looking for a new job.
53. If you miss loan payments and have a foreclosure, you have 2 derogatory remarks on your credit report. If you miss loan payments and have a foreclosure & file bankruptcy, you have 3 derogatory remarks on your credit report, because usually or frequently the bankruptcy does not permanently stop a foreclosure but only slows it down.
54. Always check with your lawyer before you sign legal documents.
55. Do not wait until the last minute to decide to sell your house. Be proactive and cut your losses.
56. Remember, the only “real” thing that will stop a foreclosure is repayment of the debt and defaults and full reinstatement; everything else (including bankruptcy) is just a costly delay.
57. If your monthly house payments (including loan, property tax & fire insurance) do not exceed 45% of your gross monthly household income, it should be possible for you to pay for your home.
58. Does a lis pendens prevent a foreclosure? No, a lis pendens does not prevent a foreclosure. Only payment of the debt or reinstatement of the loan prevents a foreclosure.
59. Shop for cheaper home fire insurance & auto insurance by getting a quote from 4 different insurance agents & apply the savings toward paying the property taxes & fire insurance payments & mortgage loan payments.
60. Do not use your home as an ATM machine by refinancing to spend on "impulse buys".
61. If you are refinancing, do avoid all balloon payment loans, all variable interest rate loans & all prepayment penalty loans, because these features can/do frequently cause foreclosure and harm you.
62. If you are refinancing, do avoid all loans that force you to pay for credit insurance, credit life insurance, disability insurance, unemployment insurance, health insurance, because frequently these programs are costly scams.
63. Remember, the lender can start foreclosure if you default in paying the property taxes or the fire insurance or the home loan payments, so pay them to prevent a foreclosure.
64. If you are a senior citizen or are disabled and are facing foreclosure because of unpaid property taxes, you may be eligible to postpone the payment of property taxes under 1 or 2 programs made available by the county tax collector.