Nowadays, it’s nothing new to hear that the houses down the street or your neighbor or even worst yourself are being faced with foreclosure notices. Being hit with foreclosure is not the end of the world because you can fight back either by paying your missed payments because foreclosure is a long process that can take up to a year to be sold and sometimes even longer especially if you’re making your missed payments which resets the foreclosure process. Although it may seem like a good idea to stall the sale of your house, it is even better to prevent foreclosure to happen in the first place. The way to avoid the headaches of foreclosure is to talk directly to your lender.
It’s a myth to think that the lender don’t want to talk to you the borrower because they want your money and they want your house which is not true. Yes, they want your money but they want it with your monthly payments plus interest because once you are late on your payments then you become a risk and lenders do not like taking risks. But why should it be a risk if the lender gets your house plus all the money you made to the house? It’s a risk because now the lender has to go through more hassle to obtain a court order, appraise the house, and sell the house. The lender just wants their money every month until all is paid back. So be smart and call your lender because they will negotiate with you if you can’t make your next payment. Lenders are more understanding than you might think but be sure that you are connected to the loss mitigation department so don’t the customer service representative forward your request.
The lender can modify your mortgage by suspending your payments for a short amount of time or by lowering the payment amount briefly. Just talk to your lender and see how a forbearance can benefit the both of you, but it does not mean that the lender would issue a forbearance on any request. You should always present proof that you have always been in good standing with the lender and have always made your payments on time because that will earn you some brownie points. Be sure to have records or documentation to show that you have been trying to negotiate.
If you truly cannot meet the negotiated terms and feel like throwing in the towel then you can let the lender take your house which pretty much is like foreclosure except it’s not called foreclosure and does not ruin your FICO score so you will have a chance to redeem yourself to lenders. Don’t let foreclosure ruin you more than just taking your home away, it can ruin your FICO score for 7 years and keep you from obtaining loans. Negotiation is key.