Foreclosure is a situation in which a homeowner is unable to make mortgage payments as required, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract.
Step one: communicate with your lender
As soon as you realize that you are going to have trouble making your mortgage payments, contact your lender and tell them about your financial difficulties. This gives them the opportunity to work with you to create a plan. Do not stop paying your bills, and do not wait until you cannot make payments before you act. Though you may feel scared or embarrassed, immediately begin working with your lender to avoid foreclosure on your home. Learn more about how to talk to your lender about trouble making payments.
Step two: work with the MHA program
You can get help through the Making Home Affordable (MHA) program, which provides free counselors for advice and assistance with keeping you in your home or getting out safely. Visit the MHA website to read about the options and what you’ll need to prepare.
MHA has a hotline you can call anytime: 1-888-995-HOPE (1-888-995-4673) and TTY users should call 1-877-304-9709. You can also find a counselor in your area.
Dishonest companies or individuals sometimes target homeowners who are struggling to meet their mortgage commitment or are anxious to sell their homes. Scam operators like this promise to help you keep your home or sell your home without having to go into foreclosure, for a fee. However, they rarely deliver on what they promised.
These scam operators find potential victims in several ways:
Advertise online and in local publications
Contact people whose homes appear in the foreclosure notices (they can easily find these notices online or in a local newspaper)
After a foreclosure, the road to recovery can be challenging, but there are steps you can take to get yourself and your family moving forward to new housing, revitalizing your credit, and buying another home in the future.
Your immediate need is finding a new place to live. Reach out to the U.S. Department of Housing and Urban Development’s Office of Housing Counseling. Local HUD-approved counselors can help you work through your housing options. Your other immediate need is your children. If you’re staying in a new area, get them enrolled in school as soon as possible. And check your city or state department of social services if you need additional support such as SNAP benefits (food stamps).
Moving forward both financially and emotionally will take time. To help you organize those next steps, use
Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms. You may want to refinance your mortgage to take advantage of lower interest rates, to change your type of mortgage, or for other reasons.
These resources will help you learn more about refinancing your mortgage:
A Consumer's Guide to Mortgage Refinancings is your first place to look for an introduction to mortgage refinancing, including useful worksheets, a glossary of terms used in the industry, and more to help you decide if mortgage refinancing is right for you.
The Making Home Affordable Program offered opportunities to modify or refinance your mortgages, but as of December 30, 2016, no new requests for assistance under any MHA program will be accepted.
However, this program still offers free counseling and help for homeowners who are having difficulty communicating with mortgage companies or lenders about their needs for mortgage relief. Learn more about counseling or call 888-995-HOPE (4673).
Federal Reserve rules require mortgage companies to notify homeowners when their loans are transferred to another company. The company that takes over your loan must send you a notice within 30 days of acquiring it. Even with a new loan owner, the company that "services" or handles your loan might not change and you might continue to send your payments to the same address. If that loan servicer changes, you will receive a separate notice.
The Independent Foreclosure Review was established to determine whether eligible homeowners suffered financial injury because of errors or other problems during their home foreclosure process between January 1, 2009, and December 31, 2010. The following resources provide information on the review process:
As of October 10, 2014, $3.4 billion in checks distributed as part of the Independent Foreclosure Review Payment Agreement have been cashed or deposited. Because checks were issued with a 90-day expiration date to prevent fraud, checks issued in the early waves of distribution that have not been cashed or deposited have begun to expire.
The deadline for borrowers to have a check reissued in the name on the record is August 21, 2015. If you have questions:
Call Rust Consulting at 1-888-952-9105 Monday through Friday, 8 a.m. - 10 p.m. ET or Saturday, 8 a.m. - 5 p.m. ET.