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Preventing Foreclosure on Your Home

By Celia Hayhoe, Ph.D., CFP®

Preventing Foreclosure on Your Home

If you are having trouble making your monthly mortgage payments or think you may have trouble in the near future, you may be able to protect your home from foreclosure, but you must act immediately. Know that you are not alone. Rising prices, job loss, reduced overtime, falling real estate prices, and subprime mortgage loans are all reasons why many homeowners are having problems.

The most important thing to do is to communicate with your mortgage servicer (where you make your payments). Mortgage servicers do not want to foreclose on property. They are authorized by the mortgage lender to work with you and help you find a way to keep your home, so contact them first. The longer you wait, the more difficult this will be. If you are three months behind in your mortgage payments and the lender has not heard from you, they will assume you do not intend to pay and will feel justified in pursuing foreclosure. Take action right away to save your home and your credit record.

If the mortgage servicer will not or cannot help you, ask them who your mortgage lender is and how to contact them, or check your loan papers for contact information. When you talk to your mortgage lender, be prepared:

  • Be ready to explain the situation that led to your problem – such as a lay-off notice, medical expenses, or large utility bills. It is important to be truthful.
  • Write down your current monthly income such as salary or wages, disability, retirement or welfare benefits, and savings and investments.
  • List your expenses for essentials and other current financial obligations. Don’t forget to include food, utilities, loan or credit payments, insurance, child support, and/or alimony.
  • Try to think of some ideas on how you could manage your problem as it exists now and over the long run. Your attitude, outlook, and plan will influence how far the lender will go to help you.

If you need help getting your information together, call your local Extension office and ask to speak to the Family and Consumer Sciences agent. They will help you, or they will put you in touch with someone who can. Even if you feel your situation is hopeless, DO NOT GIVE UP. Foreclosure can ruin your credit record for years, so check into every other possibility.

For more information:

How To Prevent Foreclosure on Your Home, Virginia Cooperative Extension publication 2804-7001, available at www.ext.vt.edu/resources/fcspublications.html or from your local Extension office.
See www.ext.vt.edu for a list of offices.

Working with your lender:

Virginia Housing Development Authority at www.virginiaforeclosureprevention.com or www.vhda.com

Celia Hayhoe is an Extension specialist in Family Financial Management at Virginia Tech.