Reporter was commissioned to write this in-depth article.
Losing your home to foreclosure can be a costly and emotionally taxing experience. What many homeowners don’t know is that they have access to a variety of options to help rescue them from the process. Foreclosure timelines vary from state to state and can take anywhere from a few months to more than two years. If you think filing for bankruptcy is your only hope, you may want to explore these last-resort efforts that could help save your home.
Ask for help
If you’re facing an imminent foreclosure, perhaps the most important thing to understand is that you don’t have to go it alone.
“A lot of people who find themselves in that situation have a tendency to kind of stick their head in the sand or believe that there isn’t any other option, and they simply don’t reach out,” said Josh Fuhrman of theHomeownership Preservation Foundation.
HPF is a nonprofit organization that helps homeowners avoid mortgage foreclosure whenever possible. Fuhrman’s first line of advice is to pick up the phone and call your mortgage servicer, who should be able to review available options and possible next steps. Or if you want an independent view of your situation, you can contact a local housing counselor to help you determine what your goals are. Just be sure that the agency you use is HUD-approved, which means they’ve been cleared by the U.S. Department of Housing and Urban Development.
“There is help out there, and it’s free,” said Fuhrman.
Look into a loan compliance audit
A good idea for anyone up against a foreclosure is to run a loan compliance audit. This detailed snapshot essentially lets the homeowner know whether their lending organization adhered to proper regulatory guidelines. The audit can help identify a variety of potential red flags related to a residential mortgage loan. It analyzes public records, tracks mortgage loan ownerships and transfers, and reveals SEC filings and other public records.
According to Progressive Legal Group, which handles loan modifications and foreclosures, audits are crucial for a number of reasons. For starters, they can pinpoint defects in the chain of title, improper transfers and potentially fraudulent activity. During the mortgage crisis of 2008, many lenders used false affidavits in foreclosure cases. The act, known as robo-signing, can come to light through an audit.
“The more a homeowner knows and understands the activities taking place behind the scenes of their loan, the better the opportunity exists for them to prevent foreclosure,” said Frank Walters, a Progressive Legal Group spokesperson.
This information can play a serious role in helping a homeowner keep their home at a payment they can afford. The audit can also serve as a basis to rescind or cancel the mortgage if legal action is taken within one year of the loan origination date.
Consider a loan modification
If your back is against the wall, modifying the terms of your loan may help you save your home. Doing so typically lowers your mortgage payment to something more affordable. According to the U.S. Department of Housing and Urban Development, borrowers are allowed to receive oneloan modificationwithin a 24-month period. Eligibility for a loan modification is determined by the lender pending a financial analysis and a possible review of the property.
"Borrowers should consider a loan modification," said Walters. "If all else fails, sometimes declaring bankruptcy can save your home."