If you are facing foreclosure, you have several options. If you still have enough income and equity in your home, you may be able to refinance your mortgage. It is also possible to negotiate a mortgage modification after the foreclosure process has started. Alternatively, your bank may agree to a short sale of your home or to accept your home's deed in lieu of foreclosure. In a short sale or a deed in lieu of foreclosure, however, you still lose your home. If you lose your home through foreclosure or a short sale, your credit rating also may be reduced.
Living in your home through the foreclosure process allows you to save money to get back on your feet. In many cases, the bank will not start the foreclosure process until several months after you fall behind in your payments. Depending on your state's laws, the foreclosure process can take up to a year or longer after you receive a foreclosure notice. In addition, filing for Chapter 13 bankruptcy temporarily stops your foreclosure and may allow you to enter into an agreement to save your home. In some states, homeowners also have the right to pay off the amount owed at the end of the foreclosure process to keep their homes.
If you are facing foreclosure, seek help to protect your rights. Many stories have surfaced recently of banks improperly processing foreclosure documents. For example, in a practice known as "robo-signing," bank executives signed thousands of legal documents without properly verifying the accuracy of the necessary information. Your bank also may pressure you to move out of your home before you are legally required to do so. For these reasons, you should seek help from a federally approved housing counselor or a lawyer.
The Protecting Tenants at Foreclosure Act gives renters the right to stay in their homes for at least 90 days after foreclosure. You may have additional rights under state or local law. If you need legal advice regarding your rights as a tenant, contact a legal aid center in your community, a tenants' rights nonprofit organization or your local bar association for a referral to a lawyer.
Foreclosure prevention counseling services are provided free of charge by nonprofit housing counseling agencies working in partnership with the federal government and by legal services organizations. Be wary of scams that ask for a fee to help you modify your mortgage. You can find a list of federally approved housing counselors who have been approved by contacting the U.S. Department of Housing and Urban Development.
U.S. Department of Housing and Urban Development (800-569-4287)
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