Do's and Don'ts of Foreclosure

Facing a foreclosure, or potential foreclosure, is very frightening from both a financial and emotional perspective. However, it is more important than ever that you are aware of actions you should take - and shouldn't take - to avoid making the situation worse.

• DO call your lender immediately.
  If you have already missed a mortgage payment or predict you will in the near future, call your lender immediately.  Your lender is your biggest ally and the sooner you reach out for assistance, the more help they can provide.
• DO answer the phone and read your mail.
  Avoiding your lender won't make the problem go away. In fact, it will only make the problem worse. Your lender may be able to help you, so be sure to answer the phone and read any mail they may have sent you.
• DO realistically assess your situation.
  Are your financial problems temporary? If so, call your lender and let them know the situation. Lenders may be able to offer a forbearance or repayment plan.
• DO call a housing counselor for assistance.
  Housing counselors can help you contact and work with your lender to get help with your mortgage and provide advice to avoid foreclosure - free of charge. Be aware of Foreclosure scams-never pay for a housing counselor!
• DON'T move out of your home.
  In order to qualify for assistance, homeowners are often required to be living in their home. Be sure to talk to your lender before you think about moving.
• DO protect your wealth.
  Recognize that you may have significant equity in your property that must be preserved.
• DO be aware of certain financial responsibilities.
  Even if your lender sells your property, you may still be responsible for the difference in the sale price and what you owe. This is called a deficient balance.  It is also important to realize that you may be responsible for certain taxes when a lender forecloses on your property.
• DON'T ignore the problem.
  It may be possible to keep your home, but if you wait to take action, fewer options will be available. You have certain rights and can take certain actions to help you keep your home; however, you only have a limited amount of time to assert those rights or take those actions.

• DON'T fall victim to a scheme.
  Unfortunately, some people want to profit by your misfortune by offering to contact and conduct all work-outs and negotiations with your lender on your behalf - for a fee.

• DO talk to a lawyer or legal aid organization.

Your rights vary from state to state. Most states and large cities have legal aid organizations that can assist you in making the right decision and help you understand the laws of your state.