How Can I Avoid Foreclosure?

Q: What options do I have besides foreclosure?

We recently bought a house and my husband lost his job with the airlines. We are not behind on the house just yet. I would like to know my choices. Can I turn over the keys to the bank? Or will the bank let me pay the interest until next spring or summer when maybe things are better? - Monica

Dear Monica,

Open communication may be the answer to your problem. Many lenders have policies in place to help people in your situation. Please call your mortgage company today.

Turning the keys over the bank is not a desirable solution. It would result in what is called “foreclosure.” This would negatively impact your credit for the next seven years and possibly prevent you from getting another loan during that time.

In addition, if the bank sold the home for less than the loan amount, you may be responsible for the difference.

My advice is to slow down a bit and analyze all of your options.

Best of Luck,
Ask the Experts

Q: My mortgage company says I am behind on my mortgage, but I disagree. Can they make me pay?

My mortgage company says I am behind on my mortgage, but I disagree. Can they make me pay? "According to my mortgage company, I'm behind one month (I disagree!) But in order to protect our credit I'm willing to pay $200 a month for five months for a total of $1,000. Can they force me to pay that amount at once? Can they sue me even if I'm willing to make those payments? Can they foreclose on my house because of this?" - Virgilio

Dear Virgilio,

Do you have proof that you are current on your payments? Check your bank statements, mortgage statements, or cancelled checks to verify payment. With proof, you and your mortgage company can surely resolve the situation. Without proof, the mortgage company can request payment in full and does not have to accept your plan to pay the amount in installments.

That being said, many lenders are willing to work with consumers to get back on track. We recommend that you keep the lines of communication open with your lender and start searching for that proof! Remember to keep detailed records in the future.

Best of luck,
Ask the Experts

Q: Which option is best after receiving a notice of foreclosure?

I recently received notice of a foreclosure through my mortgage company and was seeking some advice on procedures which might be able to help me stop or put a forbearance for a few months on my payments and possibly put them towards the back of my loan. I recently was approached by a door-to-door real estate broker claiming he would be able to negotiate with the bank for a fee of $1,400. Which option is best after receiving a notice of foreclosure: letting the real estate broker negotiate with the bank for a fee, filing Chapter 13, or filing the forms myself for a special mortgage forbearance agreement? - Steven

Steven,

The first thing you need to do is call your mortgage company yourself. Open communication is very important. Be wary of anyone coming to your door offering unsolicited services. Make sure you understand exactly what you are buying — $1,400 is a lot of money.

Many mortgage companies have programs already in place that will accomplish the same thing this door-to-door broker is selling.

You could also speak with a HUD-certified housing counselor at 800.432.7310 for free, professional advice.

Good Luck,
Ask the Experts

Jessica Horton is a former copywriter and community manager at MMI.

  • The Consumer Federation of America (CFA) is an association of nonprofit consumer organizations that was established in 1968 to advance the consumer interest through research, advocacy, and education. Today, nearly 300 of these groups participate in the federation and govern it through their representatives on the organization's Board of Directors.
  • The National Council of Higher Education Resources (NCHER) is the nation’s oldest and largest higher education finance trade association. NCHER’s membership includes state, nonprofit, and for-profit higher education service organizations, including lenders, servicers, guaranty agencies, collection agencies, financial literacy providers, and schools, interested and involved in increasing college access and success. It assists its members in shaping policies governing federal and private student loan and state grant programs on behalf of students, parents, borrowers, and families.

  • Since 2007, the Homeownership Preservation Foundation (HPF) has served as a trusted, neutral source of information for more than eight million homeowners. They are partnered with, and endorsed by, numerous major government agencies, including the U.S. Department of Housing and Urban Development and the Department of the Treasury.

  • The mission of the U.S. Department of Housing and Urban Development (HUD) is to create strong, sustainable, inclusive communities and quality affordable homes for all. HUD works to strengthen the housing market in order to bolster the economy and protect consumers; meet the need for quality affordable rental homes; utilize housing as a platform for improving quality of life; and build inclusive and sustainable communities free from discrimination.

  • The Council on Accreditation (COA) is an international, independent, nonprofit, human service accrediting organization. Their mission is to partner with human service organizations worldwide to improve service delivery outcomes by developing, applying, and promoting accreditation standards.

  • The National Foundation for Credit Counseling® (NFCC®), founded in 1951, is the nation’s largest and longest-serving nonprofit financial counseling organization. The NFCC’s mission is to promote the national agenda for financially responsible behavior, and build capacity for its members to deliver the highest-quality financial education and counseling services.