Caught in a mortgage mess? Contact your lender
by Chad Graham - Apr. 26, 2009 12:00 AMThe Arizona Republic
Hiding in plain sight is one of the worst actions a homeowner who is facing foreclosure can take.
You won't save your house - or credit - by barricading the door and ignoring phone calls from bill collectors.
It is completely understandable that you want to isolate yourself. An unbelievable amount of shame, fear and guilt can wash over someone who is behind on payments or who is about to lose a home. It's not just you. Pre-foreclosures in metropolitan Phoenix topped 10,000 in March; a new record.
To prevent those becoming a wave of foreclosures, lenders are working with a lot more homeowners to fix or modify their loans. Last month, the number of foreclosures fell for the first time in a year and the number of foreclosures canceled by lenders rose.
That's good news. Here are 10 steps to try and save your home, suggested by Arizona Republic real estate reporter Catherine Reagor:
1. Don't wait. Call your lender immediately. New government-backed programs can help fix your loan so you can afford the payment.
2. Organize important papers. Locate such items as lender information, annual tax returns, paycheck stubs and monthly utility bills. Any organization providing help will ask for this information.
3. Click on http://www.makinghomeaffordable.com/. It's a federal Web site that determines if you can qualify for new programs, just by answering a few questions. Or, call 888-995-HOPE(4673).
4. Call 877-448-1211. It's the Arizona Foreclosure Prevention Hotline. It offers bilingual counselors.
5. Click on http://www.hud.gov/. That's a good way to find a counselor approved by the U.S. Department of Housing and Urban Development, or HUD. Click on the "foreclosure avoidance counseling" link and then choose Arizona.
6. Contact your lender again and again. The people who answer the phone for your lender are used to collecting on past debt. But the government is encouraging them to find a solution with struggling homeowners. Be nice to them. Don't get stressed and lose your temper. Have the names and dates of people you've spoken to previously. To be sure, this is a time-consuming, exhausting process, but it's benefiting an increasing number of homeowners. Lenders want to avoid getting stuck owning property.
7. Scan for scams. Mortgage fraud has risen 400 percent nationally. Housing advocates advise people not to pay big up-front fees to the growing number of groups offering help to struggling homeowners. Remember, HUD counselors provide help for free.
8. Slash your expenses. It'll show your lender you're serious about refinancing. Get a roommate to help meet your monthly mortgage payment. Cut up your credit cards. Have a garage sale. Check out how much you can save by cutting down on extras at http://www.finishrich.com/. Click the "learn" tab and then the "Latte Factor Calculator."
9. Consider a short sale. You won't make any money, but you won't have a foreclosure ding on your credit either. Lenders are being encouraged to consider more short sales. Or maybe you should consider filing for Chapter 13 bankruptcy, according to Bankrate.com. "Doing so temporarily halts the foreclosure process and can force the mortgage lender to accept a more borrower-friendly repayment plan, such as one that grants five years to repay the amount in arrears rather than one or two," according to the site.
10. Know when to fold 'em. Not everyone is going to be able save their home and not everyone wants a bankruptcy on their record. Be mentally prepared to turn over the keys to your lender.
Yes, it's a heartbreaking time, but it can mean have far less stress in your life. This is a good time to make a fresh start, while learning valuable lessons for the future.