Foreclosure can be extremely damaging to your credit and overall financial health, so it is important to avoid it if you can. Here, the commercial law and real estate attorneys at Snee, Lutche, Helmlinger & Spielberger provide tips for avoiding foreclosure.
Foreclosure occurs when a lender repossesses a property due to delinquent or nonexistent mortgage payments. Ideally, a foreclosure should be avoided, as it can have a serious impact on your financial health. Here are a few ways to prevent foreclosure from occurring:
Confront the Problem Immediately
The longer you continue to miss payments, the more likely foreclosure becomes. If an unforeseen event occurs that will make it difficult for you to continue making mortgage payments, contact your lender immediately. Lenders prefer not to foreclose on a property and would rather continue receiving mortgage payments, so they may be willing to extend a certain level of flexibility in repayment or they may offer a modification of your loan, if you are eligible. This is more likely if you act quickly.
Further, open and respond to all correspondence from your lender—you want to be perceived as proactive, responsive and prompt in finding solutions. Initial correspondence regarding late payments will usually offer information about foreclosure prevention, which can be a valuable tool. And, if the case does end up in court, later correspondence will provide critical information about court dates and decisions.
Know Your Mortgage Rights
Review your loan documents so that you know your lender’s potential for legal recourse should you not make your payments or seek assistance from us. In Maryland, a mortgage is considered in default if a payment is one day late. A lender may send a Notice of Intent to Foreclose 45 days after default. To learn more about your rights, speak to one of our attorneys experienced in real estate law and commercial law as it relates to foreclosure.
Create a Financial Plan of Action
Besides maintaining adequate healthcare personally, your home should be your top priority. Analyze your budget and see if there are ways to cut costs in other areas—such as entertainment, cable or cell phone bills, dining out and more—that will free up income to go towards your mortgage. If you have any assets that can be liquidated, such as a second car, antiques or artwork or a whole life insurance policy, it could be advantageous to sell them to cover mortgage payments.
Know Who to Consult and Who to Avoid
Many foreclosure prevention companies assert that they can negotiate with your lender for better terms on your mortgage. While some of these companies are legitimate businesses, the money you pay them in fees is better spent on your mortgage itself. There are also several illegitimate entities that run scams attempting to convince homeowners that they can prevent foreclosure if they sign a form allowing the entity to act on the homeowner’s behalf. These are extremely risky and may end in signing the title of your home to the entity—avoid any such schemes at all costs.
There are, however, several reputable professionals or institutions you may speak to for more information about how to avoid foreclosure. The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling in Maryland and nationwide. More information about these housing counselors can be found here.
An attorney knowledgeable in real estate and foreclosure law can also be an invaluable resource if you are concerned about or are in the process of foreclosure. Having an attorney explain your mortgage rights, review your lending terms and other legal documents, and represent your interests will be vital should foreclosure become a reality. The attorneys at Snee, Lutche, Helmlinger & Spielberger are dedicated to helping their clients maintain ownership of their homes—for more information about how we can help, contact us immediately.