As the economy worsens, more and more families are facing the harsh reality of home foreclosure. According to the FDIC, one in every 200 homes will be foreclosed upon. Every three months, 250,000 more families enter foreclosure. And to make matters worse, some "stop foreclosure now" companies with shady business practices are preying on families who feel they have no where else to turn.
To address the growing foreclosure crisis, I have put together this Resource Guide of Online "Stop Foreclosure" Resources. I don't claim any particular expertise or specialty with the foreclosure process, but many hours of research have shown me that there are some really good (and mostly free) online resources that can help anybody who is or may be facing foreclosure. If you know of other helpful resources, please contact me with the information and I'll consider adding it to this resource guide.
Foreclosure timeline
One of the first things many homeowners want to know is what will happen if they miss a payment. Simply put, they want to know whether they will lose their home in a week, a month, or longer? And they also want to know the process--what's going to happen next. The foreclosure process, including timing, varies from state to state. One comprehensive resource of state foreclosure laws and processes is foreclosurelaw.org. While I have no affiliation with the site or its owners, it is worth pointing out that HUD's website links to foreclosurelaw.org as a resource on state foreclosure laws.
You will find information on all fifty states, including a "typical" timeline for the foreclosure process. For example, the site indicates that in Ohio, the typical foreclosure process takes 150 days. Florida takes 180 days, while Virginia is listed at just 60 days.
In addition, the HUD website provides its own foreclosure timeline:
- First month missed payment – your lender will contact you by letter or phone. A housing counselor can help.
- Second month missed payment – your lender is likely to begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.
- Third month missed payment – after the third payment is missed, you will receive a letter from you lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate". If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.
- Fourth month missed payment – now you are nearing the end of time allowed in your Demand or Notice to Accelerate Letter. When the 30 days ends, if you have not paid the full amount or worked our arrangements you will be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency. A housing counselor can still help you.
- Sheriff's or Public Trustee's Sale – the attorney will schedule a Sale. This is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.
- Redemption Period – after the sale date, you may enter a redemption period. You will be notified of your time frame on the same notice that your state uses for your Sheriff's or Public Trustee's Sale.
HUD also notes that all dates are estimated, and vary according to your state and your mortgage company.
Source: HUD Foreclosure Timeline
What to do if you miss a mortgage payment
Virtually every resource on the Internet I've found universally agrees on one thing--don't ignore the problem. The further behind in payments a homeowner is before beginning to address the issue, the more likely it is that they will lose their home. HUD provides tips on avoiding foreclosures, and one tip is to contact your lender as soon as you know you have a problem.
Did you know? "Lenders do not want your house. They have options to help borrowers through difficult financial times."--HUD website.
Many people fail to contact their lender for one of several reasons. They may be concerned that the call will draw the lender's attention to their problem and accelerate the foreclosure process. They believe that they won't say the right things or know what to say at all. And in many cases, they just don't want to deal with the emotional strain of an already difficult situation. But ignoring the problem will only make matters worse.
If you are uncomfortable calling your lender, and even if you do call, you can also reach out to an HUD foreclosure counselor. You can find a list of approved counselors by state at the HUD website by clicking here.
Resource Roundup: Here are some foreclosure resources from other blogs:
How To Save Your Home From Foreclosure - Moolanomy
The Pros and Cons of Going Into Foreclosure - The Digerati Life
Drama in Real Life: Foreclosure!
Top 3 Foreclosure Scams To Avoid
Federal foreclosure assistance programs
Here are several assistance programs available to those eligible.
FHASecure: According to the HUD website, FHASecure:
is a refinancing option that gives homeowners with non-FHA adjustable rate mortgages (ARMs), current or delinquent and regardless of reset status, the ability to refinance into a FHA-insured mortgage. With FHASecure, the lender will not automatically disqualify you because you are delinquent on your loan, and the lender may offer you a second mortgage to make up the difference between the value of your property and what you owe.
According to the HFA, "so long as you are current on your mortgage and have sufficient income to make the mortgage payment, you are eligible for an FHASecure refinance. If you are delinquent, the default must have been due to the payment shock of an interest rate reset or, in the case of an Option ARM, the "recasting" of the mortgage to fully amortizing."
The 888-995-HOPEâ„¢ hotline has a single mission: to help more homeowners avoid foreclosure. Provided by the Homeownership Preservation Foundation, the Homeowner's HOPEâ„¢ Hotline has provided advice and education to more than 300,000 homeowners since 2002.
The Foundation is not a mortgage company. We are an independent, third-party resource that has assembled a not-for-profit network dedicated to helping homeowners avoid foreclosure.
The help we offer is free.
More information on Hope Now from HUD
Freddie Mac and Fannie Mae Streamlined Modification Program: If your mortgage is owned by Freddie Mac or Fannie Mae, you may be eligible for a loan modification. Loan modifications may include extending the term of a loan to as much as 40 years, reducing the mortgage interest rate for a period of time, deferring payment of part of the principal, or a combination of all three.
To be eligible, the mortgage loan must be owned by Fannie Mae or Freddie Mac, the mortgage loan must be 90 or more days past due, you must occupy the property as your primary residence, and you cannot be in bankruptcy.
Lender foreclosure assistance resources
Mortgage companies want to help homeowners stay in their homes. While it's not possible for every situation to work out as one might hope, mortgage companies do take steps to help their borrowers fix the problem and stay in the home. As an example, Wells Fargo's website lists the following potential options for those having trouble making their payments:
| Options | How it works | Key benefits |
|---|---|---|
| Repayment Plan | Distributes your delinquent payments over a period of time, usually no more than 10 months. The monthly amount is added to the usual mortgage payment. |
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| Loan Modification | Adds any past-due interest and escrow amounts to the unpaid principal balance, which is then reamortized over a new term. |
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| Partial Claim (only for FHA loans) | The Department of Housing and Urban Development (HUD) advances a loan to repay the past-due interest and escrow amounts. |
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| Short Sale | Allows you to sell your home and use the proceeds to pay off the mortgage if you are unable to maintain payments, even if the home's market value is less than the total amount owed. |
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| Deed in Lieu of Foreclosure | Allows you to transfer your property voluntarily to Wells Fargo if you are unable to maintain payments and cannot sell the home at market value. |
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Here is a list of some of the largest mortgage companies, along with links to their website where foreclosure assistance can be found:
| Lender | Website | Comments |
|---|---|---|
| Wells Fargo 1-800-678-7986 | Alternative Repayment Options | |
| Citi Financial | www.mortgagehelp.citi.com | Citi announced in November 2008 several initiatives related to foreclosure prevention. One initiative was its foreclosure moratorum practice: "Citi will systematically implement its practice of not initiating a foreclosure or completing a foreclosure sale on any eligible borrower where Citi owns the mortgage, the borrower is seeking to stay in the home which is his/her principal residence, is working in good faith with Citi, and has sufficient income for affordable mortgage payments. In addition, in order for its efforts to have the broadest possible impact, Citi is working diligently with investors to secure their approval to expand the program to include mortgages Citi services but does not own." Source: Citi Press Release November 11, 2008. |
| Bank of America Mortgage help: 1-800-846-2222 Home equity help: 1-800-451-6362 | www.bankofamerica.com | From Bank of America's website: Mortgage and Home Equity If you're having trouble keeping up with payments, we may be able to help you get back on track with:
The sooner we can talk, the sooner we can try to help. |
| Chase 1-866-550-5705 | Chase Mortgage Modification and Assistance | From Chase's website: "There are several alternatives for a borrower that is having trouble making payments. If you are having difficulty making your mortgage payments, contact Chase immediately (at the number listed below), to pursue options available." |
| HSBC 1-800-333-7023 | When Payment Difficulties Arise | From HSBC's website: "Sometimes life throws you a curve. We understand that, and we're here to help you. Losing a job, a death or illness in the family or a divorce are just some of the things that can cause your monthly budget to run into trouble. As soon as it appears you may be in danger of missing or making a late payment, contact us. We'll work with you to try to make the best of a difficult situation, and do our best to work out a plan for you to keep your home." |
If your lending is not working with you, check out this resource from HUD.
Foreclosure and Tax Issues
There can be tax issues related to the foreclosure process. Generally, if a lender forgives part of the debt, it is treated as taxable income to the homeowner. However, The Mortgage Forgiveness Debt Relief Act of 2007 generally allows taxpayers to exclude income from the discharge of debt on their principal residence. Here is a must read resources from the IRS, which includes worksheets to help taxpayers determine the potential tax consequences of debt relief and the foreclosure process: Home Foreclosure and Debt Consolidation.
Should you pay for foreclosure assistance help
With the rise in foreclosure have come a rise in foreclosure assistance scams. Such scams range for out and out fraud to "assistance" programs that cost a lot of money but fail to deliver anything of value. Recently, the Ohio Attorney General filed lawsuits against two companies that promised to help homeowners but didn't deliver.
There are many resources that can help homeowners determine who really wants to help and who just wants to profit from their misery:
- OCC Consumer Tips for Avoiding Foreclosure Rescue Scams: The Comptroller of the Currency issued this alert on May 16, 2008. It includes a description of some of the more prevalent scams and links to helpful resources.
- Foreclosure Rescue Scams: Another Potential Stress for Homeowners in Distress : A Federal Trade Commission publication with a detailed description of how these scams work and what to watch out for.
- DOJ's white paper on foreclosure scams
Important Telephone Number: You also may contact a credit counselor through the Homeownership Preservation Foundation (HPF), a nonprofit organization that operates the national 24/7 toll-free hotline (1.888.995.HOPE) with free, bilingual, personalized assistance to help at-risk homeowners avoid foreclosure.
And here's a short video Freddie Mac put together about the risks for mortgage fraud:
Stop Foreclosure Resource Roundup
Freddie Mac's Do's and Don'ts of Foreclosure
Freddie Mac's Avoid Foreclosure Page
HousingHelpNow.org: Part of the National Foundation for Credit Counseling.
Department of Veterans Affairs: Contains links to a video about foreclosure assistance for vets.
Home Loan Learning Center: A list of contact information for some of the largest mortgage lenders.
Federal Housing Administration (runs the FHASecure program).
How to avoid foreclosure rescue scams
HUD's Guide to Avoiding Foreclosure
- Homeowner Affordability and Stability Plan–Refinancing and Restructuring Home Mortgages
- Making Home Affordable Refinance and Modification–A 2009 Federal Program to Help Struggling Homeowners
- When (if ever) Should You Walk Away From a Mortgage
- Freddie Mac Uses YouTube to Warn of Foreclosure Scams
- Real estate, foreclosures, mortgages, and other things that go bump in the night
{ 8 comments… read them below or add one }
Wow, this has got to be the biggest guide I’ve seen distilled in a post anywhere! Congrats for doing such a coverage. Awesome job! I’m bookmarking this!
Terrific job! I’m sick and tired of seeing stop foreclosure scammers take advantage of an already dire situation. I’m going to help spread this article, if you don’t mind.
I’m a housing counselor; thanks for the free advertising. You are right; we CAN help, often right up to the very end (Sheriff’s Sale). GREAT compendium of resources. HOWEVER, you should know that the FHA Secure program ENDED on 12/31/08. It is no longer available. There also is another Fannie Mae/Freddie Mac program called HomeSaver Advance, whereby if your arrearage (back missed payments) is less than $15,000, you can get a 15-year, 5% interest loan through Fannie Mae to pay off your back payments. At maximum terms, that’s about $119/mo. There are some specific requirements, the most important one of which is that the borrower must have successfully resolved the reason for delinquency. In other words, if you lost your job, you must now have another job. AND, you must have the income to make your payments AND the Advance payment. But it’s another option. And at the rate some of the repayment plans are set up, it’s often a BETTER option than the repayment plan. It is available for ANY loan that is backed by Fannie Mae/Freddie Mac, which is at least half of the loans in the country. Ask your housing counselor about it.
Phyllis, thanks so much for the infor. I’ll update the list accordingly.
HELP!!!! My boyfriend has just gotten done with a divorce and was server with a sommons for his home. I want to help him save the house, but I dont kno where to start. He has been at the same job of 7 years and is a lead man there. has been for 4 yrs.he is in the 20.00+ an hour bracket for his hourly. PLEASE help us!!!!
This is quite helpful and I will see that I can implement that. I really hope that this will save my home.
indeed, ignoring the problem by not responding to the lenders notification letter is not a way tostop home foreclosure. This post is very informative and thanks for neutral and helpful advice to the home-owners!
To help you that has a guarantee and takes payments-any that don’t won’t have very impressive outcomes! *It matters, to some extent, which the lender is, but not really. If you have the right representation(doesn’t have to cost and arm and leg) you’ll get a modification no matter what since there is threat of legal action and lenders would go under if they were audited with all the bad loans they have written/bought/traded.