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.
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:
- 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-HOPE™ hotline has a single mission: to help more homeowners avoid foreclosure. Provided by the Homeownership Preservation Foundation, the Homeowner’s HOPE™ 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:
Here is a list of some of the largest mortgage companies, along with links to their website where foreclosure assistance can be found:
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.
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
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).