In roughly 50% of all foreclosures, borrowers fail to take steps to work out a responsible alternative with their lender.It is important to contact your lender as soon as you realize you have a problem.

Avoid the
Threat of
Foreclosure

Foreclosure and the loss of a home, while especially devastating for the individuals and families affected, also drags down home values in surrounding  neighborhoods.
Thus, cities have a big stake in preventing foreclosures.

Many people avoid their mortgage lenders when money problems occur, but they can help.
In roughly 50 percent of all foreclosures, borrowers fail to take any steps to try and work
out a responsible alternative with their lender. Most lenders have workout options.
Thus, it is important to contact your lender as soon as you realize you have a problem.

In ordinary times, a home mortgage lender has little incentive to alter the terms of a loan their borrower has agreed to. However, with the prospect of mass foreclosures due to the "subprime lending crisis," lending regulators are now counseling banks to work with their borrowers. And while lenders cannot guarantee that every loan situation can be fixed, they will approach the issue of restructuring on a case-by-case basis. For example, a lender might consider modifying loan terms, including delaying a rate reset, deferring interest, converting a sub-prime to a prime load or converting loans with variable rates into fixed-rate products with more predictable payments.

Recommended Steps to Avoid Foreclosure

• Contact your lender NOW! Many people avoid their mortgage lenders when money problems occur, but they can help. Most lenders have workout options and are willing to explore every possible option. The key is to contact them as soon as problems occur.
   
• Stay in your home. You may not qualify for assistance if you abandon your property.
   
• Talk to a Housing Counselor. The U.S. Department of Housing and Urban Development (HUD) is an approved housing counseling agency. You can call them at 1-800-569-4287, to help you assess your financial situation, prioritize your debts, determine your options and help you negotiate with your lender. They have information on services and programs that may help you. They may also offer credit counseling. These services are usually free of charge.
   
• Prioritize your spending.
  After healthcare, keeping your house should be your first priority.  Review your finances and see where you can cut spending in order to make your mortgage payment.  Look for optional expenses such as cable TV, memberships and entertainment that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
   
• Use your assets.
  Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income?  Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

Recommended Resources

• U.S. Department of Housing and Urban Development.
  Use this website to find a HUD-certified financial counselor and to get advice on how to avoid foreclosure.
   
• Home Ownership Preservation Foundation.
  Dedicated to helping homeowners avoid foreclosure. Call for counseling assistance 1-888-995-HOPE (4673) anytime of the day or night.
   
• State of California Home Mortgage Consumer Information
  Here you will find helpful information and links if you are considering buying a home, or if you already own a home, or have a mortgage and may be experiencing difficulty in keeping your payments current.

Watch Out for Lenders Who Might Take Advantage of You

While most mortgage lenders are reputable, a few unscrupulous lenders engage in predatory lending practices, including making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees, or repeatedly refinancing a loan without providing any real value to you.

You may also be receiving refinance offers in the mail telling you that you have been "pre-approved" for credit based on the equity in your home. But consider this, you you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.

Here are several precautions you should keep in mind to avoid falling prey to scam artists and predatory lenders.

• Don't sign any papers you don't fully understand
• Make sure you get all "promises" in writing
• Be aware of any contract of sale or loan assumption where you are not formally released from liability for your mortgage debt
• Check with a lawyer or mortgage company before entering into any deal involving your home
• Be aware of "rescue" scam artists who want you to sign a Quit Claim Deed or other paperwork you do not understand and who advertise their services as "Fast Cash," "Equity Funding," or a "Foreclosure Service."
• Never do business with someone who cannot provide legitimate references such as a major bank or trusted professional organization, such as the Better Business Bureau or AARP, or a Federal or State government agency. 

Contacting Your Lender

Bank of America California Housing Finance Agency Cendant Morgage Corporation Chase Home Finance Citimortgage Comerica Incorporated Countrywide Downey Savings & Loan Association First Federal Bank of California GMAC Home Loan Services, Inc. HSBC Mortgage Corporation Irwin Mortgage Corporation James B. Nutter & Company JP Morgan Chase & Co. Litton Loan Servicing Midland Mortgage National City Mortgage Suntrust Mortgage U.S. Bancorp Wells Fargo Mortgage Wendover Financial Services Corporation Washington Mutual Home Loans, Inc. Wilshire Credit Corporation

(800) 846-2222 (800) 669-1079 (800) 257-0460 (800) 848-9136 or (800) 527-3040 (800) 374-8814 (800) 437-5822 (800) 669-4576 (800) 824-6902 (310) 665-2333 (800) 627-0128 (800) 622-5035 (800) 338-6441 (800) 284-4462 (800) 315-7334 (800) 848-9136 (800) 247-9727 (800) 654-4566 (800) 523-8654 (800) 443-1032 (800) 365-7772 (800) 766-0987 (888) 934-1081 (866) 926-8937 (888) 952-7339