If you've missed one or more mortgage payments:
- Take action right away. Your lender can offer options such as loan modifications or mortgage workouts that may result in a lower payment or reduced interest rate.
- Open and respond to all mail from your lender. The notices you receive will offer advice on avoiding foreclosure. Later mail may include important notice of pending legal action.
- Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments.
- Prioritize your spending. After health care, 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 such as a second car, jewelry or 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.
If you cannot reach your lender or comply with a loan agreement:
- If your loan carries an unusually high interest rate or requires a "balloon payment," you may have been the victim of predatory lending. Contact a local financial institution to see if you qualify for a refinanced, fixed-rate mortgage.
- If you still cannot make reduced mortgage payments, call your lender again.
- Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments.
- Stay away from companies that promise to help you work with your lender for a fee - these are often scams.
If you have received a foreclosure notice:
- Contact your lender to see what options they may be willing to offer. Understand that your financial institution wants to help you keep your home. Foreclosures cost lenders tens of thousands of dollars, drive down property values and damage the credit of the homeowners for years to come.
- Contact your attorney.
- Avoid foreclosure prevention companies. You don't need to pay fees in advance for foreclosure prevention help. Use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they may charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.
Click here to find HUD-approved counselors in Hawai'i.
If your home is worth less than you owe:
- Walking away from a home is a drastic move that can have a devastating impact on your credit and leave your family with few housing options.
- Know that the only way to regain the value of your home is to stay. Home values will recover, and in the meantime, you will have earned equity by making your payments.
- Talk to a lender or housing counselor about your options.
Avoid foreclosure scams:
- Watch out for questionable counseling companies who advertise that, for a minimal fee, they will hire a lawyer to defend the foreclosure in court or negotiate lender assistance on your behalf.
- You should call a HUD-approved counseling organization before you pay or sign anything.
- The Federal Reserve Board has also developed 5 Tips for Avoiding Foreclosure Scams
TIMELINE
Foreclosure timelines vary depending on lender, location, and situation. There is always the possibility of postponing foreclosure, such as when the property owner lists the property for sale as a short sale, receives an offer or offers and forwards the offer(s) subject to lender approval.
A timeline from late mortgage payment to foreclosure may look like this:
- DAY 1: The borrower misses the payment.
- DAY 16-30: A late charge is assessed. The mortgage servicer contacts borrower to find out why the payment is late. File is sent to the Collection Department.
- DAY 45-60: The servicer sends a "demand" or "breach" letter to the borrower who has 30 days to resolve the situation by paying the delinquent amount.
- DAY 90 Notice of Default: Foreclosure proceedings start with a Notice of Default (NOD). The document is recorded at the request of the lender by the trustee and is recorded in the county in which the property is located. The borrower and junior lien holders are given proper notification and the borrower has 90 days to bring their account current. This period is referred to as the Reinstatement Period.
- DAY 180 Notice of Trustee Sale: If the borrower does not reinstate their account within the 90-day period, the lender will authorize and instruct the Trustee to record the Notice of Trustee Sale (NOS).
- DAY 196 5 Business Days Before the Sale Date: Right to Reinstate expires.
- DAY 201: After 21 days of the recording of the Notice of Trustee Sale, a foreclosure sale can take place at public auction. The property may be sold to a third party bidder or revert back to the lender for a specified amount.