While facing a home foreclosure is a terrible thing for any family, the best thing you can do for yourself and your family is stay informed. Sadly the rate of home foreclosures has skyrocketed in the last few years thanks to the sub prime mortgage crisis and the subsequent decline in the economy. If you are one of the unfortunate home owners that have discovered that a home foreclosure may be in your future, do not despair. If you are facing a home foreclosure, there are some things you can to do to either avoid a foreclosure or make the best of what seems like an impossible situation.
There are several things you can do if you are facing a home foreclosure, such as talking to a housing counselor or credit counselor to attempt to get your finances in order, borrowing money from friends or relatives to try to catch up on your mortgage payments, contacting your lender to attempt to work out some type of deal, refinancing your current home loan to lower your mortgage payments, or selling your home so that you may purchase another home you are more easily able to afford.
If you have an FHA (Federal Housing Administration) insured loan, there are some other things you should know about an impending foreclosure. An FHA insured loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration against loan default. If you have an FHA insured loan, there may be some options available to you.
With FHA insured housing loans, there may be forbearance or special forbearance plans available to you. Forbearance is basically a term for a special agreement between a lender and a borrower to delay a foreclosure. Based on your financial situation, these plans may provide for a temporary reduction or suspension of your payments if you have experienced a reduction in income or increase in living expenses. To request consideration for forbearance, you will need to contact the servicer of your mortgage loan.
If you have an FHA insured housing load, you may also qualify for a possible mortgage modification. This means that the years of the loan could be extended or the interest reduced in order to make the monthly payments more affordable. Having an FHA insured loan could also qualify you for something called a partial claim. Your lender may be able to work with you to obtain a one time payment from the insurance fund to bring your mortgage current. The mortgage insurance company can execute a promissory note and a lien will be placed on your property until the note is paid in full. The promissory note is due when you pay off the first mortgage or sell the property. You must be able to begin making full mortgage payments at the time of agreement.
Having an FHA insured loan on your home may also mean that you have the option for a pre-foreclosure sale, also known as a short sale. In a pre-foreclosure sale, you avoid foreclosure by selling your property for an amount less than the amount owed. You must use a licensed real estate agent to find a buyer and you cannot under sell the property to family members or friends.
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