Foreclosure is a situation in which a homeowner is unable to make mortgage payments as required, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract.
As soon as you realize that you are going to have trouble making your mortgage payments, contact your lender and tell them about your financial difficulties. This gives them the opportunity to work with you to create a plan. Do not stop paying your bills, and do not wait until you cannot make payments before you act. Though you may feel scared or embarrassed, immediately begin working with your lender to avoid foreclosure on your home.
After a foreclosure, the road to recovery can be challenging, but there are steps you can take to get yourself and your family moving forward to new housing, revitalizing your credit, and buying another home in the future.
Your immediate need is finding a new place to live. Reach out to the U.S. Department of Housing and Urban Development’s Office of Housing Counseling. Local HUD-approved counselors can help you work through your housing options. Your other immediate need is your children. If you’re staying in a new area, get them enrolled in school as soon as possible. And check your city or state department of social services if you need additional support such as SNAP benefits (food stamps).
Moving forward both financially and emotionally will take time. To help you organize those next steps, use
The Starting Over After Foreclosure Toolkit – These handouts and worksheets will help you learn to manage stress, consider housing options, and explain money to kids.
A Resource Guide for Foreclosure Recovery (PDF, Download Adobe Reader) – Learn ways to gracefully exit home ownership, how foreclosure affects your taxes, how to avoid rental scams, and ways you can rebuild your credit.
Refinancing your mortgage allows you to pay off your existing mortgage and take out a new mortgage on new terms. You may want to refinance your mortgage to take advantage of lower interest rates, to change your type of mortgage, or for other reasons.
Is there anything else I need to know?
Federal Reserve rules require mortgage companies to notify homeowners when their loans are transferred to another company. The company that takes over your loan must send you a notice within 30 days of acquiring it. Even with a new loan owner, the company that “services” or handles your loan might not change and you might continue to send your payments to the same address. If that loan servicer changes, you will receive a separate notice.
Source: kingcounty.gov | www.usa.gov/