Mistakes to Avoid When Facing Foreclosure

The first mistake is to ignore the situation and hope it goes away.

The first mistake people make when facing foreclosure is to ignore the situation and just hope it goes away. It won’t. A foreclosure will not just magically disappear. If you are facing foreclosure, it is important that you deal with it… period… and the sooner, the better! 

We’ll point you in the right direction and offer resources and assistance. You won’t be going through this alone.

The second mistake is to fall prey to a foreclosure prevention company

While some of these foreclosure prevention companies are legitimate, they all cost money you don’t need to spend. The fact is, there is nothing they can or will do that you cannot do yourself.

They often charge an amount equivalent to two or three month’s mortgage payments. If you have the cash, that’s money that would be better spent trying t bring your payments up to date. If you put it on a credit card, you’re only digging yourself farther into debt.

The legitimate companies do provide a service, but it is a service you can get for free by contacting your lender or a HUD-approved mortgage counselor.

Be sure to ask if help is available to you through the American Rescue Plan Act of 2021 and the Homeowner Assistance Fund. This bill was passed in March 2021, making funds available for mortgage assistance to individuals who fall within its guidelines.

Some foreclosure prevention companies offer to assist with a Mortgage Loan Modification

Again, they can’t do anything you can’t do, and their fees can be high. Explore this possibility by talking with your lender.

Some foreclosure recovery scams will cost you even more

Some foreclosure recovery scams will actually cost you your house. These scammers coerce you into signing a document that gives them power of attorney to act on your behalf. What they are really doing is gaining title to your home.

They promise to let you stay in your home as a renter with a lease to own contract while they negotiate a new loan with the bank. Then, they say, you can buy it back.

You might not have any idea what’s happening until you are served with an eviction notice.

Red flags that alert you to mistakes to avoid when facing foreclosure

1. The company contacts you. Legitimate business waits for you to contact them.
2. They pressure you to act quickly – without consulting your lender, your agent, or an attorney.
3. They advise you not to contact your lender for any reason
4. They demand money up front.
5. They aren’t willing to give you information about themselves or referrals to past clients.

Protect yourself from mortgage foreclosure scammers

• Contact your lender when you know you will not be able to make payments.
• Consult with a HUD-approved housing counselor.
• Refuse to sign any document without first consulting with an attorney, a trusted real estate professional, or your HUD-approved counselor.

The final mistakes to avoid when facing foreclosure

• Moving out too soon. If you’ve exhausted all avenues and your house is definitely going into foreclosure, don’t move out too soon. Wait until you get an eviction notice. In the meantime, maintain the house in good condition and keep it clean. You’ll be saving the money you would spend on rent payments, and you could be offered cash for keys. Do note that cash for keys arrangements are always contingent on the house being left clean and in good repair.
• Failing to explore options to sell to an investor for cash. Cash investors can close quickly, allowing you to pay off the loan and avoid having a foreclosure on your credit report. Depending upon the equity you’ve built, you might even get cash back in your pocket.

Remember, the sooner you start dealing with a foreclosure, the better your chances of achieving the best possible outcome. 

If you aren’t sure where to start, what to do, or just need a little assistance, please contact us as soon as possible. We specialize in win-win solutions.