Foreclosure

Pierce County

Community Connections

What is Foreclosure?

Foreclosure is a legal process in which a person who has made a mortgage in order to borrow money loses his or her rights to the mortgaged property. A mortgage represents security - generally real estate - for money loaned. The borrower retains possession of the property, and foreclosure is effected only if the borrower fails to make payment of the debt at the proper time or fails to meet other obligations specified in the mortgage.

To make a foreclosure, it is usual for the lender to apply to a court for authority to sell the property or to proceed with the sale under a power provided in the mortgage itself. In such instances the term foreclosure is loosely applied to the sale by the lender or holder of the mortgage. Money received from a sale is applied to all debts on the property, including payments due to the mortgagee.

Tips for Avoiding Foreclosure

Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?

Don't ignore the letters from your lender
Contact your lender immediately
Contact a HUD-approved Housing Counseling Agency
Toll FREE (800) 569-4287
TTY (800) 877-8339

If you are unable to make your mortgage payment:

1. Don't ignore the problem.

The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.

Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. 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. Learn about the foreclosure laws and timeframes in Washington State (every state is different) by contacting the Washington State Department of Financial Institutions by visiting http://www.dfi.wa.gov/consumers/homeownership/foreclosure_help.htm.

5. Understand foreclosure prevention options.

Valuable information about foreclosure prevention (also called loss mitigation) options can be found at the HUD (Housing and Urban Development) website at at http://portal.hud.gov/hudportal/HUD?src=/topics/avoiding_foreclosure

6. Contact a HUD-approved housing counselor.

The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339 or visit http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?&webListAction=search&searchstate=WA.

7. 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-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other 'unsecured' debt until you have paid your mortgage.

8. 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.

9. Avoid foreclosure prevention companies.

You don't need to pay fees 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 will 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.

10. Don't lose your house to foreclosure recovery scams!

If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.

More information at: http://www.fhgov.com/services/planningandcommdev/CommunityDevelopmentOffice/Foreclosure.pdf.

(Source: HUD)

FHA Resources for Foreclosure

Call the Federal Housing Authority (FHA) at (800) CALL-FHA or to visit www.fha.gov. There you will have the opportunity to learn about foreclosure prevention, legal rights, and credit counseling, among other topics.
Take advantage of the recently announced ''FHASecure'' program. This new program allows eligible homeowners to refinance into a secure, fixed-rate FHA loan even if they are in default.
A new partnership between mortgage companies and non-profit housing counselors called HOPE NOW is available. Their mission is simple: reach out to homeowners who may be having difficulty paying their mortgages. For more information or to see if your mortgage company is a member of this coalition please go to www.hopenow.com.

The Washington Post reported on June 16, 2008...

Major mortgage lenders have agreed to streamline and speed up the process for assisting distressed homeowners, according to new guidelines. The guidelines address the complaints of homeowners and housing counselors that even as foreclosures climb, lenders remain difficult to work with and can take months to approve a request or even acknowledge that a homeowner has asked for help. In the meantime, borrowers fall further behind in their payments and grow more frustrated.

Under the guidelines, the lenders acknowledge a borrower's request for help within five business days and approve or deny a request within 45 days of receiving the application. Lenders will also update borrowers about the status of their application after 30 days.

The voluntary guidelines are the result of months of discussions among lenders, loan servicers and government officials. They encourage lenders to have enough staff to respond to calls from homeowners and housing counselors. They also call for lenders to consider pausing the foreclosure process once a homeowner has contacted them. Many lenders had already agreed to a similar plan announced in February by Hope Now, an alliance of lenders and nonprofits

See more at http://www.washingtonpost.com/wp-dyn/content/article/2008/06/16/AR2008061602278.html