Note: A version of this article previously appeared on the Dickens Law Group blog
Facing foreclosure? Take a moment to breathe. You have options. In fact, it may still be possible to stop foreclosure and save your home.
While filing bankruptcy or launching a lawsuit may be the right option for some, for the vast majority of homeowners, applying for assistance through your mortgage company—such as a loan modification—is often the best solution and should be your first step before resorting to other options.
Here’s how to apply for assistance through your mortgage company to stop foreclosure and save your home.
Honesty is the best policy
The key to working with your mortgage company is communication. If you are facing foreclosure, call your mortgage company right away. Don’t put it off, be embarrassed, or ignore your mortgage company’s attempts to contact you. Doing so will only make your situation worse and make it harder to find a solution.
Be aware that your mortgage company would prefer not to foreclose. Foreclosing takes time, costs money, and is generally a hassle that mortgage companies want to avoid if at all possible. Your mortgage company will make decisions based on what makes the most financial sense for them, and in most cases, they will make more money if they offer you assistance that allows you to keep your home and continue making payments each month.
Follow the process
Nearly all mortgage companies have a formal application process to determine whether assistance can be offered. When you call your mortgage company, tell them you want to apply for assistance and they will provide you with the necessary documents. Typically, these documents include a basic application and supporting documents regarding your income and expenses, such as bank statements, pay stubs, tax returns, etc.
Carefully follow instructions and be sure to submit all required documents. After submitting your application, call your mortgage company in 2-3 days to confirm the application was received and to see if they need any additional information.
Respond to any requests for additional information as quickly as possible. It is common at this point for homeowners to become discouraged or overwhelmed and stop responding to their mortgage company’s requests. But failing to respond in a timely manner may cause your mortgage company to remove you from consideration for assistance and move forward with foreclosure.
So reply quickly, and call within 2-3 days every time you submit additional information to confirm the information was received and to see if anything further is needed. Don’t get discouraged. The process of applying for assistance will take time, energy, and work on your part, but it will be worth the effort if it stops the foreclosure and saves your home.
How the bank decides
Once your mortgage company decides it has enough information, your application for assistance will be considered “complete” and will be submitted to the mortgage company’s underwriting department for official review to determine if assistance can be offered. Once your application is considered complete—and only once your application is considered complete—the mortgage company will postpone any pending foreclosure sale until a decision is reached.
Most mortgage companies say the official review will take approximately 30 days. During this time, call your mortgage company at least once a week to check on the progress of the review until a final decision is made.
Your mortgage company will automatically review you for all available assistance options, including repayment plans, loan modifications, and any government assistance programs your mortgage company participates in. If you receive an offer for assistance, review the terms of the offer carefully to make sure you are willing and able to comply. If you choose to accept the offer, be sure to follow all instructions carefully to ensure you properly accept and that the foreclosure is stopped.
If you don’t qualify for assistance, you typically have 30 days to appeal the decision if your financial circumstances have changed since your initial application. If appealing is not an option, it is time to think about other options such as bankruptcy, a short sale, or a deed in lieu of foreclosure.
Getting the right help
While professional help is not required to apply for assistance through your mortgage company, it can be worth the money to have an experienced professional working on your behalf. Unfortunately, there are a lot of foreclosure prevention scams that will take advantage of desperate homeowners. If you choose to hire a professional, be sure to only hire an attorney licensed in your state who has foreclosure experience.