Tips to Avoid Foreclosure (Part 2)
What options do I have if I can't keep my home?
If your income or expenses have changed so much that you are not able to continue paying the mortgage even under a workout plan offered by your lender, you should consider the options below.
Pre-foreclosure Sale
With your lender's permission, you can offer your house for sale and sell it at fair market value even if the amount you receive from the sale is less than the amount you owe. If you meet certain conditions, you may be eligible to receive relocation expenses.
Deed in Lieu of Foreclosure
As a last resort, you may be able to voluntarily give your property back to your lender. If you leave the property clean and undamaged, you may be eligible to receive relocation expenses. There could be income tax consequences to any plan that reduces the amount of debt you owe, so check with a tax advisor before accepting these workout options.
Contact the Federal Housing Administration (FHA).
Struggling homeowners with FHA-insured loans can get assistance by contacting the National Servicing Center of the U.S. Department of Housing and Urban Development (HUD) at 877-622-8525. Persons with hearing or speech impairments may reach this number via TDD/TTY by calling 800-877-8339.
Should I be aware of anything else?
Beware of foreclosure prevention scams! You may be approached by organizations with official-sounding names offering a quick fix to your mortgage problems. They often charge hefty fees or require that you "temporarily" sign over your deed to them. Remember: Solutions that sound too good to be true usually are. These precautions will help you avoid being taken by a scam artist:
- Never sign any papers you don't fully understand.
- Check with a lawyer, your lender or trusted advisor, or a HUD-approved housing counselor before entering into any deal involving a loan assumption, a contract of sale, or a transfer of the deed to your home.
- If you can't afford your current mortgage, don't be talked into refinancing into a new loan with a higher payment.
To find a HUD counselor in your area, call 800-569-4287 or TDD 800-877-8339.
What is FHA?
The FHA is part of HUD. FHA provides mortgage insurance to approved lenders who in turn offer mortgage loan financing to individuals and families throughout the United States and territories. The FHA mortgage insurance enables approved mortgagees to provide home loans to eligible borrowers who might not otherwise qualify for mortgage loan financing.
FHA borrowers are often first-time homebuyers, moderate-income families, or folks who can't afford a large down payment. To learn more about FHA's programs, please visit Link opens in a new windowhttps://www.hud.gov/fha or contact the FHA Resource Center at 800-CALL-FHA (800-225-5342).
U.S. Department of Housing and Urban Development (HUD), Federal Housing Administration (FHA). (2012, April). Save your home: Tips to avoid foreclosure (Doc. No. HUD- 2008-5-FHA). Retrieved June 21, 2024, from https://www.hud.gov