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Don’t
panic! Do not focus on one event but consider the big picture. Your lender
is not in the business of foreclosing properties and owning real estate.
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Call
your lender as soon as you realize that you will miss or be late on a
payment. Then you can work out an agreement on your payments. Start the
procedure to gain some time. Don’t deal with the bill collector; contact
your lender who is the final authority.
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If FHA
or VA insured your home mortgage loan, review your options under such plans.
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Under
FHA loans: you get a one-time payment from the FHA Insurance fund if your
loan is 4 to 12 month-due if you prove that you are able to afford future
mortgage installments. You sign an interest-free promissory note and HUD
places a lien on your property. Call 1-800-569-4287 for HUD-approved
counseling agency or visit nearest
counseling agency
to find one on the Internet. Learn more about
Mortgage Relief.
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Under VA
loans: Financial counseling is available to help you avoid foreclosure is
available at VA Regional Loan Centers. Call VA Regional Loans Center at
1-800-827-1000 and ask for the phone number of the Loan Service
Representative nearest you.
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Military
people have some special privileges under the Soldiers and Sailors Civil
Relief Act to stop foreclosure.
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Reinstatement option: promise a lump sum to bring payments current by a
specific date. You need to negotiate modalities with your lender.
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Consider
refinancing to bring your loan current and even get extra cash depending on
your equity. Refinance for lower installments based on lower interest rate
or extended loan maturity.
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Change
your mortgage agreement: add the past due amount into your existing loan to
finance your home again. Spread your payments to a longer time period.
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Deed in
Lieu of Foreclosure: lender allows you to sell your property in a specific
time period, in turn forgiving the debt.
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Sell
your home by yourself to avoid foreclosure and pay the mortgage off.
What is
forbearance?
Lender and homeowner usually can negotiate and delay foreclosure. In
general, lenders engage in forbearance, that is, they delay foreclosure to
give the borrower extra time. In principle, lender can start foreclosure
process if homeowner is late on first payment but most wait for several
months to do that.
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