Living After Foreclosure

The US Department of Housing and Urban Development has some good advice for people that are in danger of losing their home through foreclosure. Here are the last three tips from that list, with some discussion.

• 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.” This can be good advice if the setback that’s gotten the homeowner into hot water is temporary — that is, there’s a light at the end of the tunnel. People will go to great lengths to keep their homes. The flip side of this is that the lenders, unfortunately perhaps, are more willing to deal with you if you’re upside-down on your mortgage because they will take a really big loss if they end up foreclosing. If you have equity, staying on the defensive and paying however you can is the best way to go because you stand to lose more, because the lender is probably a bit more likely to foreclose if they have a cushion.
• Avoid foreclosure prevention companies. “You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.” Just like companies are beginning to see the market in helping people to walk away from their homes, companies are also well aware of the market to take some of the scare factor away from dealing with a lender and charging for things that could be done for free.
• Watch out for 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.” If it sounds too good to be true, well then it probably is! Facing foreclosure is disheartening and likely makes people feel more vulnerable and more willing to consider offers that would be disadvantageous under more normal circumstances.

My comments on the other tips are here and here.

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