Released March 26, 2009
URBANA, Ill. - Homeowners fall behind in paying their mortgages for three primary reasons, but in any of these scenarios, there are things you can do to avoid foreclosure, said Susan Taylor, a University of Illinois Extension consumer and family economics specialist.
"You may have experienced a reduction in income caused by life events--death of a spouse, loss of a job, or an illness that keeps you from working. Or you may have failed to understand the terms of your mortgage--what type it is and the clauses it contains. Finally, you may have been lured into an unsustainable mortgage by a predatory lender.
"No matter how you arrived in this situation, there are steps you can take that will help. Illinois State Treasurer Alexi Giannoulias's office has published a brochure that gives helpful tips for preventing foreclosure, and they've given us permission to share this information," she said.
This just in:
1. 2009 Federal Foreclosure Prevention Initiative. As part of President Obama's comprehensive Homeowner Affordability and Stability Plan, you may be eligible for a special Making Home Affordable loan modification or refinance, to reduce your monthly payments and help you keep your home. For specifics on the plan or to see if you are eligible, visit http://www.makinghomeaffordable.gov.
Back to the basics:
2. Understand your loan. If you have a fixed-rate mortgage, your payments will stay the same throughout the life of your loan. If you have any type of adjustable-rate mortgage (ARM), including interest only, balloon, and two-step mortgages, your monthly payments will change. You must understand how and when these changes will begin affecting your monthly household budget.
3. Know your rights. If you are unable to make payments, immediately locate your loan documents to determine what your lender can do. For free assistance in understanding these documents, contact the Homeownership Preservation Foundation, a non-profit organization dedicated to helping homeowners prevent foreclosure. Visit www.995hope.org or call their hotline at 888-995-HOPE.
4. Contact your lender right away. Your lender may have a loss mitigation specialist who can provide alternatives to assist. Do not avoid lender communication, hoping the problem will go away. Review your payment book or monthly mortgage billing statement to determine how to contact your lender. Often the mortgage broker or financial institutions originally involved in your home purchase no longer handles the serving of your loan.
Make sure to document all verbal communication during this process, including the date, name of representative, and a brief summary of the conversation. Keep copies of all written communication.
5. Seek assistance from a housing counselor. If assistance isn't available through your lender, the Homeownership Preservation Foundation or the U.S. Department of Housing and Urban Development (HUD) can help you find a HUD-approved housing counselor who can speak to your lender on your behalf to help you work out a better solution. Visit HUD's website at http://www.hud.gov or call 1-800-569-4287.
6. Prioritize your spending. The Illinois Department of Financial and Professional Regulation can help you find a debt-management company licensed by the State of Illinois to assist you. Debt managers can assist with budgeting, financial education, and programs to control your debt situation, especially if you have unsecured debt, such as high credit-card bills. Visit http://www.idfpr.com or call 888-298-8089 to locate a licensed debt manager near you.
7. Avoid foreclosure scams. If the foreclosure process has begun, your foreclosure status becomes public information. You may receive mail or phone calls with promises to help "get you into a new loan," "buy your property," or "save your credit." Beware of such calls, which tend to come from scam artists. Freddie Mac provides information about how to avoid predatory lending on their website: http://www.freddiemac.com/. If you suspect you may be a victim of predatory lending, visit http://www.stopmortgagefraud.com or call 1-800-348-3931 to learn more about your rights and how to file a complaint.
This information is available in brochure format at http://www.treasurer.il.gov/programs/finally-home/pdf/Foreclosure_Prevention_Flier_071508.pdf. Phone numbers for the Chicago, Springfield, Rockford, Mt. Vernon, and Rock Island areas are listed on the brochure, she said.
For more information on which bill to pay first, how to talk with your creditors, how to deal with stress, how to stretch your food dollars, and much more, visit U of I Extension's "Getting Through Tough Financial Times" website at http://www.ToughTimes.illinois.edu.
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http://www.aces.uiuc.edu/news/stories/news4720.html
Contacts: Susan Taylor, (708) 720-7520, setaylor@illinois.edu
Phyllis Picklesimer, 217-244-2827, p-pickle@uiuc.edu
