What to do if you find yourself in foreclosure trouble:

It is likely that if you have seen your monthly mortgage payment increase, you may find yourself not being able to afford the upward adjustment.  There are several solutions available depending upon your circumstances, but first and foremost - communicate with your lender.  Many debtors are afraid to admit to their lender that they are in trouble, but reality is that lenders do NOT want to go through the foreclosure process because of its cost to them, but also, they are in the business of lending money, not owning real estate.  Your current lender may be able to help you.  Many lenders do mortgage modifications that actually change the terms of the note.  They may convert the adjustable interest rate into a fixed rate.  They could also extend the number of years to repay the loan, or even put any missed payment into the balance of the loan and recast it.  Also, if you have an escrow shortage due to the increased insurance or property taxed, most lenders require the shortage to be repaid over 12 months by default.  If you ask, they could stretch the shortage payment s out to 60 months, or 5 years.  If you can work out a plan with your lender early, you can protect not only your credit score, but also your home.

If you find that the payment is just too much, you may need to get out from under the mortgage altogether.  This may require selling the home.  If you can not sell the home for the full amount of the mortgage, the lender may accept less than the full amount owed.  This arrangement is called a short-sale.  A short sale takes place when the bank allows you to sell your property even though their mortgage won't be paid. Be careful -- the bank may allow the sale to go through, but only on the condition that you repay the deficiency. In a deed in lieu of foreclosure, the property is signed over to the bank in exchange for the bank giving up its rights against you. Why might a bank agree to either of these? Lenders spend $30,000 or more to foreclose on a property. Most lenders will consider these options to avoid foreclosure costs.

These are options of last resort and require that you are already behind on your monthly payments, but this is less damaging to your credit report than an actual foreclosure and this option has certain limitations especially if you have more than one mortgage.

Beware of Scams!

Of course, when there is a large population that find themselves in trouble, there will always be unscrupulous entrepreneurs looking to take advantage.  We are seeing foreclosure prevention scams increasing as this problem grows.  Be wary of street signs that advertise that they will buy your house for cash.  These companies may in fact buy your home, however if you are not careful you may wind up letting them do so for only a few hundred dollars.  Other scam artists may approach you and offer to repay your mortgage or sell the property for you if you sign the deed over to them.  What happens in reality is you are left with no home, buy you still have a debt.  Signing a deed over to someone does not relieve you of any of the mortgage responsibilities.  These scammers are taking advantage of uneducated individuals.  Information is your best defense, and never sign a document unless you understand every word.

A New Horizon Can Help!

“We have seen a rise in foreclosures nationwide.  Cities that we work with have seen hundreds of foreclosures this year and counties all around us have seen their foreclosure number reach the thousands”, says Stephen Marcus, President and CEO of A New Horizon, “We’ve done what’s needed to help solve this problem and encourage other agencies to help tackle this crisis that is plaguing homeowners.”

A New Horizon has established its “National Pre-Foreclosure Prevention Hotline”.  The hotline is designed to assist people who believe they will be in danger of foreclosure in the coming months, while there is still time to solve the problem.  By anticipating problems in advance a large number of foreclosures can be avoided.

A New Horizon offers credit counseling and advice on avoiding foreclosure free of charge and as a public service.  Each person’s situation will be analyzed individually and confidentiality is assured.  Founded to address the social and economic problems caused by debt, the organization has several educational programs and its activities have received prominent endorsement of public officials and community agencies.  The number to the Pre-Foreclosure Prevention Hotline is (800) 466-0848 or (954) 545-6188 in Broward County.