Recession Information Center | Recession tips

Recession Info Center

Recession tips: Facing foreclosure during recession:

What to do if you are facing foreclosure in recession:

If you find yourself for whatever reason in a situation where you cannot meet monthly
mortgage payments, you may receive a foreclosure note from your lender. And
unfortunately this has become a very common situation in the current recession. The best
thing to do is to start acting immediately. The first thing you need to do is to arm yourself
with information and learn your rights. Foreclosure is something that you absolutely do not
want to have on your record because it will practically ruin your credit report. Ask for
professional advice and do not take the situation lightly, especially given the current
recession:

Keep communication lines open with your lender: Do not try to avoid the
problem by ignoring the lender institution. Open every mail you receive from your
lender and respond to them immediately. Then call your mortgage company to
explain your situation and possibly negotiate a plan. Remember that they do not want
your property, so in some cases, but not all, lender may be able to work out a plan
with you, such as reduce your interest rate, lower your monthly payment or agree
to a repayment plan for missed payments. It is also important to prepare yourself by
organizing your house-related documents before contacting your lender. Read
through the documents and learn all your options beforehand. Do not call to ask
your lender about your options, but know them before calling. Knowing your
options will allow you to build a strong case about your situation. Remember, they
do not want your home, so if you have a strong convincing case, lenders will work
with you. This is why it is so important to act quickly. It may be necessary in many
cases to ask for professional advice.

Consider selling the house: If you believe that the current situation that you are
in is not temporary, consider placing your house on the market. Price it lower in
order to attract more customers. Some real estate experts recommend putting
property at a lower price first to attract traffic instead of chasing the market where
owner prices the house at the higher price and then have to lower it with time.
Remember that you are dealing with a time crunch and selling the house even at the
lower market value may make sense, if it allows you to save your credit. Another
option is to consider a “short sale” where an owner sells the house for less than
what she owes to the bank. If your financial institution agrees for a “short sale”, it
means that it will take what you sold the house for and forgive the rest of the
balance you owe. Also, lenders may agree to a “deed in lieu of foreclosure” where
you voluntarily give the deed of your home to the lender. Making the right decision
here can save your credit. And this is even more important now, considering the
current recession. So consider all the options and ask professional advice.

Beware of the scams: When you are in a vulnerable place, scammers may take
advantage of you. To prevent being a victim of any scam, buyers need to equip
themselves with information. Some institutions, like Freddie Mac, provide valuable
information on foreclosure scams on their site. Bear in mind, if something sounds
too good to be true it is usually is. So, always have independent experts on your side.

Stay focused: It is important not to spend too much and time on regretting and
blaming yourself. You are not alone. Given the current recession, in past two years
many people have found themselves in the similar situation and were able to fix it.
Thus, it is important to stay strong and focused. Exhaust all your options first
before giving up and ask for professional advice. Many many people have
successfully dealt with it and have stories to tell.

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