When properly managed, your home could be a lifetime investment. The money you pay each month toward your mortgage will help you accrue equity, and any repairs you make to the property or upgrades to its systems will increase the property value when you refinance or sell it in the future.
All of your investments will be at risk if you fall behind on your mortgage payments. Your lender could initiate foreclosure proceedings and reclaim your residence as the collateral property for your loan. What steps do you need to take to protect your family from foreclosure?
Review your finances and mortgage paperwork
Sometimes, lenders make mistakes about the enforcement of their mortgages. They may have failed to record a payment that you actually made, or they might initiate foreclosure proceedings before their contract technically allows them to do so.
It is important that you look at the terms of your mortgage and your recent payment history to validate whether your circumstances actually justify starting the foreclosure process.
Reach out to your lender
Once your lender sends you a warning letter that foreclosure is imminent, you need to act quickly. If you worry that you cannot effectively and calmly communicate with them, you may want to have an attorney make this call on your behalf.
Your lender may be willing to work with you, especially if your finances are about to go back to normal. In some cases, they may even agree to modify the terms of the loan, such as moving the payments you have missed to the end of the loan rather than forcing you to pay them all at once right now.
Take emergency action if necessary
Ideally, a review of your mortgage and a conversation with your lender will put you in a position to get your mortgage back in good standing. However, perhaps your lender is not cooperative about modifying your mortgage, or maybe they are unresponsive.
You can defend against the foreclosure in court, but you may want to avoid going to court right now until you settle other financial issues. Filing for personal bankruptcy might allow you to temporarily halt foreclosure proceedings while also potentially discharging some of your unsecured debts, like medical bills and credit card balances. A successful bankruptcy will not only temporarily halt collection activity like foreclosure but will also make it easier for you to balance your budget after a discharge.
Taking the right steps to protect yourself from foreclosure can help you preserve your most valuable asset.