Living in a very high cost area, where property values are stratospheric and home ownership continues to be out of reach, I’ve gotten to know many homeowners who are biding their time with regards to making a new home purchase. But along with those folks who haven’t been able to enter the housing market, there are those who, unfortunately, have found their way into this market at the wrong time: during the peak of the real estate bubble.
I remember discussing this phenomenon some time ago, as it was transpiring. The subprime mortgage crisis and debacle has clearly done a number to our economy, leading us into a financial crisis and credit crunch. I remember the time when I once looked upon with envy on colleagues who were building their network of investment properties — their own mini real estate empires, if you will. I remember how friends and family would contemplate and proclaim their interest in joining the herd that wanted so badly to enter the real estate industry as agents, brokers or investors.
Today, many of these colleagues who pursued those dreams then and who tried their hand at investing in real estate are now suffering the nightmare of dealing with underwater mortgages. There are also others who simply are having a hard time paying their mortgage each month and worrying about what they can do to forestall what seems to be the inevitability of foreclosure.
Get Educated About Foreclosure With Fannie Mae’s KnowYourOptions.com
If you’re in a similar predicament, and you’re finding it tough to keep up with mortgage payments, then a resource offered by Fannie Mae may offer you some information and assistance. It’s called KnowYourOptions.com and is a pretty comprehensive site (and free resource) that provides struggling homeowners some valuable insights on how to avoid foreclosure.
Image from Barrons.com
Why should you sidestep foreclosure? Because there are many more favorable options you should investigate that will have less damage to your credit and keep your finances in better standing. Entering foreclosure might also leave you with the obligation to pay your mortgage lender with what’s known as a “deficiency” mortgage balance.
Should You Keep Your Home or Walk Away?
Now I’ve received a lot of questions from readers over the last few years with this one question in mind:
Should I stick with a house that’s losing me money each month or should I walk away from this mess? Should I stick with mortgage payments that I feel I can’t afford?
Here’s the thing: don’t walk away (just yet). You can’t and shouldn’t make that decision lightly. Getting the full picture of your situation can only help you. I’ve taken a look at the KnowYourOptions.com site and here’s what you’ll see there:
- Find out what options you have that can keep you in your home and avoid foreclosure. The possibilities here include: refinancing your mortgage, working on a repayment plan, seeking forbearance (you may be able to negotiate with your lender about temporarily suspending or reducing your payments), qualifying for a mortgage loan modification, and investigating a Deed-For-Lease. That last one is something I hadn’t heard of before, but could be a consideration if you’re open to temporarily leasing your home as you get back on your feet.
- Find out what options you have that involve having you give up your home, but still allowing you to avoid foreclosure. For instance, look into a short sale or Deed-in-Lieu of Foreclosure (DIL).
- Take a look at numerous other resources here such as calculators, forms, videos and even possible access to a HUD approved housing agency or counselor.
- There is also an area devoted to helping you become aware of existing scams that are targeting vulnerable homeowners. It may be easy to spot a likely scam: if a counseling service asks you to pay a fee upfront, guarantees you a loan modification or asks you to stop or redirect your mortgage payments, then you should be suspicious and report them to the proper organizations (LoanScamAlert.org or PreventLoanScams.org). Note that HUD approved housing counselors will offer their services for free.
Hopefully you’ll decide to explore this site further in depth, whether or not you feel the need to manage your mortgage. The information and resources here are FREE. I found it to be pretty enlightening and assuring to note that you can be proactive about your housing situation and that there are government programs that you may turn to just in case you need any kind of support.
Created January 25, 2011. Updated July 24, 2012. Copyright © 2012 The Digerati Life. All Rights Reserved.
{ 5 comments… read them below or add one }
This is pretty helpful stuff. I also know an acquaintance or two who are on the verge of losing their property. This could be some things to think about before it gets to that point. Glad to know that there are these resources available and that the gov’t and other financial bodies are trying to get the word out. Must be part of the whole focus on real estate market support — inform the public!
I wish people would contemplate their options earlier in process – when there are more options available to them. Often we get people trying to refinance when the foreclosure process has already started. It make it very difficult to find a lender willing to refinance when a home is entering or in receivership. If many of these very same people would have contacted us a few months earlier, there may have been more we could have done to help prevent unnecessary foreclosure. I’m not going to lie, it gets frustrating. Great resource! I will pass it on (although some of this doesn’t apply to Canadians – it is still contains good advice).
Of all the resources out there on debt management, I think this is one of the most helpful. Seems like KnowYourOptions is a pretty well organized site and gives you the lowdown on a lot of different avenues you can consider when you map out your “get out of debt” plans. Lots of people don’t know where to start when contemplating foreclosure. I would start by checking out this site, then if you so decide that you need more help/assistance, see if you can get a hold of a HUD approved housing counselor.
Apparently, these counselors may be able to help for free. I am aware of at least one person who tried this but found government help a bit lacking, but if you’ve got time to explore a free channel, then why not? Best of luck to all who are seeking answers to their situation.
Fannie Mae has been doing a lot to help distressed homeowners. Unfortunately, I don’t think enough is done. We still get flooded with phone calls asking for help. ~Sellnyhomesnow.com
In today’s economy it’s hard to know where to go when you are faced with financial trouble regarding paying your home’s mortgage and knowing what your options are.