The collapse of the nation’s real estate market and a softening economy have had a devastating impact on homeowners who took advantage of low interest rates, creative financing programs and an explosion in property values to get into the homes of their dreams.
Now many of those dreams have turned into nightmares.
In the first quarter of the year, foreclosures nationwide increased 72 percent, from 188,000 last year to 323,000 this year, according to RealtyTrac, an industry organization with a national foreclosure database. And the situation is worsening.
As hundreds of thousands of mortgage rates are about to reset, there are some things homeowners can do if rising mortgage payments threaten foreclosure:
Before foreclosure happens:
* Contact your lender’s loss-mitigation department and open communications about your situation.
* Contact a mortgage broker you trust who can start on a refinance for you, if you have sufficient equity in your home.
* Don’t wait to face the crisis until foreclosure happens.
But if foreclosure happens:
* Get legal counsel immediately.
* Save the monthly mortgage payments. The lender won’t accept payments while you’re in foreclosure, so sock the money away. If you want to pursue a workout with the lender, you will need it for a down payment.
* Foreclosure bailout companies can help, but make sure they are reputable before you pay them any money. Ask for references, check out the Internet and the company Web site, ask if the firm is associated with any legal counsel and check out that firm.
Don’ts:
* Don’t use the mortgage payments to pay down credit cards. You need to put the money away for a workout later.
* Don’t believe the bank will help you. The lenders want to help, but they won’t stop the foreclosure until they have money or a signed agreement in hand. Be proactive. If you wait for the lender, and the lender is slow sending documents, the process might go on too long to stop the foreclosure.
* Don’t sign anything without a complete understanding of what you are signing.     * Get an attorney, if possible.