How to Stop Foreclosure, According to HUD

If you have been missing your monthly loan payments and you have received default notices from your lender, do not ignore the notices and do not keep on delaying action. Find information on how to stop foreclosure at government web sites and ask help from HUD-certified housing counselors in your area.

The further you get behind in payments, the bigger your total arrears would be and the more difficult it would be for you to save your house from foreclosure.

The first thing you should do is to have an accurate assessment of your financial situation. Gather your financial documents, including your recent paycheck stubs, federal and state income tax returns for the last two years, home loan documents, other financial documents such as social security benefits, 401(k) or rental contracts, bank statements for the last two months and all default notices from your lender.

Next, list all your monthly expenses and your monthly income. With your data, you can see why you have not been able to pay your monthly home loan payments. Either you have been spending for unnecessary items, your income has significantly gone down or something happened such as serious illness in the family or divorce.

While preparing your data, write a short but clear hardship letter explaining why you missed your home loan payments.

In the meantime, find ways to cut your expenses. Stop cable entertainment subscriptions. The money you save will help you a lot to keep your home and to get rental housing in case you are not able to save your home. If there are ways you can increase your income such as renting out one or two of your rooms to screened renters or accepting additional part-time work, you can certainly increase your chances of keeping your home.

After completing your financial documents, contact a certified HUD counselor so he will check your documents if you missed something and he will help you negotiate with your lender. He will also refer you to a mediator if your state has a mandatory mediation program and will inform you about other programs that can give you other forms of assistance.

Nowadays, there are a lot of nonprofits and professional organizations willing to help distressed homeowners. Avoid approaching private companies offering all sorts of foreclosure prevention help. Most often, they are fraudulent.

Lastly, if you are not qualified for loan modification, do not give up. Explore other alternatives to foreclosures such as short sale, forbearance or property right conveyance.