Planning Intermediate: How to Avoid Foreclosure

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Why would a homeowner facing foreclosure try to sell their home before the lender forecloses?

If the house has appreciated in value, a homeowner might consider selling it, paying off the mortgage, and buying a house that is more affordable

The homeowner might want to move before the foreclosure is resolved, and selling the house is the best way to do that

A homeowner might want to sell their home before the lender forecloses, if the costs of the foreclosure, including legal fees, are unaffordable

If the house has appreciated in value, a homeowner might consider selling it, paying off the mortgage, and buying a house that is more affordable. This also assures that a foreclosure is not reported to credit bureaus.

In mortgage talk, a "short sale" means that a homeowner sells the house to avoid foreclosure, and the lender agrees to accept the sale proceeds even if they're less than the loan amount.

True

False

True. Unfortunately, lenders may be reluctant to agree to a short sale.

Federal programs for homeowners facing foreclosure are available to all homeowners, regardless of their situation.

True

False

False. There are many requirements that homeowners must meet, some of them quite demanding.

When faced with possible foreclosure, what is the best way to handle negotiating with your lender?

You should wait until the lender contacts you because, until that time, the lender isn't willing to negotiate

First seek advice from several professionals, as it's not serious to be late on payments if you are better prepared to discuss your options

You should contact your lender as soon as you realize you'll have a problem, ideally before you miss a payment

You should contact your lender as soon as you realize you'll have a problem, ideally before you miss a payment. Sooner is better than later because if you wait too long, the lender might insist on foreclosure.

When negotiating with a lender, what option or options might you suggest?

Forbearance is really your only option in negotiations

Loan modifications and loan reinstatement are options in negotiating with your lender

Most lenders are not interested in negotiating

Loan modifications and loan reinstatement are options in negotiating with your lender. Lenders would rather negotiate with you than foreclose on your home, and would consider several repayment options.