5 Steps to Stopping Home Foreclosure

Step 5 Understanding your lender's position

Whether you're already behind in your payments, or you think that you might run into financial trouble soon, you need to act now!

This page:

  • Explains how your lender will proceed

  • Helps you understand the lender's interests

  • Makes clear what you can expect from your lender

If you missed them, steps 1-3 in our stopping home foreclosure guideexplains what you should do right away, and step 4 helps you assess your options.

Step 5: understanding your lender's position

This step is often overlooked by many homeowners with financial problems. But what happens to your home has very much to do with how your lender sees the situation. Lenders want to protect their investment, too.

When you are late with a mortgage payment, the loan servicer will try to contact you to collect on the 16th day of tardiness. After 30 days, these attempts will grow more serious, and after 90-100 days, the servicer will refer to a mortgage attorney and begin the foreclosure process.

Intervening in this process as soon as possible is crucial. Lenders like to know that you're acting in good faith and keeping in contact with your servicer can do just that. It will help protect your credit and your investment. It may even mean the difference between keeping and losing your home. Lenders are very often willing to be flexible in order to help you honor your loan. In recent years, lenders nationwide have made efforts to resolve mortgage problems without foreclosure. Early intervention is key.

This said, it is important to remember that while lenders are usually open to negotiation, they are still very interested in their bottom line. No matter how little fault there is on your side, if foreclosing is the best way of protecting their investment, most lenders take that route. For this reason, having a lot of equity in your home can actually limit your options if you run into financial difficulty, particularly if it is long-term. If a lender can make good on an investment by foreclosing and reselling, they probably will.

So if you have a lot of equity, it's doubly important to act fast. Talk to your lender right away and discuss your options. You need to protect your investment, because it's a very large one.

You should be ready to act now to Stopping Home Foreclosure save your home. Contact your lender, and develop a payment plan, if possible. If not, stay in contact through the proceedings and you will save at least some of your equity, and hopefully your credit rating.

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