If you're a homeowner who has gotten to the point where you know the bank is about to start foreclosure proceedings, you need to take action. Because negotiations to stop foreclosures, and the actual foreclosure process, can be unpredictable, you have to be ready for anything, even if it looks like the process will take a while. Here are three steps to take once foreclosure looks imminent.
Packing and Storage
Whether or not you want to stay in the home during the foreclosure proceedings, if you're planning to eventually leave, start packing things up and either put them into storage or leave them with a friend. Getting most of your belongings out now protects you in two ways:
- If it turns out you have to make a fast exit once foreclosure starts, you'll have less stuff to worry about at that time.
- If you're dealing with an unscrupulous lender who tries to lock you out, most of your belongings will be safe. Remember, even if the law prohibits the lender from locking you out and clearing out your stuff, an unscrupulous lender can still try it, as illegal as it might be.
Remember, you can always retrieve your belongings if something works out and you can keep your house.
Exhaust Your Options
Regardless of your desired outcome for the foreclosure process (foreclosure, walking away, last-minute saves, and so on), do not actually just walk away without trying to stop the process. Looking into and trying these different options will give you a record that states you tried to avoid foreclosure. This is important because if you just leave, banks could mark you in the future as a very high risk for new mortgages. In other words, not trying marks you as someone who is just going to dump mortgages left and right. Negotiate a payment plan to make up the missing mortgage payments, ask about short sales, investigate using the many federal programs available to people dealing with potential foreclosure, and even look into declaring bankruptcy to avoid taxes from your home. You can always stop and let the foreclosure happen, but trying these things will make your future record look better.
Cut Your Budget Now
If you've been missing house payments, chances are your budget is already under strain. But you need to cut spending down as much as you can and up your earnings (through a side job, for example) to save up money. It sounds obvious, of course, but it's something that needs to be a priority. You'll need the money for potential fees, moving costs, a deposit on a new place, and so on. Every little bit helps.
Contact a foreclosure lawyer, too, to discuss options and strategies for making this less painful for you. The wave of foreclosures over the past several years has led to changes in laws that are designed to help you, and the lawyer can help you take full advantage of those laws.