As bad as the foreclosure crisis is, it only seems to be getting worse. In the first quarter of this year, more than 900,000 households received a foreclosure notice in the mail and some analysts have estimated that at least 1 million homes will be repossessed by the end of this year. But that’s just the tip of the iceberg. There are also millions more homes that are at risk of being foreclosed on by 2012.
For many Americans, the foreclosure process is particularly stressful not just because of what’s at stake, but because consumers often lack the expertise to understand all the nuances of why their home is at risk and what they can do to save it. “This process is second only to rocket science in its complexity,” says Brian Sullivan, a spokesperson for the U.S. Department of Housing and Urban Development.
We spoke with Sullivan about a few simple steps that homeowners can take to avoid foreclosure, and have added in a few tips of our own. If you or someone you know has received a foreclosure notice or if you’re worried that you may be at risk, follow these tips to prevent the worst from happening.
Start the Dialogue Early
Even before a foreclosure notice gets tacked up onto your door, you should be prepared to act. “You should contact your lender as soon as you have a problem or anticipate one,” Sullivan said. If you or your spouse have recently become unemployed or been forced to take a salary cut, you should not hesitate to open a dialogue with your lender. You’ll definitely want to do this if you notice that one or more homes in your neighborhood are being foreclosed on, which could affect the prospects of your own home.
According to the Department of Housing, lenders are more interested in helping you keep your house than they are in trying to repossess it, but there are limits to their goodwill. “Begin to have a discussion as early as possible,” Sullivan said. This becomes even more important once you have been notified that your home is at risk of foreclosure. “An avoidance strategy can compound a home owner’s problems. If you’re one or two months behind, that’s better than when you’re nine or 12 months behind. A lender is much more willing to work with you if you’re just a little bit in trouble.”