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What’s the Best Way for a Family in Tampa to Avoid Foreclosure?

What's the Best Way for a Family in Tampa to Avoid Foreclosure?

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Image by Kenny Eliason via Unsplash

Many Tampa homeowners who have missed monthly mortgage payments are concerned about how to avoid foreclosure. It’s stressful to worry about pending legal action while also being unable to make this month’s mortgage payment.

If you are to weather financial problems and avoid foreclosure, you may find resources for mortgage relief options helpful.

Stop Foreclosure by Starting Now

Although it may feel overwhelming to get useful information on avoiding foreclosure, Floridians are mostly likely to get help if they reach out for help as soon as they know there’s a problem and take proactive steps to stay out of foreclosure.

Contact your mortgage servicer as soon as you can.

Many mortgage servicers have foreclosure prevention options of which you may not be aware. If you’re experiencing financial hardship, start with your loan servicer.

Contact your lender and find out if they’ll allow you to delay payments or create a repayment plan for any missed mortgage payments. Usually, a mortgage company would much rather avoid the foreclosure process, so your mortgage servicer could provide options such as:

loan modification

A loan modification is when the mortgage lender permanently changes your mortgage to make it more affordable to you.

SHort refinance

A short refinance is a type of loan modification in which the mortgage company changes the terms of your loan so that you don’t go into foreclosure.

repayment plan

A repayment plan can help you restructure your missed payments, adding some of the past due amount to your monthly mortgage payment.

forbearance

A forbearance is when your mortgage servicer allows you more time to pay on your mortgage loan by reducing or eliminating the monthly payment until you have come out the other side of your financial difficulties.

Often, a forbearance is combined with a repayment plan. Note: this is not a situation in which the lender forgives the missed payments. You will likely have to repay the loan in one lump sum at the end of the forbearance.

Mortgage companies have an incentive to help you afford your existing mortgage, so they can be a great first stop in foreclosure prevention help.

Learn about the foreclosure laws in Tampa.

There are many for profit companies who make their money from foreclosure recovery scams. One way to avoid foreclosure prevention companies that are not legitimate businesses is to be aware of federal law regarding loan documents.

Some resources to check first could be:

HUD approved housing counselors

A HUD approved housing counselor is someone certified by the United States government Department of Housing and Urban Development to look at your unique financial difficulties and help walk you through options that are possible with your personal finance situation.

your trusted real estate professional

A trusted real estate professional is one of the people more familiar with mortgage terms and may be able to offer you professional advice about how to avoid or navigate foreclosure proceedings. They might also be able to advise you on the types of things lenders might do in lieu of foreclosure.

the state government housing office

At each level of government, from federal to state, from Hillsborough County to the city of Tampa, there are professionals who can help refer you to loss mitigation programs. When mortgage holders work with homeowners to avoid a foreclosure sale, the process is called loss mitigation, and your local or state housing office can help you make sure your servicer is following the regulations of this process.

a law firm

Your mortgage is, after all, a legal document, so sometimes it’s helpful to find a legal professional that is familiar with the foreclosure process and has experience in foreclosure court. Just be sure that if a firm claims to “reverse foreclosure immediately” or some other grand claim that you check their credentials. You wouldn’t want to pay fees for advice that won’t actually be of help to you.

Investigate your own finances to see where you might make changes.

Foreclosure prevention woman

Image by Firmbee via Pixabay

Some people have fallen behind on their mortgage payments due to a medical emergency or some other sudden and unavoidable financial problem. Others just don’t have the same amount of funds free with the cost of living increasing.

Whatever the reason you’ve been unable to make mortgage payments, there are a few things to look at to increase your financial stability, even if only in the short term:

  • optional expenses
    • Cable TV, streaming services, or other entertainment expenses are often a place homeowners can cut back.
      • Are there services you’re paying for monthly but rarely use?
  • unused subscriptions
    • As above, are there any subscriptions you’re still paying for that you aren’t making use of? Check to see if you signed up for a free trial of a service and forgot to cancel when the trial period was up.
  • luxuries that aren’t so luxurious
    • Sometimes, we continue with an expense out of habit, rather than necessity. Would you be just as happy making breakfast at home as you would eating fast food on the way to work?
    • Would you work out just as often (or maybe more!) if you used those free weights in the garage instead of paying a monthly gym membership?
    • Would you be satisfied spending some time with your best friend painting each others’ nails, rather than going to the spa every three weeks?
    • For some of these types of questions, the answer will be “No! Absolutely not! That makes me happy, and my quality of life will suffer without it!” But if you find some products or activities that would still be enjoyable without the extra expense, why keep paying for something that doesn’t add value?
  • your bank balance and your credit report
    • Usually, you’ll first learn about mistaken or fraudulent charges from your bank statement. Most banks allow you to set up alerts for charges over a certain amount or a balance that dips below a certain amount. Even with such alerts, it’s often a good idea to check your accounts regularly to be sure everything is on the up-and-up.
      • Additionally, you may find recurring charges for something you’d forgotten about! A bank statement is a great place to check to find out where your money is going.
    • There are several reputable places that you can regularly check your credit report for free. It’s usually wise to look in on your credit periodically and ensure that there aren’t erroneous items that are bringing down your score.
      • Sometimes, there are reports of people seeing charges in default on their credit report that they know they’ve paid off! Keep abreast of what’s being reported so that you can take quick action if there’s a mistake.
  • insurance and investments
    • Generally, people who find themselves behind on mortgage payments aren’t gaining and losing millions in the stock market every day. However, even those of us with an average income may be forgetting about some “set it and forget it” programs.
      • For example, if you have a whole life insurance policy — often recommended to homeowners so that their family doesn’t inherit their mortgage expenses — you may have a cash value in it that you can draw from or borrow from.
      • Perhaps in times of more financial stability, someone invested in a mutual fund or retirement account that would allow you to draw on some of the value.
        • Note: you may have to pay fees for withdrawing money from some of these types of accounts. However, if the only alternative is foreclosure, sometimes the fees are worth it to homeowners.

Resources for Every Type of Homeowner

Just as there are different kinds of homeowners, there are different kinds of loans and different options for assistance. Knowing what you have can also help you figure out where to go.

Look for programs that assist people like you.

In Florida, there are specific mortgage assistance programs for seniors, for veterans, and for other groups. Check local and state websites to find out if there’s a program for you.

The type of loan may make a difference.

If you have a federally backed mortgage loan, like an FHA loan, you may find federal assistance programs to help you stop foreclosure. The United States government has developed programs to help homeowners stay out of foreclosure, and the qualifications for the programs vary. Check to see if you qualify for one of these.

If your mortgage is through a private lender, you may be able to work out an arrangement with them in lieu of foreclosure. For example, you could forbear the remaining debt and pay it in a lump sum if you’re expecting a windfall.

If you own a home outright already and are struggling to make payments on a second home’s mortgage, you may be eligible to explore a type of loan called a reverse mortgage. In this case, you’d borrow against the equity in a home to get a loan.

Homeowners must be at least 62 to qualify for a reverse mortgage, but there is no loan term as with a traditional mortgage. Instead, the loan is repaid when the borrower is no longer in the home.

When Foreclosure Seems Inevitable

Even if it turns out that a homeowner is unable to adequately modify the terms of their loan or their personal finances to be able to afford their payments, they may not necessarily enter foreclosure and be forced to move. These options may be a last resort, but a homeowner might still find them preferable to foreclosure.

deed in lieu

A deed in lieu is when your mortgage holder accepts the deed to your home as payment for the remainder of the mortgage. Using a deed in lieu means that the company doesn’t process a foreclosure, which can adversely affect your credit score. Instead, with a deed in lieu, the servicer owns the house, and the homeowner can leave without debt on the mortgage.

hard money loan

A hard money loan is different from a traditional loan or mortgage in a few key ways:

  • the house is the collateral
    • Rather than a deep investigation into your finances to ensure you’re capable of repaying a loan, as a traditional mortgage servicer might do, in a hard money loan, you’re putting up your house as collateral for the loan.
  • private lender
    • Often, the lender is a private person or company who specializes in these types of loan.
  • more expensive
    • Because the lender is taking on more risk, the interest rates tend to be much higher than a traditional mortgage.

short sale

If the lending company agrees to a short sale, the homeowner can sell the house for less than the cost of the remaining mortgage. The lender might forgive the difference or request repayment for what is left over. A short sale doesn’t allow you to keep the house, but it can help you avoid foreclosure.

There is Hope for Homeowners

Although it can seem daunting, foreclosure is not the only destination for a homeowner behind on payments. There are people, programs, and companies designed to keep you in your home — or at least to be sure foreclosure doesn’t weigh you down unnecessarily.

If you’ve fallen behind, reach out and ask for help. Your lender, your realtor, housing counselors, and others can assist you in finding the right option for you.

Brett Riggins

Brett Riggins

Founder of Connect Home Buyers Brett Riggins started his real estate journey after graduating from Western Michigan University in Construction Engineering. After completing his first few residential flips, him and his wife Arin started Connect Home Buyers LLC, and today, they help homeowners sell their property quick and hassle-free.

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