Learn some of the basics about avoiding and handling foreclosures.

Avoid Foreclosure

Foreclosure is a situation in which a homeowner is unable to make mortgage payments as required, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage contract. 

Step one: communicate with your lender

As soon as you realize that you are going to have trouble making your mortgage payments, contact your lender and tell them about your financial difficulties.  This gives them the opportunity to work with you to create a plan.  Do not stop paying your bills, and do not wait until you cannot make payments before you act.  Though you may feel scared or embarrassed, immediately begin working with your lender to avoid foreclosure on your home.  Learn more about how to talk to your lender about trouble making payments.

Step two: work with the MHA program

You can get help through the Making Home Affordable (MHA) program, which provides free counselors for advice and assistance with keeping you in your home or getting out safely. Visit the MHA website to read about the options and what you’ll need to prepare.

MHA has a hotline you can call anytime: 1-888-995-HOPE (1-888-995-4673) and TTY users should call 1-877-304-9709.  You can also find a counselor in your area.

Your state's housing agency might have a foreclosure avoidance program as well.

If you have an FHA loan, call the FHA National Servicing Center at 1-877-622-8525.

Beware of mortgage relief scams.  One sign of a scam is when they ask for a fee in advance.  Learn how to spot housing scams and report housing scams.

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Foreclosure Scams

Dishonest companies or individuals sometimes target homeowners who are struggling to meet their mortgage commitment or are anxious to sell their homes. Scam operators like this promise to help you keep your home or sell your home without having to go into foreclosure, for a fee. However, they rarely deliver on what they promised.

These scam operators find potential victims in several ways:

  • Advertise online and in local publications
  • Distribute flyers
  • Contact people whose homes appear in the foreclosure notices (they can easily find these notices online or in a local newspaper)
  • Target specific religious or ethnic groups

Common Foreclosure Scams

There are several types of foreclosure scams, but some scam activities or offers are common. Be cautious if the company:

  • Offers to negotiate with your lender
  • Advises that they can stop foreclosure by "helping" you file for bankruptcy
  • Asks you to sign over the title to your house to them and make smaller rental payments to them until you can afford to buy the house back later
  • Promises to act as an intermediary between you and your mortgage lender to refinance your loan
  • Instructs you to make payments directly to them instead of the lender
  • Claims that they are affiliated with government mortgage modification programs (keep in mind that legitimate, government approved programs do not charge fees to participate in them)
  • Encourages you to sign fake foreclosure rescue documents
  • Claims that they can perform a forensic mortgage loan audit to help you hold onto your home

File a Complaint

If you need to report a foreclosure scam, you may file a complaint by contacting the Federal Trade Commission (FTC). If the scam involves bankruptcy, contact a local U.S Trustee office.

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Independent Foreclosure Review

The Independent Foreclosure Review was established to determine whether eligible homeowners suffered financial injury because of errors or other problems during their home foreclosure process between January 1, 2009, and December 31, 2010.  The following resources provide information on the review process:

Please note: Potentially eligible homeowners received letters from mortgage servicers, which included a Request for Review form. The deadline for Request for Review forms was December 31, 2012.

In 2013, many agreements were reached with mortgage servicers and federal banking regulators, thus ending the Independent Foreclosure Review process for those servicers.

As of October 10, 2014, $3.4 billion in checks distributed as part of the Independent Foreclosure Review Payment Agreement have been cashed or deposited. Because checks were issued with a 90-day expiration date to prevent fraud, checks issued in the early waves of distribution that have not been cashed or deposited have begun to expire.

The deadline for borrowers to have a check reissued in the name on the record is August 21, 2015. If you have questions:

  • Call Rust Consulting at 1-888-952-9105 Monday through Friday, 8 a.m. - 10 p.m. ET or Saturday, 8 a.m. - 5 p.m. ET.

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Mortgage Refinancing

Refinancing refers to satisfying a debt by making another loan on new terms. The most common consumer refinancing is for a home mortgage, which generally involves paying off your existing mortgage and taking out a new mortgage.

The following resources provide further information:

Making Home Affordable Program

The Making Home Affordable Program offers opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure. Call 1-888-995-4673 for more information.

Please note: New Federal Reserve rules require mortgage companies to notify homeowners when their loans are transferred to another company. The company that takes over your loan must send you a notice within 30 days of acquiring it. Even with a new loan owner, the company that "services" or handles your loan might not change and you might continue to send your payments to the same address. If that loan servicer changes, you will receive a separate notice.

For more information about servicing companies, read the Federal Trade Commission's publication "Mortgage Servicing: Making Sure Your Payments Count."

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