10 Things You Should NEVER EVER do When You’re in a Foreclosure

1. NEVER WAIT UNTIL YOU HAVE LESS THAN 1 WEEK (to call your lender for help) BEFORE YOUR HOME IS SCHEDULED TO BE AUCTIONED OFF. In order to get the best chance of relief from your lender – you need to have a at least a good 3 day cushion to work with BEFORE your auction date. So many people call my office when he sale date is either that same day -or just one day away. That’s simply not enough time to get the wheels of your lender turning in your favor. Don’t wait till the last minute!

2. NEVER NEGOTIATE WITH THE CUSTOMER SERVICE REP WHO ANSWERS THE PHONE AT YOUR LENDERS OFFICE. This is one of the worst things you can do when you’re trying to save your home from foreclosure. The customer service reps are the zombies of the company, they know just enough to be dangerous & screw things up. For immediate, intelligent action on your foreclosure, you need to speak to specific people in this guarded department of your bank.

3. NEVER TELL YOUR MORTGAGE LENDER THE EXACT AMOUNT OF MONEY YOU HAVE SET ASIDE TO WORK WITH. To illustrate this point, let’s use a past due credit card debt as an example; Say you owe $4,000 on the credit card, and you’re 120 days late. If you tell the credit card company that you have $4,000 in the bank – you can bet they will demand all of it- right? Your mortgage is a debt that you’re late on, and the mortgage company is trying to collect a debt. So the same philosophy goes for the mortgage – it’s a past due debt that has negotiating room – and everything can be negotiated. So when your mortgage company asks you for ALL of your past due payments – or even ½ of that amount; NEVER tell them that you have that money stashed away. That’s all they need to hear from you to kill any future negotiations.

4. NEVER TELL YOUR LENDER THAT YOUR JOB (or your source of income) WILL SOON DRY UP. Once again, look at it from the lender’s point of view. Why would they re-negotiate your mortgage for you if they think that you will be unable to pay it back? Here’s how I would handle it if I were in a foreclosure (wink, wink): Yes, being honest with your lender is important, but this is your home we’re talking about! If you think that you MAY not have a job in the near future--- tell them that all is OK & your continued employment is no problem. At the very least I WOULD let them know that all is OK with your employment - as far as you know.

5. NEVER TELL YOUR LENDER THAT YOUR HARDSHIP IS DUE TO ANYTHING THAT COULD BE CONSIDERED SILLY. You have to look at this from the lender’s point of view. Why would they take a chance on you and re-negotiate your mortgage when they know you spent the mortgage money on something OTHER than a necessity? Bad things happen to good people all of the time- and if you’re in a foreclosure due to a silly action on your part, DON”T TELL THEM!!! (By silly I mean: you spent the money on a big vacation, or you co-signed on a car loan for a friend, or you had a drug / drinking problem, or you spent the mortgage payment on anything other than the bare necessities.)

Most of the time, you will need to provide some type of proof (like receipts) that show what you spent the money on. IF I were in a foreclosure- I might say the following: “I needed to lend a family member some money for an emergency, and she couldn’t repay me when we agreed. That started the snowball of effect of my mortgage being late”. Or “My car broke down & I couldn’t get to work for about 2 weeks while I saved enough money to get it fixed. So I missed close to 2 weeks of work & that started my late payments with you.” I would have a reason why I was late—and I would be sure that reason usually does not have a receipt associated with it. But that’s just what I would do.

6. NEVER IGNORE YOUR LENDERS PHNE CALLS OR CORRESPONDENCE. This may seem like a no brainer, but you would be surprised at the amount of people who will stick their head in the sand, hoping that the problem will just disappear. If you keep in contact with your lender, that shows them your being proactive and that you’re willing to meet the problem head on. When your lender sees you as a proactive borrower, the chances of getting them to modify your loan will increase.

After each conversation with your lender- ask the person on the phone to make a note in your file that you were cooperative and your willing to work out a plan with them.

7. NEVERSIGN OVER YOUR DEED TO ANYONE WHO REPRESENTS THEMSELVES AS A FORECLOSURE HELP SPECIALIST. In MOST cases it’s a scam. The intent is to steal your home & strip it of all of the equity possible. Sad to say, but this is happening more and more out there as the foreclosure crisis deepens. Also- signing over your Deed does NOT relieve you from making your payments either.

8. NEVER ABANDON YOUR HOME IF YOUR IN A FORECLOSURE. The lender will NOT work with you to resolve your foreclosure if you moved out of the property in question. They will also assume that you’ve just given up & that you won’t care if the situation gets resolved.

9. NEVER PAY A “FORECLOSURE RESCUE” COMPANY UPFRONT FEES TO NEGOTIATE FOR YOU. If you MUST use one of these companies, pay ONLY after the service is complete. I don’t want to sound biased here- but I can honestly say that approx 60-65% of the people who call my office for help- have ALREADY given $1,500-$2,500 to a foreclosure rescue company… and have NEVER HEARD FROM THEM AGAIN! I’m not saying that all foreclosure rescue companies are con artists, but you just need to be careful in today’s environment. If someone tells you they can fix all of your problems for an up front fee of $1,500- it MAY be too good to be true.

10. NEVER DESTROY ANY PART OF YOUR PROPERTY WHILE IN A FORECLOSURE. If you need to move out of your home, chances are the lender (or a representative of the lender) will contact you before your home is sold at auction, & offer you something called “Cash for Keys”. This is where the lender will give you (let’s just say for example- $500) if you leave the home in good condition after your home is sold at auction. The reason for this? Its MUCH cheaper to pay YOU $500 to keep the property in good condition—than to pay a cleaning company / construction company / painter, etc… to get the home in shape to sell it again.