Avoid the Crisis of Foreclosure

(This article appeared in the May/June 2008 issue of The American Postal Worker magazine.)

Joyce B. Robinson, Research & Education Department Director

Millions of American homeowners are facing financial difficulties because of the way their mortgages are structured. Some borrowers did not understand the risks of a mortgage tied to fluctuating interest rates. Others borrowed more than they could afford, in anticipation of ever-soaring real estate values.

The U.S. Department of Housing and Urban Development and the Better Business Bureau offer the following guidelines for improving your chances of keeping ownership of your home:

Don’t ignore the problem. The further behind you fall, the harder it is to reinstate a loan — and the more likely it is that you will lose your home.

Assess your mortgage. Determine the amount of equity you have, review the “reset” points, and see if refinancing is contingent upon restrictions or penalties.

Respond to all mail. The first notices you receive from a lender will offer options for avoiding foreclosure. If notices are ignored, later mail likely will include important notices about legal action. Your failure to open the mail will not be an acceptable excuse in housing court.

Contact your lender. If you have missed a payment, take the initiative and contact your lender about refinancing options. Ask for a contact in the lender’s loss mitigation or collection department.

Discuss your situation honestly. Give the lender specialist an accurate account of all bills and statements; don’t underplay or exaggerate the situation.

Know your mortgage rights. Contact your state housing office to learn about the foreclosure laws and the relevant timeframes where you live. (Every state is different.)

Understand foreclosure-prevention options. Valuable information about “loss mitigation” options are available on the Internet at www.fha.gov/foreclosure/index.cfm.

Prioritize your spending. After healthcare, keeping your house should be your first priority. See if you can cut spending in such things as cable TV, club memberships, and entertainment. Postpone making full payments on credit-card debt until you have covered your mortgage.

Use your assets. Sell some jewelry, or that second car. Check your whole-life insurance policies for their cash value. Even if such transactions don’t significantly increase your available cash, they demonstrate to lenders that you are willing to make sacrifices.

Consider all options. Your lender may approve a retention, which grants you a temporary reprieve from full monthly payments, or the lender may suggest a liquidation, which allows you to settle with the lender in situations where the home can only be sold for less than the balance owed on the mortgage.

Be Aware of Foreclosure “Rescue” Scams. Be aware of con artists who scam homeowners into moving out and deeding their property to a third party.

If you look into all of the above and are not able to develop a satisfactory plan of action, don’t despair. The Department of Housing and Urban Development offers free (or very modestly priced) housing counseling nationwide. HUD-approved counselors can help you to better understand the law and your options, assist you in organizing your finances, and even represent you in negotiations with your lender.

To find a HUD counselor near you, call 800-569-4287 (TTY: 800-877-8339).

Two Additional Workshops

Two workshops have been added to the slate of classes offered on Saturday, Aug. 23, the day after the conclusion of the national convention in Las Vegas:

• APWU Health Plan: The workshop will outline how members can receive excellent benefits and coverage by selecting the APWU Consumer Driven Option, with a premium that costs APWU members less than $20 per pay period for the self and family plan. (1:30-4:30 p.m.) 
   
• USPS Payroll System: The class will cover topics such as reading pay stubs, understanding deductions, and analyzing payroll adjustments. (9 a.m. - noon)