The Best Way to Avoid Default and Foreclosure

We got behind on house pymts & it was sent to an attorney for foreclosure.? The attorney has printed a notice in our paper on Oct 9 that it will go up for public action on Nov.16th. We found out we could get financial help on friday. Can we stop this action now without it going up for auction?

This never ceases to amaze me. People have a contract they can't meet, and they don't call the other party to see if anything can be done.

the lenders do NOT want to foreclose on any more properties right now. Actually, this is pretty much a constant of the real estate market.

To be truthful, you should have called the lender and explained your situation as soon as you knew you were going to be late with a payment. Lenders will always work with anyone to a reasonable extent, but now they're bending over backwards. Foreclosures are 1) bad publicity, 2) bad for their relationship with the secondary loan market, and 3) almost certain to lose them a blortload of money.

Call them this instant (or as soon as they open on Monday) and ask for Loss Mitigation. They will not be as forgiving as if you'd called them right away, but they're still likely to be willing to work something out. Just about anything is better than losing it through foreclosure, I might add, so you be willing to give as much as you can to encourage them. Foreclosures hit them in ways beyond the cash they immediately lose. They don't want to foreclose.

Now, the downsides:

First off, you've waited until you are "in extremis", long past the best time to call the lender. They're quite likely to see your belated request to talk as a last ditch method to delay the inevitable. Lots of folks do precisely this. Had you called earlier and been working with them all along, made agreements and kept them, they'd have evidence you're really doing your best to get them their money. You're not a criminal, but this is the same sort of behavior judges see with convicted criminals at sentencing, faking penitence to avoid jail - then they go right out and do the same thing again.

Payment modifications aren't some kind of magical "make it all better" The lender wants their money, and they're not going to settle for a situation that doesn't turn the loan into what they call a "performing asset." If you borrowed more money than you could really afford, and you aren't able to make at least the interest payments on it at real rates, as many people with negative amortization loans did, then the best modification they'll agree to really isn't going to help you, and you're better off selling the property ASAP, even if you don't get enough for the property to cover what you owe ("short sales").

Bottom line: Please call and ask them. It never hurts to ask. But be mentally prepared if such a modification doesn't really solve your problem.

Caveat Emptor