Your Options

Unless you have a legal defense to the foreclosure, there are 4 general options that you should consider. It usually makes sense to consider them in the following order (but you can consider more than one at a time). You can think of your exploration of each of these 4 options as 1 step in a 4-step.

Plan

  • P: Pursue a Workout
  • L: Learn about Refinancing
  • A: Ask about Bankruptcy
  • N: Negotiate a Sale
  1. Pursue a Workout
  2. Learn About Refinancing
  3. Ask About Bankruptcy
  4. Negotiate a Sale
Pursue a Workout
Be extremely cautious about working with any person or agency charging you an up-front fee to pursue a workout with your lender. Any such person or agency might be committing fraud.

One of the ways you can reinstate your loan is by working with your mortgage company to fashion a "workout" or "workout plan." Exploring the possibility of a workout is sometimes called "loss mitigation” or “loan mitigation.” The resulting plan is often called a "forbearance" or "repayment" plan. Basically, this is a way for you to reinstate your mortgage over time, without bringing the mortgage current all at once. Often the lender will ask you to pay a lump sum toward what is owed, then something like 1.5 monthly payments per month for a set period of time. Or, the lender may agree to put your missed payments at the back of the loan. Sometimes, the lender will even be willing to reduce your interest rate.

The sooner you contact your mortgage company to pursue a possible workout the better, because the process of formulating a workout and being approved for one may take a long time. You should ask for the loss mitigation department. Each time you talk with a representative from your lender you should take notes including date, time, name of representative, and what was said, including the next steps.

Get Any Agreement in Writing
Make sure to get any agreement in writing, and keep a copy. Understand that most agreements do not lead to the dismissal of the foreclosure case until you have completed the plan. Before agreeing to a proposed workout, make sure you have sufficient income to afford the payments. If you do not, you run the risk of ending up back in foreclosure.

Housing Agency Support
You may want to contact a HUD-certified housing counseling agency to help you pursue a workout. These are nonprofit agencies certified by the United States Department of Housing and Urban Development. They will not charge you a fee. The Affordable Housing Corporation of Lake County (AHCLC) has counseling services available to any Lake County resident free of charge. Currently, AHCLC requires all prospective clients to attend a 90-minute education session (exceptions may be made for those with a judicial sale pending within 30 days).

Attendees have the option of moving on to individual counseling from there. Classes are offered on weekends and evenings. You may review AHCLC’s current schedule on their website or by calling 847-263-7478. Services are offered in English and Spanish. Lake County Housing Authority also offers mortgage counseling services and can be reached at 847-223-1170.

Making Homes Affordable

Be aware that a new federal program may help you if you’re having trouble paying your mortgage on your primary residence, and the mortgage was dated before January 1, 2009 and is for less than $729,000 Your mortgage (including principal, interest, taxes, and insurance and associations dues) requires you to pay more than 31% of your current gross income.