Don't wait: Take steps, seek help to avoid foreclosure

  • Published
  • Eglin Legal Office
EGLIN AIR FORCE BASE, Fla. --  With the current housing market, more and more military members are finding themselves struggling financially. Foreclosure rates are rising all over the country and military members are not immune to this epidemic. Understanding the process, however, and taking action can help a homeowner avoid a foreclosure proceeding. 

Foreclosure refers to the legal proceeding a lender may pursue when a borrower defaults. Typically, a lender obtains a security interest in the home from a borrower. By obtaining a security interest, the lender secures an enforceable right to repossess the property in the event a borrower fails to pay back his loan. 

When a borrower finds himself facing foreclosure, the borrower will often consider pursuing a short sale. A short sale refers to a lender agreeing to discount a loan balance owed to them when a borrower is suffering economic hardship. With the bank's approval, the borrower will sell the property for less than the remaining mortgage amount and the lender will forgive the remaining balance on the loan. Although a short sale is a better alternative than outright foreclosure, the housing market surrounding Eglin Air Force Base is depressed with houses selling for much less than they did just a year or two ago, meaning short sales often result in homeowners still taking a financial hit. 

To avoid foreclosure, the first, and probably most important step, is to be upfront about the problem. The further behind you become, the harder it will be for you to overcome mounting debts and to convince your lender to reinstate your loan. The longer you wait, the more likely you will lose your house. Make sure you open all mail you receive from your lender. First notices of late payment may include repayment options available to you. Once you realize you are in financial difficulty, contact your lender as soon as possible. Believe it or not, your lender does not want your house. A lending organization typically has options for borrowers who are in financial hardship. Working with your lender may be a simple way to avoid legal proceedings.

Another important way to help avoid foreclosure is to understand what options your loan provides you. For example, you may have a forbearance option in your loan. This temporarily reinstates your loan and possibly at lower rates. Loans may also have refinance options. Consequently, find your loan documents and read them carefully. Focus on timeframes inserted into provisions in the lending agreement. 

Familiarize yourself with local programs available to help you. The Airman Family Readiness Center has staff available to assist military members with financial planning. Sometimes simple budget planning may be enough to help you avoid foreclosure. The Florida Bar Association also has developed a roster of attorneys who have volunteered to help military families facing foreclosure without charge. To implement this effort, they have formed an organization called Florida Attorneys Saving Homes (FLASH). If you qualify, you will be able to gain free legal services from an experienced attorney. For more information visit: http://www.floridabar.org or call their toll free hotline at 1-866-607-2187. 

Congress has also recently passed a law dealing with the national foreclosure crisis. Slated to come into effect Oct. 1, 2008, Public Law 110-289, also known as the Housing and Economic Recovery Act of 2008, has provisions, which will help qualifying homeowners ward off foreclosure. Given the complexity of this new law and the continuing turmoil on Wall Street, however, we await implementing guidance for this new law. For more information on this new law, visit: http://www.banking.senate.gov/public/_files/HousingandEconomicRecoveryActSummary.pdf 

Those of you who are struggling financially should recognize you are not alone. Take advantage of resources available to help alleviate some of the difficulty. Stop by the AFRC and the Base Legal Office if you find yourself in this situation. If you do not feel comfortable using the resources at Eglin, the U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. 

Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. You can reach them at (800) 569-4287. For more information visit the Federal Housing Administration's website: http://portal.hud.gov/portal/page?_pageid=33,717348&_dad=portal&_schema=PORTAL