Foreclosures have hit the American dream hard. Few things represent in our society than owning your own family home. And few things make us feel failure as hard as when we lose it. The housing crisis that started in 2008 is still affecting us today. Millions of homeowners are at risk of losing their homes, while hundreds of thousands already have. This has, quite naturally, created a mass hysteria, which is the perfect breeding ground for myths. Myths are a great read when they tell the stories of ancient heroes; but they are dangerous when people base important financial decisions on them.

We will dedicate two articles on debunking six myths that are widespread among homeowners nationwide. Unfortunately these misunderstanding are sometimes stopping homeowners from getting the help they need.

Myth 1. I am only one month behind; I can easily catch up. I am not at risk.

Foreclosure procedures start when you are behind in your payments, whether one month or ten. If you do not act quickly you could lose your home. Remember that when you are a month behind in your payments you owe two months: the one you are behind on and the current one. Ideally you should ask for help before you are behind in your payments. The earlier you contact a free housing counselor the more chances they will have to help you. Contact your lender and explain you are struggling with your mortgage payments as soon as you as you can. This gives the message you are serious about paying your mortgage, and increases the likelihood your lender will grant you a loan workout.

For free professional housing advice contact the Housing and Urban Development Department (www.hud.gov) or the Home Ownership Preservation Foundation (888-995-HOPE).

Myth 2. My lender would prefer to foreclose on my mortgage than help me keep it.

This is a dangerous myth because it creates a sense of helplessness. “If the mortgage company wants me out of this house, what can I do?” The truth is of course different. Mortgage companies are in the business of lending money for profit not owning, managing and selling homes. A recent study by the TowerGroup consulting company revealed that lenders lose $58,000 on average for every foreclosure. This happens because foreclosed homes rarely are sold for the balance of the mortgage, and the lender must also cover the fees and costs that go with selling a house.

The bottom line is that mortgage companies prefer you catch up with your payments and save your home. Of course, if they realize you can’t afford any payments and there is little chance you will be able to do so in the future; they will cut their losses and foreclose. That is your job;  to prove them you can afford reasonable payments if you are granted a loan modification.

No Comments »

No comments yet.

RSS feed for comments on this post. TrackBack URL

Leave a comment

You must be logged in to post a comment.