Do Not Panic
When your Mortgage Servicer says, "You are in foreclosure," do not panic. Know the difference between collection letters and letters from foreclosure attorneys. You may have more time than you think.
1. Read - read - read, and prepare. Being educated about this process is a good start.
2. Know the difference between:
» A COLLECTION letter by the Mortgage Servicer. See Example. These can sound threatening but do not indicate that your property is at risk of foreclosure. Remember these letters are sent out from the Collections area. Collections and Loss Mitigation do not normally communicate. If you have a loan modification request pending, or intend to do so, or you have a short sale pending, disregard the request from Collections.
» A COLLECTION / DEFAULT letter from the foreclosure attorney. See Example 1, See Example 2. This will let you know that an attorney has been hired by the Mortgage Servicer to take legal action. Start posturing, if you have not done so already, to meet loan modification guidelines, to ask for a partial payment forebearance, or to sell property (remember, a bonafide offer on property - submitted with the correct hardship paperwork - stops foreclosure action).
» A FORECLOSURE letter from the foreclosure attorney. See Example 1, See Example 2. This will let you know that the attorney has initiated foreclosure proceedings. If you have not done so already, posture to meet loan modification guidelines and get paperwork in, or list the property to obtain a quick offer (a bonafide offer on property - submitted with the correct hardship paperwork - stops foreclosure action).
» SOLICITATIONS by official-looking firms or attorney offices. See Example 1, See Example 2. Do not panic. These are official-looking letters which are sometimes worded so carefully that you may think they are coming from the Servicer's Foreclosure Attorney. Read these letters carefully. Most are solicitations to perform services for a fee.
3. Know the different strategies to stop foreclosure. Read either Frequently Asked Questions: Prevention Options and Modifications or Frequently Asked Questions: Prevention Options and Short Sales. Learn - Think - Strategize. There is always an answer - Never give up.
4. SURVIVALTIP: If you believe you have a foreclosure date in the system, ask the Servicer to look it up. If you do, do not panic. When your documents are sent to the Servicer, they will continue to push the foreclosure date FORWARD in their system to give themselves time to work the file, or they will take the date OUT. Make sure to call the Servicer, starting three (3) days before the foreclosure date, to verify that the foreclosure date has been moved or stopped. CRITICAL: Then call the ATTORNEY and make sure the attorney has been notified.
5. Remember, if you are not paying your mortgage, you will continue to receive calls from the Collections area. If you do speak with them and you are under review for a modification or short sale, please tell them to notate "under review". They are trained (and are measured) to attempt to collect money from you. This will not stop the calls as this is an automated function with all Servicers. It is your choice whether or not to make a payment during the period of loan modification or short sale review (making payments will help you from getting further behind or further hurting your credit). Please note: it is recommended that you do not spend money on other items as you may be asked what funds you have available.
6. Always ask, if you receive a call from the Servicer, to what department you are speaking. The Foreclosure/Collections area is designed to collect money and to set up Repayment plans and they do not normally communicate with the Loss Mitigation or Short Sale areas.
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- Anne Batte, Executive Director