Testimonial: Foreclosure Advice
If I'd known at the time what I know now about foreclosure, I probably would never have lost my home to one in the first place. I'd really let my credit card bills get out of hand. I was working on a contract project in addition to my full-time job, and the contract ended earlier than expected. What's more, when I'd signed on for the contract project, a second project had been expected to follow the first; instead, the sponsoring group lost their funding, the project was canceled and my contract terminated.
When the letters started coming in from my mortgage lender, I threw them away. I was determined to find more work and get back on track. Contacting the lender about their notices would have been admitting I was having a problem, and I wasn't ready to admit that.
I know, now, that if I had contacted my lender, I might have been able to qualify for "special forbearance" which is just mortgage lending terminology for a modified payment plan. Another option I could have checked into was refinancing my mortgage into a different program that I would have been able to afford. I might even have qualified for what's known as a "partial claim" from FHA where the FHA insurance fund would have made a one-time payment to bring my mortgage current in exchange for a promissory note that would have been due whenever I sold my house or made the last payment on my mortgage. Working with my lender, any one of those options might have helped me avoid foreclosure, but all I could think about at the time was avoiding any unpleasant conversations, getting back on track by finding more work and paying as soon as I could.
While I had plenty of job security at my full-time job, I continued to have trouble finding additional contract work over the next few months, and my credit card bills were stacking up as well from where I'd thought I'd have more income. If I'd contacted my mortgage lender then (as each of their notice letters requested), they might have referred me to a housing counseling agency. I found out later that those agencies have lots of information about programs and options open to people having trouble paying their mortgage. Housing counseling agencies can suggest help from government agencies and community organizations as well as credit counseling, but I really missed out on their resources by continuing to ignore my lender's letters.
The only thing I did right in the whole process was stay in my home. Abandoning my property would have rendered me ineligible for any type of assistance. In my case, it didn't matter, because I didn't contact my lender soon enough to save my home from foreclosure anyway, but when I share what my experience has taught me with friends and acquaintances today, I make sure to never leave that part out.
When my foreclosure took place, it was the process known as a "strict" or "judicial" foreclosure in which the bank repossessed the deed to my house and the local sheriff conducted a public auction. In some other states, I found out later, a "non-judicial" or "power of sale" foreclosure would have involved my lender or my lender's attorney providing me with notice of default and giving me the option to repay the debt or file for bankruptcy, something else I probably should have considered, at the time if I'd had my head on straight. The end result would probably have been the same though. My house would have been sold at auction. A few days before the actual auction took place, I moved back in with my parents.
Today, five years later, I'm finally getting close to where I feel I was before my problems started. I can't help but think how much better my credit score would be if I'd just contacted my lender as soon as I'd received their first notice, but along with everything I've learned about foreclosures, I've also learned that it doesn't pay to imagine what life would be like under other circumstances. I know, now, that I have to work with what life actually gives me. While that's a valuable lesson, if my head hadn't been so hard in the first place, it might not have cost me so much to learn it.