Freddie Mac's take on Myths about Foreclosure
Freddie Mac released a series of videos aimed at educating homeowners with troubled mortgages about the foreclosure process. The videos are available at Freddie Mac's YouTube channel. They present content that was developed for the Freddie Mac “Get the Facts” series of educational and outreach materials about homeownership.
The series of five videos, that run less than two minutes each, focus on countering five basic myths that could keep a person facing foreclosure from keeping his or her home.
Common Myths about Foreclosure
- Having a foreclosure on your financial record will prevent you from ever buying a home. It is true that a foreclosure will severely harm your credit score and the foreclosure will appear on your credit report for years. It will take years before a lender will approve you for a mortgage loan, but foreclosure is not a permanent mark against you. Take the proper steps after a foreclosure to rebuild your credit and to save up for a 20% down payment and you should be able to realize your goal of home ownership.
- Stop paying your mortgage payment in order to get a loan modification. Many borrowers are told that stopping making monthly mortgage payments is the only way to be approved for a loan modification. You should only stop making mortgage payments if you cannot continue making them and only after opening up and maintaining good communication with the lender. Any time you stop making your payments, you open up the possibility of foreclosure.
- If I miss my mortgage payment, then I will lose my home. Missing your mortgage payment can lead to major problems, including foreclosure, but it does not have to. Speak with your lender before you miss a payment and try to work out a loan modification. Contact a HUD approved housing counselor by calling HOPE NOW at 1-888-995-4673.
- Any offer of help I receive with avoiding foreclosure is illegitimate. No doubt, there are many scams out there and scammers love to target vulnerable people that are looking for a solution to a serious problem. Still, there are resources that can help you. Work proactively with your lender. Speak with a HUD approved counselor. Remember to exercise skepticism; if something sounds too good to be true, it likely is.
- If my lender doesn’t respond to my attempts to work things out, then I should accept that foreclosure is inevitable. Don’t give up easily. Lenders are overwhelmed with the volume of people facing foreclosure; they do not have adequate systems in place to handle the volume. Maintain up your efforts to work things out and keep all records of your communications with your lender.