How to Avoid Foreclosure in Dallas Texas

Question: What happens when I miss my mortgage payments?

Answer: Foreclosure may occur. This is the legal means that your lender can use to repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortage loan, your lender or HUD could seek a deficiency judgment. If that happens, you not only lose your home, you also would owe your lender or HUD an additional debt. Foreclosure or a deficiency judgement could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if at all possible.

Question: What should I do?

Answer:
1. Do not ignore the letters or phone calls from your lender. If you are having problems making your payments, contact your lender immediately. Explain your situation. Be prepared to provide them with financial information, such as your monthly income and expenses. Without this information, they may not be able to help.
2. Stay in your home for now. You may not qualify for assistance if you abandon your property.
3. Contact a HUD-approved housing counseling agency. They have information on services and programs that could help you. The housing counseling agency may also offer credit counseling. These services are usually free of charge.

Question: What are my alternatives?

Answer: Potential options include the following:


1. Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation.
2. Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan.
3. Partial Claim. Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current. 
4. Short Sale. This will allow you to sell your property for less than is owed to avoid foreclosure and damage to your credit rating.
5. Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily “give back” your property to the lender. This won’t save your house, but it will help your chances of getting another mortgage loan in the future.

Question: How do I know if I qualify for any of the alternatives?

Answer: A housing counseling agency can help you determine which, if any, of these options may meet your needs. You should also discuss the situation with your lender.

Question: Should I be aware of anything else?

Answer: Yes. Beware of scams! Solutions that sound too simple or too good to be true usually are. If you’re selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people out there who may try to take advantage of your financial difficulty.
 

Be especially alert to the following:

1. Equity Skimming. In this type of scam, a “buyer” may suggest that you move out quickly and deed the property to him or her. The “buyer” then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember that signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

2. Phony Counseling Agencies. Some groups calling themselves “counseling agencies” may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubts about paying for such services call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.

Question: Are there any precautions I can take?

Answer: Here are several precautions that should help you avoid being “taken” by scam artists:

1. Don’t sign any papers you don’t fully understand.
2. Make sure you get all the “promises” in writing.
3. Beware of any loan assumption where you are not formally released from liability for your mortgage debt and contracts of sale.
4. Check with a lawyer or your mortgage company before entering into any deal involving your home.
5. If you plan on listing your home for a pre-foreclosure / short sale, make sure you list with a licensed Texas real estate agent with a reputable brokerage that has been trained to represent distressed sellers.

Question: What are the main points I should remember?

Answer:
1. Don’t lose your home and damage your credit history if there is any way you can help it.
2. Call or write your mortgage lender immediately. Avoiding the problem will only serve to limit the options available to you. Most lenders would prefer not to foreclose on your home and are willing and motivated to work with you.
3. Stay in your home to make sure you qualify for assistance.
4. Arrange an appointment with a HUD-approved housing counselor to explore your options.
5. Explore every alternative to losing your home.
6. Beware of scams.
7. Do not sign anything you don’t understand. And remember that signing over the deed to someone else does not necessarily relieve you of your loan obligation.
8. Act now. Delaying can’t help. If you do nothing, you most certainly will lose your home and damage your credit rating.