Sunday 9th December, 2007


Let credit card debt lag to save home

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Loss mitigation is a term in foreclosures that refers to the ability of the owner of the asset to reduce his total loss, and attempt to save his investment. In other words, it describes how to save your home when you cannot pay your mortgage.

The first step is to see the problem before it strikes. Some event will precipitate the money shortage. Don’t hope for it to go away. Call and visit your lender immediately. The longer you wait, the more money you will owe when you begin to negotiate.

Always work on the premise that your house will be a further cost to the lender, if the lender invokes foreclosure. Therefore, the lender doesn’t want back the house; lenders want you to continue to pay for it, because it is not easy to sell it. We are not in a sellers market!

Shows your commitment

Once you’ve communicated with the lenders, keep on top of the mail. Respond to all correspondence immediately. This shows your commitment to the process.

Become familiar with your mortgage documents, and get legal advice on how the State law can protect you. This information is basically free.

Next it is critical that you prioritise your spending. If you are in a crunch, you will have to cut back on the food bill. What’s the sense of having a table spread with food, and no roof to shelter the food from sun and rain?

Optional expenses like cable TV, Internet and entertainment will have to be eliminated. Credit card debt can be allowed to lag (yes, at a high price!) because your home is your first priority.

Many people continue to pay for medical services that are available for free. Forget about the stigma attached to health offices and lines, and get in line-your home is your first priority.

Assess assets

See what assets you have and what leverage you can get from them. A safe full of expensive jewelry may be an inheritance-but what is it without a home? Can you get cash from an insurance policy?

Can you get a second job? Jobs are aplenty now, and it makes little sense hitting the roads at 4 pm. Look for evening jobs, because you can certainly work another four hours, rather than sit in the traffic. And when work is over, you beat the traffic!

In addition, terms and conditions of all loans can be modified, for example the duration and payments schedules can be changed.

Don’t rush to sign papers and agreements. Fully understand what you are signing and the stages you must follow. When a market is a trouble, there are more people trying to get you, than people trying to help you.

And finally, the old rule of thumb: anything that looks too good to be true is usually not true! So don’t be gullible, and allow yourself to be deceived. Don’t pay money to people purporting to be representatives of the lender. Deal directly within the offices-the physical structure-of the lender.

Your home is your priority. It shelters you, it nurtures your family!