I ...
New: The Foreclosure Mediation Program begins July 22, 2011.
If you are facing foreclosure or can't pay your mortgage:
- Stay in your home and gather your financial documents. Stay in your home to make sure you qualify for assistance.Print and complete this checklist of information you will need to have available.
- Contact your lender. Your lender may be able to temporarily reduce or suspend your payments or help you refinance with a new loan and better terms. Lookup contact information for lenders, loan servicers and Washington state banks and credit unions through the Hope Now Alliance site. Write down who you spoke to, the date and what was said. Use registered or certified mail in any correspondence on legal matters.
- Free counseling and assistance is also available to Washington residents. To be connected to a counselor, call the Washington Homeownership Information Hotline at 1-877-894-HOME (4663). They will be able talk to you about your situation, evaluate options, and explain assistance programs that may be available to you. You may also contact a Washington HUD-approved housing counseling agency.
- How to request mediation with your lender: State law now requires lenders to notify borrowers prior to foreclosure of the availability of foreclosure counseling and the potential for mediation. Foreclosure mediation will begin July 22, 2011. Homeowners who wish to participate in mediation must be referred by a housing counselor or an attorney. Information about the program is available at www.homeownership.wa.gov or download this handout (PDF).
- Review refinancing and modification programs available to assist you.
- Consider possible alternatives to foreclosure, including HUD's new Emergency Homeowners' Loan Program.
- Protect yourself and your home from scams and research any offer to help. The Washington State Department of Financial institutions requires that any provider offering loan modifications be licensed as a loan originator, mortgage broker or consumer loan company. If you choose to go with a loan modification business, verify they have a license by checking the DFI Web site at www.dfi.wa.gov or by calling 1-877-RING-DFI.
- Don't walk away. Even if you lose your home, you may receive money. The market value of your home may have increased since you purchased it. Any unpaid loans or taxes will be withdrawn from the sale price of the house, as well as fees related to the foreclosure process. Whatever money is left after those debts are cleared up is rightfully yours. If you have abandoned the home, you may not receive this money.
If you believe unlawful activity has occurred in regard to your mortgage:- Speak with an attorney. Homeowners in need of legal help who are unable to afford a lawyer should contact the Washington State Homeownership Information Hotline at 1-877-894-HOME (1-877-894-4663) for referral to the Washington State Bar Association's Home Foreclosure Legal Aid Project. You should be aware that the Attorney General's Office can NOT stop your foreclosure and is prohibited from representing you individually. However, if you have information about a foreclosure problem that may be helpful to our investigation, please file a consumer complaint.
- Know your rights.
- Since July 26, 2009, Washington trustees have been required to identify the owner of the loan and the company that is acting as servicer. The notices must also include an address and phone number for the servicer.
- Additionally, lenders are required to advise borrowers who obtained mortgages between 2003-2007 of their right to meet and confer and, if requested, the loan owner must schedule a meeting to occur within 14 days. This meeting is required by the Deed of Trust Act, RCW 61.24.
- Contact your foreclosure trustee.
- Foreclosure trustees have the power to postpone a foreclosure sale whenever they think it is advantageous. Some possible reasons for stopping a foreclosure include: a mortgage servicer failed to credit payments, the homeowner never received notice of the foreclosure, one division of the mortgage servicer promised a loan modification while the other started the foreclosure process, the homeowner has a genuine contract to sell his home but the servicer will not respond to the sales offer.
- A homeowner who is unable to find a local address or phone number for their foreclosure trustee should file a complaint with the Attorney General’s Office online at http://atg.wa.gov/FileAComplaint.aspx. However, this will not stop a foreclosure sale.
- If a trustee is unwilling to stop a foreclosure, then the homeowner must file a lawsuit under the Deed of Trust Act and obtain a court order before the sale. Bankruptcy may stop or delay a foreclosure but it may also put the homeowner in a worse position. Legal representation is essential to a successful case.
If you're a renter and your landlord is in foreclosure:
A federal law protects tenants who are dealing with landlord foreclosure. Among other things, the new owner must give you a 90-day notice if they want to end your tenancy. If you have an unexpired lease, you may be able to stay until the end of the lease.
If you're considering a reverse mortgage:
Reverse mortgages are becoming increasingly popular. The Attorney General advises you to evaluate all your available options carefully before choosing any mortgage product. A reverse mortgage is a type of loan that allows homeowners aged 62 years and older to tap into their home equity for cash. It differs from a traditional mortgage or home equity loan in that no repayment is required until the last surviving borrower dies, sells the home or no longer occupies the home as a principal residence.
Pros:
- May allow a homeowner to stay in a home that they otherwise would have to sell or vacate.
- Generally, reverse mortgage loan advances are not taxable.
- Typically don’t affect Social Security or Medicare benefits.
Cons:
- The biggest disadvantage can be the cost. Lenders generally charge various fees for both originating and servicing the reverse mortgage. The amount you owe on a reverse mortgage grows over time as interest is charged on the outstanding balance and added to the amount you owe each month. Reverse mortgages often have adjustable interest rates that will fluctuate with the market making financial planning more difficult. As your debt increases on any loan funds advanced to you through a reverse mortgage, your equity in your home will decrease and may leave you and any heirs with fewer assets. You should also be aware that with a reverse mortgage you continue to be responsible for any property taxes, hazard insurance and maintenance expenses.
You can find more information at the following websites:
Additional Resources