Remember that most lenders remain open to negotiating an alternative payment plan even after the foreclosure process has started. Negotiating an alternative plan, or a "work out," avoids the legal and administrative costs associated with the foreclosure process. Although you may be in default on your loan, it may still be possible to avoid a worst-case scenario.

Foreclosure Survival: Action Steps

Going through foreclosure is an emotional strain for homeowners, but you can take critical steps during the foreclosure process to avoid a foreclosure on your home. See them listed below.

If you have missed one or more mortgage payments
  • Take action right away. Your lender can offer options such as loan modifications or mortgage workouts that may result in a lower payment or reduced interest rate.
    [What you will need before talking to your lender.]

    [Questions you should ask your lender.]

  • Open and respond to all mail from your lender: The notices you receive will offer advice on avoiding foreclosure. Later mail may include important notices of pending legal action.
  • Know your mortgage rights: Find your loan documents and read them so you know what your lender may do if you can't make your payments.
  • Prioritize your spending: After health care, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses, such as cable TV, memberships and entertainment that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
  • Use your assets: Do you have assets such as a second car, jewelry or a life insurance policy that you can sell for cash to help reinstate your loan? Can anyone in your household take a second job to bring in additional income?  Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.

If you cannot reach your lender or comply with a loan agreement
  • If your loan carries an unusually high interest rate or requires a “balloon payment,” you may have been the victim of predatory lending. Contact a local financial institution to see if you qualify for a refinanced, fixed-rate mortgage. To find lenders in your area, click here.
  • If you still cannot make reduced mortgage payments, call your lender again.
  • Know your mortgage rights. Find your loan documents and read them so you know what your lender may do if you can't make your payments.
  • Stay away from companies that promise to help you work with your lender for a fee — these are often scams.
  • If you need additional assistance, contact a housing counselor in your area. For a list of local housing counselors in your area, please click here.

If you received a foreclosure notice
  • Contact your lender to see what options they may be willing to offer. Understand that your financial institution wants to help you keep your home. Foreclosures cost lenders tens of thousands of dollars, drive down property values and damage the credit of the homeowners for years to come.
  • Don't give up. The Wisconsin foreclosure process gives homeowners extra time to work with lenders to halt the process.
  • Contact your attorney.
  • Contact a housing counselor in your area for additional assistance or call 1-888-995-HOPE. For local housing counselors in your area, click here.
  • Avoid foreclosure prevention companies. You don't need to pay fees for foreclosure prevention help. Use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge a hefty fee — often two or three month's mortgage payment — for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.

If your home is worth less than you owe
  • Walking away from a home because you are “upside down” or “underwater” is a drastic move that can have a devastating impact on your credit and leave your family with few housing options.
  • Know that the only way to regain the value of your home is to stay. Home values will recover, and in the meantime, you will have earned equity by making your payments.
  • Talk to a lender or housing counselor about your options.

Avoiding foreclosure scams
  • Watch out for questionable counseling companies that advertise that for a minimal fee, they will hire a lawyer to defend the foreclosure in court or negotiate lender assistance on your behalf.
  • You should call an HUD-approved counseling organization, a local NeighborWorks® organization or 1-888-995-HOPE before you pay or sign anything. Click here for counselors in your area.
  • The Federal Reserve Board has also developed 5 Tips for Avoiding Foreclosure Scams.

Freddie Mac recommends that you ask the following questions:
• How much time will you have from the lender to complete a work-out?
• What are your obligations under the work-out package?
• What are the specifics? Be sure to ask what is due and when.
• Will a foreclosure sale of your property be put on hold while your lender looks at the possibility of a work-out package?

Freddie Mac recommends that you have the following documents ready before contacting your lender:
Last two pay stubs and most recent tax return
• For a self-employed borrower, complete signed federal income tax return for the previous year or year-to-date profit and loss statement
• Bank statements
• Proof of other income such as alimony or Social Security
• Information about any second mortgage on the property
• Completed Form 4506-T, Request for Transcript of Tax Return
• Completed Form 1126, Borrower Financial Information

Foreclosure advice.

With REALTOR®r Laurie Logan

Mistakes made by homeowners in foreclosure.

With Wisconsin Bankers Association President & CEO Rose Oswald Poels

Seeking advice on foreclosure options early.

With Wisconsin attorney David Saya

Foreclosure advice.

With Wisconsin Bankers Association President & CEO Rose Oswald Poels

Preparing to talk to your mortgage lender.

With Wisconsin attorney David Sayas


Spotting a foreclosure scam.

From Freddie Mac

The information contained herein is of a general nature and should not be considered as advice on a particular fact situation. Individuals should consult with their lender, legal counsel or financial counselor with specific questions or for current developments.