Did you see the Dr. Phil Show the other day? A guest recalled how devastated she was to find the sheriff on her front steps, with an eviction order in hand. Her home had been foreclosed after months of notices and legal actions. All this time, her husband had hidden the mail from her that warned how dire the situation was. She knew the finances were bad as her husband had lost his job and both of them had hocked their rings to prevent their car from being repossessed, but she never realized how grave things were. Now, she and their kids live with her parents, in view of the foreclosed family home. He sleeps on his mother’s couch and is trying to repair his fractured marriage.
The saddest thing is in this situation is that the husband’s denial and deception turned a financial difficulty into a financial nightmare for the whole family. The family may not have been able to keep the home, but failure to confront the problem closed the door to any alternative. (For the full story, see Is Charlie ready to deal with reality?)
According to investment broker Marilyn Logan, these unhappy former homeowners could have altered the course of events by following a few simple rules:
- Admitted they needed help – and done it early.
- Contacted their lender at the first sign of trouble
- Resisted the temptation to deplete retirement savings
- Sold their possessions
This is good advice.
Most people have not faced foreclosure, so have no experience in dealing with it. Lenders, on the other hand, while not thrilled to hear of borrowers’ problems that will affect their ability to pay, have heard it all. They are in the business of lending money, not managing property, so they would prefer to work with a delinquent borrower than take back the house. Notifying the lender at the first sign of trouble, (and certainly by the time the man in the story recounted above lost his job) may have changed the outcome. Ignoring the bills and not opening the mail doesn’t relieve the problem.
You Can Get Reliable, Honest Help
If you are in this situation and find your lender is not too sympathetic, there are many non-profit organizations set up to help. Many times, they will deal with your lender. Of course, not every organization that says it will help homeowners has your best interests at heart, so make sure to find a HUD-approved counselor, not someone you saw advertised on a telephone pole or late night TV.
When people are desperate, they look for any money they can make liquid, including their retirement. Tempting as it is to tap the 401K, Logan says, distressed homeowners should leave it alone. Her thinking? It is easier to get another home than rebuild retirement savings. Lenders might not be sympathetic to your not paying the back mortgage while you have money sitting in the 401K, but Logan’s advice is thought provoking: sell off other assets you have, maybe even your possessions. Or maybe it’s time to unload the house and start over.
The thinking here is clear. You bought your home for your family (even if your family is just you and your cat.) It’s more important to keep your family intact than save the home. As much as you love your house, it’s your family that makes it a home. If you are in troubled circumstances, choose your family even if it means moving.
Looking for a quick and trouble free solution from a reputable company? Express Homebuyers can buy your home for cash. We assess your home’s value in a phone call and make you an offer on the spot. We will even give you a $2,500 cash advantage to help you move. Within a couple weeks of accepting our offer, you are free and clear of any obligation to the property.
Wondering how this works? Check out our Frequently Asked Questions for an overview of program, and then call us at (877) 804-5252.