Foreclosure Prevention

NeighborWorks Blackhawk Region provides Foreclosure Prevention (Loss Mitigation) counseling if you get behind on your mortgage payments or, due to circumstances, can no longer afford your home. We can assist you through the process of trying to keep your home, and help you understand your options and rights.

We can talk to your lender on your behalf, and help you negotiate a resolution for your delinquency. Or if you aren’t able to keep your home, we can advise you on the best way to make the transition, helping you to minimize damage to your credit and getting you back on your feet.

The most important thing to remember is to always keep an open communication with your lender. If you know ahead of time that you are going to be late with a payment, call your loan servicer to let them know your situation and ask them what options you may have.

Possible Options Available:

  • Reinstatement:
    If you are able to get a loan from family, friends, or an agency to pay off the amount you are behind, your loan will be back on track. You may need to get a part-time job, get some extra income, or drastically change your spending habits for a time until you get back on your feet and build up some reserves.
  • Loan Modification:
    The loan can be restructured to change some of the terms of the loan, such as the due dates, payment amount, and interest rate, to help lower your monthly payment.
  • Forbearance:
    Some lenders will allow you to postpone some or all your payments for a specified time. You may qualify if you can show that the reason you fell behind was beyond your control and for a limited time. You need to prove that eventually you will have enough income to cover the monthly payment plus what you are behind.
  • Refinancing:
    This option works if you have equity in your home and if it lowers your payment. This will not work if the reason you are behind is overspending or credit card overuse. Also, a poor credit score might lead to less favorable terms in a new mortgage.
  • Partial Claim:
    This option is for loans that are FHA insured. The lender lends you the amount that you are behind to bring the loan current, then places a second mortgage on your home and sets the terms under which you need to pay the loan back. You need to show that you have enough income to cover both payments.

Alternatives To Foreclosure

  • Foreclosure Presale:
    You can sell the house prior to the foreclosure sale. Sell the house for at least what you owe the lender, and move on.
  • Short Sale:
    A real estate agent who specializes in short sales convinces your lender to agree to take less than what you owe and accept whatever the house can sell for. For example, you owe $90,000, the most you can get for the house is $79,000, and the lender agrees to take the lower amount.
  • Deed in lieu:
    When it becomes evident that you cannot maintain your payments anymore, you deed the house back to the lender. A tax professional can explain any tax implications.

How To Participate:

  • Fill out the online form here.
  • Or schedule an appointment.
    • Text us: 608-313-7809
    • Call us: 608-362-9051, Ext. 14
  • This field is for validation purposes and should be left unchanged.

Reverse Mortgage

NeighborWorks Blackhawk Region provides counseling for those interested in a Reverse Mortgage. A Home Equity Conversion Mortgage (HECM), or better known as a reverse mortgage, is a loan that allows you to draw cash from the equity in your home without having to make payments for as long as you live in the home. Increasingly popular with seniors who have equity in their homes and want to supplement their income, reverse mortgages are only available through an FHA approved lender, and a counseling session with a HECM counselor is required.

There are many factors to consider before deciding whether a reverse mortgage is right for you, and to aid in this process the HECM counselor discusses program eligibility requirements, financial implications and alternatives to obtaining a reverse mortgage and repaying the loan. The counselor will also discuss provisions for the mortgage becoming due and payable. Upon the completion of HECM counseling, you should be able to make an independent, informed decision of whether this type of loan will meet your specific needs.

When you meet with the counselor, she will help you with

  • Understanding reverse mortgages, including their features, how they work, and what the impact is on you and your heirs.
  • Determining if a reverse mortgage is appropriate to meet your particular needs.
  • Explaining alternatives to a reverse mortgage.
  • Understanding your financial and other needs for remaining in your home.
  • Knowing about the availability of other assistance you may need.

Alternatives to a Reverse Mortgage

  • Selling your home and moving to a more suitable residence
  • Renting
  • Support services and public benefits that may be available to you in your community
  • Other financial options

Frequently Asked Questions

  • Why are Reverse Mortgages called “rising debt, falling equity”? Because your debt increases and the home equity falls.
  • Why do I need an appraisal? To determine market value of your home.
  • Why is the loan amount different than the lender’s estimates? Your loan at closing is based on the value of your home and the interest rate.
  • What if I change my mind after I close? By law, you have three business days to cancel the loan.
  • What are the annual expenses I will have with this loan? You are responsible for the property taxes, flood and hazard insurance premiums, any special assessments, such as association or condo fees.
  • After I close, how soon can I access my line of credit? The lender can disburse funds to you after the three day right of rescission ends.

Additional Resources

Use Your Home to Stay At Home

NCOA Publication (National Council on Aging)

How To Participate:

  • Fill out the online form here.
  • Or schedule an appointment.
    • Text us: 608-313-7809
    • Call us: 608-362-9051, Ext. 14
  • This field is for validation purposes and should be left unchanged.

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