How to Avoid Foreclosure in Southwest Louisiana
Facing pre-foreclosure can be incredibly stressful, but you have options. This guide is designed to help you understand the choices available to you as a Louisiana homeowner so you can make the best decision for your family.
Your Key Takeaways: Don't Panic, Take Action
Here’s what you need to remember as you navigate this process.
Communicate Early & Often
Contacting your lender immediately is the most critical first step. They have options, but you need to be proactive to access them.
You Have Options
From modifying your loan to selling your property, there are multiple paths to avoid foreclosure. The key is to understand each one.
Fast Solutions Protect Your Credit
The two fastest solutions are a cash sale or having a buyer take over your payments. Both will ensure your credit score stays intact and provide a fast solution.
A Step-by-Step Guide to Stopping Foreclosure
This guide is a playbook you can follow to take control of your situation.
Step 1: Contact Your Lender Immediately
Lenders don’t want to foreclose—they lose money when they do. Reaching out shows you’re serious about resolving the issue and opens the door to solutions.
How to Do It:
Gather Your Information:
- Have your loan account number, recent mortgage statements, proof of income, and a hardship letter ready.
Call the Loss Mitigation Department:
- Be polite but firm. Let them know you want to explore options to avoid foreclosure.
Ask About These Options:
- Loan Modification
- Forbearance
- Repayment Plan
- Reinstatement
Pro Tips:
- Document Everything: Note the name of the person you spoke to, the date, and what was discussed.
- Follow Up: If they promise to send paperwork, call back in 2-3 days to confirm it’s on the way.
Step 2: Understand Your Options
Each option has pros and cons. Knowing what’s available helps you make the best decision for your situation.
Options to Keep Your Home
Loan Modification
- What It Does: Adds missed payments to the back of the loan and lowers monthly payments.
- How to Apply: Submit proof of income, a hardship letter, and any lender-required forms.
- Pro Tip: Be honest in your hardship letter but focus on how your situation has improved (e.g., new job, reduced expenses).
Forbearance
- What It Does: Temporarily pauses or reduces payments.
- How to Apply: Request this directly from the lender.
- Pro Tip: Plan for how you’ll repay the paused payments—lenders will ask for this.
Repayment Plan
- What It Does: Adds a portion of missed payments to your monthly payment until you’re caught up.
- Pro Tip: Negotiate a realistic plan you can stick to.
Reinstatement
- What It Does: Pay all missed payments in one lump sum.
- Pro Tip: If you can’t afford this, consider borrowing from family, selling assets, or using retirement funds (as a last resort).
Step 3: Get Accurate Information from Your Lender
The numbers you see online for your mortgage balance are often incomplete. They don’t include late fees, penalties, or foreclosure-related costs. To figure out the best way to stop foreclosure, you need to get the exact numbers directly from your lender or the trustee handling the foreclosure.
How to Do It:
Call Your Lender’s Loss Mitigation Department:
- Ask for two specific documents: a Payoff Statement and a Reinstatement Letter.
Contact the Trustee (if applicable):
- If your foreclosure has already been assigned to a trustee, you may need to call them directly.
Write Down All Deadlines:
- While you’re on the call, ask about any upcoming deadlines, like the auction date.
How This Helps You:
- No Surprises: You’ll know exactly how much you owe, so you can make informed decisions.
- Stay in Control: By getting this information yourself, you’ll have everything you need to explore your options.
- Build a Plan: Once you have the numbers, you can decide whether to catch up on payments, sell, or explore other solutions.
Step 4: Submit Your Paperwork
Lenders won’t process your request without the right documents. Missing paperwork can delay or derail your efforts.
What You’ll Need:
- Hardship Letter: Explain why you fell behind (e.g., job loss, medical bills) and focus on how your situation has improved.
- Proof of Income: Recent pay stubs, tax returns, or bank statements.
- Monthly Budget: Show your income and expenses to prove you can afford the new terms.
- Lender Forms: Each lender has specific forms—ask for them during your initial call.
Pro Tips:
- Triple-Check Everything: Incomplete paperwork is the #1 reason for delays.
- Submit Early: Don’t wait until the last minute—give yourself time to fix any issues.
Step 5: Know Your Deadlines
Foreclosure timelines vary by state, and missing a deadline can cost you your home.
Pro Tips:
- Act Early: The sooner you start, the more options you’ll have.
- Get Help if Needed: If you’re overwhelmed, consider working with a HUD-approved housing counselor.
Key Deadlines to Track:
- Notice of Default (NOD): This is the official start of the foreclosure process.
- Auction Date: The date your home is scheduled for auction.
- Lender Deadlines: Each option (e.g., loan modification) has its own timeline—ask your lender for specifics.
Step 6: Explore Alternatives if All Else Fails
If keeping your home isn’t possible, you still have options to avoid foreclosure and protect your credit.
Alternatives:
- Sell Your Home for Cash:
Fast, hassle-free, and avoids foreclosure.
Pro Tip: Work with a local buyer who can close quickly and handle everything for you.
- Short Sale:
Requires lender approval but can be a good option if you owe more than your home is worth.
- Deed in Lieu of Foreclosure:
A last resort to avoid foreclosure but means giving up your home.
- Subject-To:
Transfer ownership of your home to a buyer while keeping the existing loan in your name. The buyer takes over your mortgage payments, stopping the foreclosure and protecting your credit.
Pro Tip: This is a great option if you’re behind on payments or have little to no equity. It allows you to walk away without the burden of foreclosure or needing to bring money to the table. Plus, your credit can improve as the buyer continues making on-time payments.
Step 7: Get Professional Help if Needed
Foreclosure is complex, and having an expert in your corner can make all the difference.
Who to Contact:
- HUD-Approved Housing Counselors: Free or low-cost advice on avoiding foreclosure.
- Real Estate Investors (Like Us!): We specialize in helping homeowners in foreclosure. Whether you want to sell or explore creative solutions, we can help.
- Attorneys: If you’re facing legal challenges, consult a foreclosure attorney.
Get a Confidential Cash Offer
A fast cash sale is a powerful way to stop foreclosure, protect your credit, and get peace of mind. Fill out the form below to get a free, no-obligation offer from our local team.