How to avoid foreclosure

Options exist for people facing foreclosure issues or whose names are penned on loan documents for an adjustable-rate mortgage (ARM), loan officers and brokers say. But the sooner one acts, the better.

“It’s tough to advise people in general,” said Sam Tatiersky of Wells Fargo Home Mortgage. “Ask a realtor and ask a banker. They’re the professionals.”

For ARMs, mortgage broker Bob Peery used to tell people to sign a new loan once their prepayment penalty period ended on their ARM. Now Peery has a different message for people with an ARM: “Get out of it now.”

He recommends a 30-year fixed-rate mortgage, even if you have to pay the prepayment penalty, to ensure that you’re in a more stable situation.

Shane Winter of Winter Financial Counseling suggested avoiding prepayment penalties altogether.

“I cannot dream of a scenario where it’s a good thing to get a mortgage with a prepayment penalty,” he said.

Those already facing foreclosure or falling behind on their payments have choices, too.

“Give them the money they think they’re owed right now,” realtor Greg Harmon said. “No. 2, re-modify the debt so you can afford it.”

Harmon, who operates a Web site featuring foreclosed homes in Missouri, said about 35 percent of all the foreclosed homes he sees make it to the courthouse steps to be sold without delay.

Harmon sees homeowners avoid foreclosure once, twice and sometimes three times. Normally the third time the house is nearing foreclosure is the last.

“We try to work with our borrowers as much as we can,” said Rick Poe of Boone County National Bank.

Even folks in a comfortable situation with no foreclosure or mortgage worries may still have work to do regarding their home.

“Now it’s more important than ever for people who own property that want to sell in this market to keep their home in as good as condition as they can, because that’s going to set them apart from everybody else,” Harmon said. “It won’t up the value, but what it will do is protect the value of what you have left.”