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Ohio Department of Aging Aging Issues

Avoiding Foreclosure
You Have Other Options

March 23, 2010

Director Riley Photo

For older Ohioans on limited incomes, making it from month to month can be an economic struggle, and sometimes the mortgage payment loses out to other bills. A serious illness, an accident, helping a family member or other circumstances can cause older homeowners to fall behind on monthly mortgage payments, putting them in danger of losing their home to foreclosure. Older adults coping with foreclosure face not only the loss of their home, but also damaged credit, which may affect their opportunities to borrow money at a reasonable interest rate for years to come. The emotional strain can be just as serious as the economic strain.

Americans age 50 and older represent nearly 30 percent of all delinquencies and foreclosures. Conventional wisdom holds that most seniors have paid off their mortgages or have significant equity in their homes, but in reality, 25.5 million seniors have a mortgage, according to an AARP study. Unlike younger people, many are on fixed incomes and lack the money or job opportunities to catch up on payments when they fall behind.

Compounding the foreclosure problem are scam artists who see home foreclosure as an opportunity to take advantage of older citizens who don't know what options they have. Home mortgage foreclosure rescue scams can involve refinancing at exorbitant interest or with hidden fees, or offers to buy the property, pay off the mortgage and resell the property to the homeowner, usually at an inflated price or on terms very likely to cause default.

To help stem the tide of home foreclosures, Ohio created SaveTheDream.ohio.gov, which provides information and highlights programs you can use to help you keep your home out of foreclosure. You also can call the Save the Dream Hotline toll free at 1-888-404-4674 for information and referrals.

Here are some steps you need to take if you are facing foreclosure, according to Save the Dream:

  • Act now and do not ignore the problem.
  • Contact your mortgage servicer as soon as you realize that you have a problem.
  • Open and respond to all mail from your servicer.
  • Understand Ohio's foreclosure process.
  • Understand foreclosure prevention options and alternatives.
  • Beware of scams.
  • Do not sign any document that you do not understand.

Abandoning your home and moving will not make your foreclosure debt go away. In addition to still owing your debt, you will no longer qualify for assistance.

These are possible alternatives to foreclosure. A housing counselor can help you determine if any of these options are right for you.

  • Loan Modification - The servicer could work with you to change the terms of the loan permanently.
  • Repayment Plan - You may be able to work out an agreement with your servicer in which you make partial payments now and resume your regular monthly payments later.
  • Forbearance - The loan servicer may agree to reduce or suspend payments for a specific period of time, until you get back on your feet financially. After that, you'll be expected to make full payments on time and the servicer will expect you to pay extra each month until you are current on the loan.
  • Partial Claim - Certain government loans, such as from the FHA, contain provisions that let borrowers who meet specific criteria apply for another loan, to finance previously missed payments.
  • Short Sale - You sell your house for less than you owe. Your servicer must agree to the short sale and be willing to accept less than the full amount owed.
  • Mortgage Assumption - Permits a new qualified borrower to take over both the title to the property and the mortgage obligation from you.
  • Deed-in-Lieu of Foreclosure - As a last resort, it may be best to give the house back to the servicer.

You can contact a HUD-approved housing counselor at 1-800-569-4287 or visit www.hud.gov to get help and advice from a HUD-approved counseling agency in your area.

Signature of Barbara E. Riley
Barbara E. Riley

About Aging Issues

Twice each month, the Ohio Department of Aging delivers Aging Issues, a column from Director Barbara E. Riley that examines topics of interest to older Ohioans, their family members and others who care for and serve them. Aging Issues is intended for personal use as well as re-publication in newspapers, newsletters and other publications with older adults as a target audience.

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