Know Your Options Overview

Regardless of whether you are in foreclosure or not, Fannie Mae offers a great resource for understanding what options may be available to you during a financial hardship. Visit Fannie Mae's website for more information...

It’s important to know your options and understand all the potential solutions that may be available to help you avoid foreclosure. It’s also important to understand what can happen if you fail to take action and foreclosure becomes unavoidable. The process can be stressful, embarrassing, and it can have long-lasting consequences.

"What happens if my home is foreclosed on?"

Walking away from your home voluntarily, may seem like the best solution when your home is valued lower than what you owe. However, this action may lead to financial consequences in the future. In some states, you may be required to pay a portion of your mortgage debt even after the home has entered foreclosure. Also, the impact to your credit may make it difficult to rent or purchase a home in the future. It may be best to explore other options to foreclosure with your mortgage company before making a decision to leave your home.

Keep in mind, your mortgage company doesn’t want to foreclose on your home. Just like there are consequences for you, the foreclosure process is time-consuming and expensive for them. They want to work with you to resolve the situation. However, some homeowners simply don’t take advantage of the help available and foreclosure becomes the only option.

What are the consequences of a Foreclosure?

  • Eviction from your home—you’ll lose your home and any equity that you may have established

  • Stress and uncertainty of not knowing exactly when you will have to leave your home

  • Damage to your credit—impacting your ability to get new housing, credit, and maybe even potential employment, for many years

  • May owe a deficiency balance after the foreclosure sale

  • Lose any relocation assistance or leasing opportunities that may be available with other options

  • Forfeit ability to get a Fannie Mae mortgage to purchase another home for at least 7 years (Fannie Mae guidelines)

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What you can do on your own

TAKE ACTION

Gather your financial information—Make sure you have your basic financial and loan information on hand when you call your mortgage company. You’ll need:

  • your mortgage statements, including information on a second mortgage (if applicable)

  • your other monthly debt payments (e.g., car or student loans, credit card payments), and

  • your income details (paystubs and income tax returns).

Explain your current situation—Be ready to outline your current hardship and explain why you are having trouble making your mortgage payment. Your mortgage company will need to understand the reasons why you are having difficulty in order to find the right solution for you.

Contact your mortgage company—

Your mortgage company wants to help you avoid foreclosure and, in most cases, will be willing to work with you. The biggest mistake you can make is to wait any longer to take action.