How To Get Government Help To Stop a Foreclosure

Homebuyers know that owning a home is a major accomplishment that comes with huge responsibilities. Unforeseen financial trouble can lead to missed credit card and mortgage payments.

Feelings of dread and uncertainty may tempt you to ignore the problem. But do so, and you risk going into pre-foreclosure and losing your home in a foreclosure auction.

If you are facing foreclosure and don’t know where to turn for help, don’t panic. You may have recourse under federal laws and state laws. You can also get individual support and advice from a foreclosure prevention lawyer. Read on to learn about government resources and foreclosure laws that may help you. 

What Are Government Housing Programs?

Government housing programs focus on helping people access affordable housing options and stay in their homes to combat homelessness in society. These programs often develop assistance to target specific types of problems, such as the risk of foreclosure.

These programs offer services such as:

• Loan modification, refinance, and interest rate refinancing
• Repayment plans (for past due, missed payments)
• Forbearance (temporary relief from payments)

There are a variety of free government programs that can help borrowers stop a foreclosure sale. But sometimes, it can be difficult to determine what programs exist, whether you qualify, and how to apply for relief.

How Can Government Programs Help Me?

Government programs can provide important services to overwhelmed homeowners. This includes free information, counseling, and mediation. Getting information about stopping foreclosures is an important first step.

Education and Counseling Services

Government programs typically offer helpful resources, including:

• Frequently Asked Questions (FAQs) about mortgage liens
• Information about foreclosure alternatives available to you
• Guides on how to avoid scams

Government programs can even provide free housing counseling to help you communicate with your mortgage lender. You’ll be able to determine which options are best for you based on your specific circumstances.

Loss Mitigation Programs

Some state courts also offer mediation programs. These help homeowners minimize their damages (loss mitigation).

These programs help homeowners:

• Stop foreclosure proceedings and stay in their homes
• Negotiate a reasonable exit, such as by real estate short sale or deed in lieu of foreclosure

For example, you may be able to submit a loss mitigation application to your mortgage loan servicer. If you have suffered from a job loss or a family emergency, relief may be available depending on your financial situation.

If you have a legitimate excuse, your mortgage company may work with you instead of foreclosing. They may offer options to help you get back on track with your monthly mortgage payments.

Federal Foreclosure Resources

Foreclosure assistance resources are available through federal, state, and local governments. The U.S. Department of Housing and Urban Development (HUD) exists at the federal level. It offers free foreclosure avoidance counseling. From the HUD website, you can browse by state to find HUD-approved housing counseling agencies in your area.

Federal Government Assistance Programs

Over the past few decades, federal programs have routinely started and expired as economic conditions changed. For example, many homeowners needed help due to the housing crisis during the Great Recession. Another example is the Homeowner Assistance Fund (HAF). It was created as part of the American Rescue Plan Act in response to the COVID-19 pandemic. Many programs continue to offer foreclosure assistance for a period of time after they expire. As new public needs arise, more government programs may offer relief. A HUD-approved housing counselor can explain which other federal programs are available. 

Federal Bankruptcy Relief

Under federal law, you may also be able to explore Chapter 7 bankruptcy or Chapter 13 bankruptcy. Declaring bankruptcy may hurt your credit score and remain on your credit report for some years. Learn more about how bankruptcy can help you during foreclosure.

Foreclosure Help From State and Local Governments

State and local governments also offer various programs to help homeowners stop foreclosure. Some examples of these programs include:

• Washington State has free foreclosure counseling, assistance, and mediation for Washington residents.
• North Carolina has a Foreclosure Prevention Fund for those struggling to make mortgage payments. It recognizes challenges due to temporary financial hardship.
• New York State created a Foreclosure Relief Unit. It helps homeowners at risk of foreclosure or already in foreclosure. It also visits communities disproportionally impacted by foreclosure.
• The California Housing and Homelessness Agency (CHHA) website offers free assistance programs. The programs are available to California homeowners experiencing financial hardship.
• Cook County, Illinois, offers a Mortgage Foreclosure Mediation program. Their Superior Court offers critical services to homeowners in the foreclosure process.

There are many more state and local programs out there. Find out how your own state’s foreclosure resources can help you. Your real estate agent may also help you find local resources.

Contact a Foreclosure Attorney for Guidance

When it comes to foreclosure, time is of the essence, and immediate action is critical. Some people find the idea of dealing with foreclosure very overwhelming. It’s hard to know what to do first.

It’s usually a good idea to talk to an experienced attorney. They can help you simplify the process and learn more about government programs. Explore your foreclosure options by contacting a local foreclosure attorney. Some lawyers may offer a free consultation before charging attorney fees.