Myths

Foreclosure has been viewed with so much fear and foreboding that myths have developed out of the lack of knowledge and information about mortgages and default payments. The Roper Poll showed that 6 out of 10 homeowners currently in default have no concept of what options are available to pay their mortgages and avoid foreclosure. The best action that you can take is to call qualified legal counsel, mortgage professionals, and the lending institutions right away to determine your best solution. 
Foreclosure Myth #1:
If I call the bank and tell them I can’t pay, they will take the house. 
This is the number one, most common myth of all, and the most damaging. This myth alone contributes to at least 50% of all foreclosures. In a survey conducted by Harris Interactive, 38% of default homeowners were too scared, 35% were too depressed and only 8% were too embarrassed to contact the lender. It costs tens of thousands of dollars to process a foreclosure – you could save the bank money by arranging for another option which they will gladly entertain.  
Foreclosure Myth #2:
There is no reason for me to alert the bank, I have only missed one payment. 
There is every reason for you to call. The best time to contact the lender and arrange for alternative payment options is before you default, when you become aware of a financial problem. You have more options available to you and greater chance of making affordable payment arrangements before you incur debt. The longer you wait, the greater the arrearage, fines, and legal fees that you accumulate until it is too late to forestall foreclosure.  
Foreclosure Myth #3:
What’s the big deal anyway, the bank gets the house back. 
This is a huge deal. Aside from the public embarrassment, the damage levied on your credit takes years to repair. When it comes time to buy a car, get a loan for a new house, pay the medical bills, send your kids to college, or any other reason for getting a loan, you will be faced with rejection. Also, in some states, if your house sells for less than what you owe, you are still liable to pay back the deficiency of what you owe. 
Foreclosure Myth #4:
I am in way too deep. There is nothing I can do. 
There is always something that can be done even once the foreclosure process has started. Unfortunately today, with millions of homeowners facing foreclosure, this is a common, and depressed, mis-belief. As long as you still have time before the completion of the foreclosure process, there may still be an option to at least avoid foreclosure and the death of your credit. 
Foreclosure Myth #5:
No one will touch me because I am already in foreclosure.
If you have sufficient equity remaining in your house, at least 60-70%, you may be able to negotiate with a specialty lender to refinance the mortgage which will pay off the old debt thereby stopping the foreclosure.  
Foreclosure Myth #6:
The bank doesn’t want my money, they want the house.  
If the bank is refusing your payments unless you pay your arrearages in full and will not negotiate a payment plan with which you can agree, other lending institutions and mortgage professionals can create a plan that allows you to pay on your debt as well as maintain a monthly payment. Your debt has value with other financial institutions and as long as you maintain the new payment plan, the foreclosure process will cease.  
Foreclosure Myth #7:
No one understands what I am going through and the problems that I am facing. 
With 85% of all homeowners in the United States in default of at least one payment on their mortgage, the majority of the populace understands exactly what you are going through which is why the Obama administration has rolled out new plans to assist millions of Americans to stay in their homes. Foreclosure is costly to the banks and lending institutions and they would far rather lose a little, than lose a lot.  
Foreclosure Myth #8:
If I file for bankruptcy, I can save my home and not pay anyone.  
This myth has several grey areas. If you file for Chapter 7 Bankruptcy, you only have a temporary stay on foreclosure proceedings; you still owe the debt. If you file for Chapter 13 Bankruptcy, you must also be approved by the courts and faithfully make all your payments in the bankruptcy plan to be able to keep the house.