NEW YORK -- Inflation is undeniably making it harder for renters and owners to pay their bills. No matter if you're in expensive urban states like New York and California, or more rural ones like Arkansas or Vermont, you are not alone.
While there are some rent relief programs available to help you not get behind on your rent, there are still some intricacies when it comes to paying your bills that you should be knowledgeable about in order to prevent further issues.
Here's a detailed guide on foreclosure prevention and how to deal with a possible eviction.
What is Foreclosure or Eviction and Why You Should Avoid It
Eviction is a civil process by which a landlord can legally remove a tenant from their rental property. An eviction may occur when the tenant stops paying rent, when the terms of the rental agreement are breached, or in other situations permitted by law.
In the U.S., evictions are governed by individual states and by certain municipalities, and landlords are required to inform tenants they are being evicted with a notice specifying the reasons why.
Meanwhile, foreclosures happen when a lender seizes and sells a property because the homeowner has not been making the required mortgage payments.
Foreclosures and evictions can have serious consequences for individuals, for instance:
- Foreclosures and evictions can significantly damage a person's credit score, making it difficult to secure loans or housing in the future. It can also result in the loss of any equity built up in the property.
- They can also involve complex legal processes, and failing to comply with court orders can result in legal action or even criminal charges
- In severe cases, foreclosures or evictions can lead to homelessness, which poses a range of health and safety risks and can exacerbate existing social and economic challenges
- Of course, being forced to leave your home due to foreclosure or eviction can be emotionally traumatic and highly disruptive to your life, especially if you have children or dependents
How to Prevent Foreclosure or Eviction
Evictions and foreclosures are preventable, even if you are struggling financially. Here are some of the ways in which you can stop them from happening.
If you are facing an eviction:
- You can seek legal assistance if your landlord is threatening to evict you, or you need help understanding your housing rights. You may qualify for free legal aid based on your income
- See if your state provides temporary eviction protections
- Take advantage of emergency housing resources
- Know your tenant and debt collection rights
For foreclosure prevention:
- Communicate with your lender immediately and let them know you are facing financial difficulties
- Do not stop paying your bills
- Do not wait until you cannot make payments before you act
- Get legal assistance and become knowledgeable about housing rights
Know Your Housing Rights and Responsibilities
For eviction and foreclosure prevention, it is imperative to know your housing rights and get legal assistance if necessary. Here are some emergency housing resources and housing counselors that can help you learn your housing rights and options.
- The Making Home Affordable (MHA) program offers free legal assistance if you are struggling to pay your mortgage.
- Find a HUD-approved housing counseling agency in your area for free, local foreclosure prevention services
- The homeowner Assistance Fund provides financial help for families having trouble paying their mortgage because of COVID-19 pandemic.
Seek Legal Assistance if Necessary
Evictions and foreclosures can be a complex process, that is why seeking legal assistance is a must. If you are facing foreclosure or eviction, contact a lawyer and review your mortgage or tenant documents. If you do not have a lawyer, depending on the state, your local Bar Association may be able to refer you to an appropriate attorney for your situation.
LawHelp.org and The Legal Service Corporation website are good resources to start your search for free or low-cost legal assistance.
Apply for Mortgage Relief Programs
The Homeowner Assistance Fund (HAF) is a mortgage relief program authorized by the American Rescue Plan Act, which provides $9.961 billion to support homeowners facing financial hardships associated with COVID-19.
Use the map to find your state's Homeowner Assistance Fund program.
Contact Your Lender or Landlord and Negotiate a Solution
Eviction and foreclosure prevention can start with good communication. Let your lender or landlord know you are having financial difficulties, do not stop paying your bills and do not wait until you cannot make payments before you act.
Here is a guide with tips on how to talk to your lender or landlord.
Request a Forbearance or Repayment Plan
If it has become difficult for you to pay your mortgage, contact your mortgage servicer immediately, as you may be eligible for forbearance, which temporarily pauses or reduces your monthly mortgage payments.
Here is a on mortgage relief and forbearance repayment plans.
Request a Rent Reduction or Payment Plan
You can request a rent reduction from property managers at any time, but your landlord might take you more into consideration if you're able to leverage before the lease ends.
While your landlord is not required to actually reduce your rent, writing them a specified letter explaining your situation might be able to help.
Request a Loan Modification or Refinance
Loan modifications allow homeowners to change their loan terms due to financial hardship. It is a change made to the terms of your existing mortgage by your lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three.
Bottom Line
It is no secret that life often puts obstacles in front of you that might be making it hard to pay your bills. If this is your case, you are not alone.
However, if you find yourself in this scenario, it is imperative to act quickly and accordingly. Whether it is seeking legal assistance, communicating with your lender or landlord, or requesting a repayment plan, there are several options available for you and your specific case.
It is always important to be informed and know your housing rights. For more information on eviction and foreclosure prevention, click here.
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