There are four essential aspects on which a  homeowner should focus in order to prevent foreclosure. There is no particular order for these steps, though all can be addressed as necessary throughout the foreclosure prevention process.

  1. Open and Consistent Communication—Establishing and maintaining open and consistent communication between the client and the lender sounds like a simple task. Given the stress of the situation, coupled with life’s distractions, it is common for calls to go unanswered and letters unopened by the client. Since preventing a foreclosure is time sensitive, homeowners need to be proactive. Failure to act on calls and correspondence diminishes the options available to homeowners and gives lenders the impression that the client is not interested in saving their home. One of the most effective ways of staying on top of the correspondence between lender and homeowner is a communications log. Track the date, time, contact person and method of contact helps the homeowner stay on track and not miss deadlines to submit paperwork to the lender. It helps to keep detailed notes of what was discussed. Losing or never receiving paperwork is one of the biggest complaints from both lenders and homeowners. Maintaining a log helps prevent this issue from happening.

  2. Assess the Financial Situation—Creating a crisis spending plan will help put things into perspective for the homeowner. Often, they are so caught up in the situation that they have not taken time to assess their finances. This step facilitates the discussion of whether the current housing situation is sustainable. It also opens the door to talk about making hard choices on spending habits. Making changes to spending is hard, especially when facing a foreclosure. Reviewing what is important to the client and their family helps this process. Decisions about spending and cutting expenses have to be the client’s choice. A housing counselor may see what seems obvious to cut from a spending plan, but these decisions belong to the homeowner. Helping the client to honestly assess their financial predicament will prepare them to have the same discussion with their lender.

  3. Practice Self Care—Resources and a plan for coping with the stressors that arise as a result of the financial distress faced while preventing foreclosure is often overlooked. Not recognizing the strain on the family and taking measures to address it can affect the client’s ability to solve and manage the situation. One of the units in the Starting Over After Foreclosure Toolkitfrom Michigan State University Extension equips homeowners and their families with tools to help them manage during this difficult time. It is available for download for free at
  4. Create a Plan of Action—A written action plan  with specific steps for the homeowner to take is vital to the process and can make managing tasks easier and more likely to succeed. It can include action steps regarding self-care, assessing finances, and communication as discussed previously, and it can have other action steps such as:
  • Contacting a HUD housing counselor who specializes in assisting homeowners in dealing with lenders and explaining the options available to them.

  • Submitting an application for loss-mitigation options (such as repayment plan, modification) with their lender

  • Applying for other emergency assistance programs particular to the city or state. For example, some States have Hardest-Hit Funds available.

  • Finding specific ways to increase income

When writing a Plan of Action, using SMART goals (Specific, Measureable, Achievable, Relevant and Time Bound) has proven to be an effective way to achieve what one has set out to accomplish. An example of a SMART goal to prevent foreclosure may be “I will submit a work-out package to my lender via email by May 31, then follow up with them by phone every three days on the progress of their review, and record what was discussed in my communication log.”

Incorporating these four strategies can help a homeowner be more confident in and successful with their efforts. An organized and calculated approach to handling the situation can offer relief from the anxiety of ‘the unknown’ that is so often experienced. With the added support of a housing counselor or financial coach, a homeowner will be much better equipped to navigate through the crisis.

Robert Weber is an Extension Educator at Michigan State University and specializes in Foreclosure Prevention Counseling and Pre-Purchase Homeownership Education. He holds a master’s degree in Community Development.

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