Overall, the U.S. housing market is well on its way to pre-2008 health. In February 2016, there were 98,121 U.S. properties with foreclosure filings. That is down four percent from a year ago and is significantly lower than the 367,000 figure during the peak of the housing crisis in March 2010, according to data from real estate information company RealtyTrac.
Still, despite an overall nationwide decrease in foreclosures, states such as Massachusetts, Missouri and New Jersey still saw increases.
“For some states, particularly in the Northeast, we’re seeing foreclosure activity rising rather than falling,” explains Daren Blomquist, senior vice president at RealtyTrac. “The very lengthy process of completing foreclosure has enabled the foreclosure pain to linger in those markets.”
If you are currently experiencing or anticipating a struggle making mortgage payments, the key is to be proactive.
Here are five options for productive action.
Examine your budget
“See what else can be cut in order to create a little breathing room to make that mortgage payment,” says Greg McBride, chief financial analyst at Bankrate.com. “It is really important to be proactive. The goal is to right-size your home situation to the realities of your income and household budget.”
Know your situation
Become intimately acquainted with your mortgage. You might find your situation is worse, or actually better, than you realize. Depending on the type and structure of your loan, and thanks to continued low interest rates, adjusting rates might not necessarily mean higher payments.
Work to understand your property’s true value.
“A lot of homeowners think they’re in worse shape than they are,” says Blomquist. “But the housing market has really recovered in many areas for the past few years. You may have a lot more equity in your home than you thought.”
Call your lender
Contact your lender at the first sign of trouble. Depending on the severity of the situation, lenders may be able to assist with options such as mortgage modification or forbearance. If you are behind on your payments, the importance of calling is even greater.
“Unlike the days of the housing bust where lenders were inundated with foreclosures or delinquencies and people could literally live rent-free for years because lenders never got around to it, that’s not the case now,” says McBride. “Missing a payment or two will not go unnoticed.”
Seek counseling or assistance
There are many resources available for distressed homeowners. McBride suggests seeking counseling from an agency accredited by the National Foundation for Credit Counseling.
Federal government programs such as the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP) can provide assistance in some cases. States also receive money from the U.S. Department of the Treasury via the Hardest Hit Fund. Look for the housing finance agency in your state to research specific programs for struggling homeowners.
Be wary of third-party scams. Mortgage relief companies might contact you and offer to provide assistance for a fee. There are fewer now than five years ago, but it is still important to be cautious.
“If you start answering the phone from entities that promise they’re going to fix your situation, you’re getting cold-called, that’s inviting trouble,” says McBride.