Avoiding Foreclosure
A week ago, it looked like Lethedia Davis would have to hand over the keys to her home.
"This was the first home I ever owned," Davis says. "It was one I built from the ground up. It was mine!"
As CBS News correspondent Kelly Cobiella reports, Davis had missed three mortgage payments, and the bank was calling.
"What they were saying was, 'We want to see the money,'" Davis says. "It's like, 'We don't care how you get it, we want to see the money.'"
Davis had been scraping by on an early retirement while trying to get a new business off the ground. Credit cards bought more time, until the monthly minimums shot up. Then her tax bill came due.
"I mean, my taxes increased quite a few times — and by the time April rolled around of this year... I couldn't handle it," Davis says.
Signs of similar struggles are on middle-income homes and mini-mansions alike. Foreclosures are up 25 percent in the past year. But what many people don't know is that lenders are just as unhappy about that as the homeowners.
Ken Wade is the CEO of a non-profit that works with banks to help people avoid foreclosure. He says that surprisingly, most homeowners don't ask for help.
"Our data suggest that 40 to 50 percent of all the people who go to foreclosure never have any contact with their lender," Wade says.
That's why they say the most important step is to talk to the bank. From there, solutions could include suspending payments, restructuring the loan, getting a new loan or even giving back the home to avoid a black mark on your credit.
Credit counseling can help, too. But to avoid a scam, make sure the counselors are HUD approved, like Lynn Jaime, who has been busy lately.
"I'm probably dealing with 20 clients that are facing foreclosure," Jaime says.
Jaime's most recent success story is Davis, who doesn't have to pay her mortgage for six months. The payments will be added to the end of her loan, giving her time to find a job.
"I really and truly believe that it's gonna happen way before six months is over, but the pressure is off," Davis says.
On average, a foreclosure costs a bank $50,000. With today's housing market showing signs of a slowdown, most banks would rather keep the customer than the keys to an empty home.
For more information on avoiding foreclosure:
The U.S. Department of Housing and Urban Development NeighborWorks America