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Homeowners who fall behind on their mortgage payments will likely receive letters from their lender and might even receive a foreclosure notice from the court.

Receiving these documents likely adds to the stress felt by homeowners. But bank officials and housing advocates say homeowners should respond to these letters. Property owners who are in danger of losing their property to foreclosure have certain rights. One of those rights is to remain in their home until the property is sold at a sheriff’s sale.

Homeowners have a lot of time to work out a modification or reach some other settlement with their bank because the foreclosure process can take up to two years, according to experts.

Stephanie Ball, director of home ownership with the South Bend Heritage Foundation, said banks usually will not sue for foreclosure until a mortgages is three to four months past due.

She said homeowners may be able to head off a foreclosure filing if they are proactive.

“The best thing that homeowners should do if they are having difficulty is to contact your lender,” Ball said.

For example, a homeowner might be eligible to receive a loan modification — which could involve lowering the interest rate or extending the term of the loan, according to Ball.

Ball said borrowers should contact their lender if they have reason to believe they are going to miss a payment.

The bank representative will ask the borrower some questions and then send a modification application to the homeowner, Ball said.

The borrower can complete the form himself or seek help from a housing counselor by contacting the Indiana Foreclosure Prevention Network at 877-438-4673 (877-GETHOPE).

Homeowners who call will be referred to one of the agencies that provides counseling services in their area. There are five such agencies for homeowners in Elkhart and St. Joseph County, according to Ball.

Counselors can help homeowners complete their loan modification application. Working with a counselor makes a homeowner eligible to receive assistance from the Hardest Hit Fund, which provides financial assistance to unemployed homeowners, according to Ball.

She said homeowners currently receiving unemployment benefits or those who have received benefits within the last 12 months may qualify to receive assistance from the Hardest Hit Fund.

“You have to (call the 877-GETHOPE) or go to the website of the Indiana Foreclosure Prevention Network,” she said.

There is no guarantee a lender will accept a modification, but homeowners have a chance to keep their homes even if they get a foreclosure summons and complaint from the court, according to Ball.

“If you receive a summons, you need to read it,” Ball said. “There are some deadlines in there that are crucial and you need to respond.”

For example, homeowners can request a settlement conference.

“However, that is time-sensitive and the homeowner needs to respond within 20 to 23 days,” Ball said.

The settlement conference is another opportunity for the homeowner and lender to reach a resolution short of foreclosure. The settlement conference brings the homeowner and lender together in a meeting with a court-appointed facilitator. Some homeowners ask their counselors to attend the meeting as well, Ball said.

“This is an opportunity to figure out if there is a resolution other than foreclosure,” Ball said. “It could be for the (borrower) to retain the home or it could be for them to leave the home.”

There is still a chance for the homeowner to keep the house even if the two sides fail to reach a deal in the settlement conference, according to Ball.

“I’ve seen it happen twice where the homeowner put together a workout package and got it to the lender and the lender acknowledges that they have it and have reviewed it and they will put a stay on the foreclosure,” Ball said.

“One person was able to come up with the money to stop the foreclosure, and the (lender reviewed) the other person’s (documentation) and reset the foreclosure.”

Homeowners run out of chances once their house is sold.

“The sale happens every Thursday at 10 a.m.,” she said, “and if you have not figured out anything by that date, it’s a done deal in Indiana.”

(c) 2012 The South Bend Tribune. Distributed by MCT Information Services.