Summer 2026 -Understanding Foreclosure Prevention
June is National Homeownership Month. While SCDHC prepares first-time homebuyers for sustainable, affordable homeownership, it’s important for all homeowners to understand foreclosure prevention and how to prepare for unforeseen financial emergencies.
We asked SCDHC HUD-certified housing counselors Cierra Frye and Tarik Gay three questions about foreclosure prevention and what homeowners need to know.
1) What are some financial strategies that can help new homeowners protect themselves from foreclosure?
Cierra: We advise our counseling clients to maintain a minimum of three months of reserves in the event of an unforeseen financial hardship that could impact their ability to make mortgage payments. Additionally, we encourage clients to contact their loan servicer as early as possible if they experience any financial difficulty, rather than waiting until a payment is missed. Typically, there is a 15-day grace period before a late fee is assessed, and a 30-day period before a late payment is reported to the credit bureaus. Early communication with the servicer is strongly encouraged, as it allows for more options and flexibility in addressing potential delinquency.
Tarik: Clients should prioritize saving 3, then 6, then 12 months’ worth of living expenses. When purchasing a home and paying a mortgage, clients should make sure that their monthly mortgage payment stays within 35% of their gross monthly income. As a homeowner, clients should have a formal and tangible budget for their reference.
2) What should every homeowner know about the foreclosure process?
Cierra: That it is important to understand your mortgage rights and the foreclosure timeline. In the State of Virginia, the foreclosure process can begin after a borrower is 120 days delinquent on their mortgage. Foreclosure is a public record and can impact your credit and financial standing. If you experience a financial hardship, it is strongly recommended that you contact your loan servicer as soon as possible and inform them of your situation. Early communication is important, as it is always better to work with your lender than to allow them to assume your circumstances.
Tarik: Homeowners should know that loan servicers are required to provide loss mitigation options (e.g. partial claim, repayment plan, loan modifications, forbearance). Foreclosure proceedings cannot begin until the mortgage is more than 120 days delinquent. After 120 days, servicers cannot begin the foreclosure process while a borrower is being evaluated for a loss mitigation plan.
3) If a homeowner anticipates imminent default or foreclosure, what steps should they take?
Cierra: There are workout options available that may help you keep your home. We encourage you to contact your loan servicer and request to speak with the Loss Mitigation Department to review available options such as a repayment plan, forbearance, loan modification, or a partial claim, depending on eligibility. It may also be beneficial to contact and utilize free housing counseling services. Through a HUD-approved housing counseling agency, you can work with a housing counselor to review your situation and help determine the best available options to avoid foreclosure. In addition, it is important to create an emergency budget and reduce unnecessary expenses where possible. Taking these steps early can help improve financial stability and increase the likelihood of a positive outcome.
Tarik: Contact their loan servicer for loss mitigation options and contact a HUD certified Housing Counseling Agency for additional help with resources and/or funding.
SCDHC offers free, HUD-certified foreclosure prevention counseling. Call (804) 231-4449 ext. 109 to get started.
Click HERE for HUD pamphlet, "Save Your Home: Tips to Avoid Foreclosure".
Want to read more news from SCDHC? Check out our Summer 2026 Newsletter.