Millions of Americans are faced with the same question nationwide. What should you do if you fall behind on Mortgage Payments? The following are suggestions to help answer that question:
Call Lender Immediately
If you find yourself slipping behind in your mortgage payments, call your lender immediately. Mortgage companies really want to work with their customers to help them find a way to stay in their homes. Especially right now since banks and financial institutions have more foreclosure properties than they can handle on their books right now. Sometimes consumers complain that the mortgage companies don’t always seem like they are being cooperative. Remember they are overwhelmed with requests and understaffed so it may take awhile to find the right person to talk to you and help you with your situation.
Explain your hardship. The sooner you speak to the lender, the better chances you have of getting them to cooperate. If you fall too far behind, you could jeopardize your credit and lose your home to foreclosure.
- If you need to see if you’re qualified to Negotiate your Loan and may need professional legal help in doing so, Consult Your Case for Free with a local certified Foreclosure Attorney as they are experts in mortgage modifications.
Mortgage Servicer
The Mortgage Service is the company that services the loan and it may not be the same company that gave you the mortgage. Start calling the mortgage servicer first. The mortgage service is the company that will pass along the payments to the insurance company and tax collector, and calls the borrower when they are late on payments and sends out letters as well. Researchers have discovered that in approximately half of all foreclosure cases, the borrower never even spoke to the servicer. Had those borrowers taken the initiative to make the phone call, they may have not lost their home to foreclosure.
Make a Budget
Sit down and make out a budget and figure out your monthly debts and income and how much is left for your mortgage payment. This way when you do reach the right person at the lender or mortgage servicer’s office, you can intelligently show them how much you can now afford to pay on the mortgage. This really helps if you are requesting a mortgage modification. (Change in your current mortgage payments.)
Get Financial Counseling
Seek financial counseling from either an attorney or home counselor. Knowing your options is the best way to make an informed decision. There are certified home counselors that are recommended by HUD that do not cost you anything. Or you can go the route of talking to your attorney. Most attorneys do not charge for an initial consultation.
Foreclosure Prevention Options:
Mortgage modification. Modify the existing loan to extend the term or add the default amount on to the back end of the mortgage. Works best if you have a variable interest rate mortgage.
- Refinance. Obtain a new loan at a lower interest rate of at least one point and pay off the old loan. If you don’t obtain a point lower, it won’t make enough difference in lowering your monthly mortgage payment.
- Short Sale. Sell the home for less than you owe on the mortgage with the lender’s approval.
- Reinstatement. Ask the lender to reinstate the loan.
- Loan Forbearance. Ask the lender to forgive the amount of debt you are behind, or a portion of it or add the default amount to the back end of the loan.
- Rescission. If there are statutory or predatory violations, you can request the lender rescind the loan or you can file a court action against the lender for predatory loan practices and fraud. Hire an attorney to do what is called a “forensic loan audit” to determine if you have any grounds for rescission or for filing a court action for predatory loan practices against your lender.
- Sell the home. If you have equity, then it might be smart to sell your home either by for sale by owner or list with a Realtor. In today’s market, it makes more financial sense for you to hire a Realtor who will expose your home to a large pool of buyers.
- Deed in Lieu of Foreclosure. Sign the deed and give the house back to the lender.
- Bankruptcy as a last resort. File a court action asking the court to discharge your debts and allowing you to keep your residence and some other personal items such as your car.
Choose the best option that works for your financial situation and try and work it out with your lender to save your home. The earlier you start thinking about your options, the better chance you have of negotiating something that works for you and the lender.
- If you need to see if you’re qualified to Negotiate your Loan and may need professional legal help in doing so, Consult Your Case for Free with a local certified Foreclosure Attorney as they are experts in mortgage modifications.
Content Related to Topic
- Foreclosure Prevention Rights and Options
A guide summarizing different rights and options consumers have to prevent or delay foreclosure. - Negotiation with your Lender
A guide to negotiating your loan with your lender. - Loan Modifications
How loan modifications work and can help prevent foreclosures.
