Millions of Americans who thought they realized the American dream of becoming a homeowner are now facing the American nightmare. For whatever reason, they are no longer able to make their mortgage payments. Some are scraping by now but know it can’t continue, while others are so far behind they don’t know where to turn.
First and foremost, contact your mortgage servicer. Try to get to their Loss Mitigation Department. This is not always an easy feat. Let the customer service agent know you need to speak to someone in Loss Mitigation. Once there, explain the situation and ask for your options. Typically the initial option offered is what is called a Forebearance Agreement. You will be agreeing to pay the past due payments by making a larger mortgage payment. If you are able to now maintain paying a payment-and-a-half or payment-and-a-third, then great. Once you have successfully completed this plan, your loan will once again be current. The mortgage company must agree to this alternate payment plan. Do not try to do this without their authorization. If you do, they are likely to return your payment to you as not enough to make the loan current.
If you are unable to afford a higher payment, do not agree to make the higher payment. Explain that is not going to work. They will try to tell you that is the only option. This is not the only option. You need to get to the next step. Next, they will probably offer a “partial-claim” type situation in which they take the past due payments and all late fees and make it a 2nd mortgage with or without monthly payments. Again, if this situation will work, then great – if not, don’t accept it.
If you can persevere, you may be able to get to the next step which is Loan Modification. The Loan Modification would actually change the terms of your mortgage. This can include interest rate reductions and/or principal balance reduction, or moving a portion of the principal balance to a 2nd loan with no payments and/or no interest. These are being done everyday. It is a lengthy and frustrating process. If you have the time, you can accomplish this yourself – if you don’t, you can always seek the assistance of a Loan Modification Specialist. Beware – unfortunately, there are those out there who are offering these services without your best interests at heart. Interview carefully or contact us for a recommendation or assistance. These services will cost you, much as a refinance would have closing costs. However, the long term benefits in avoiding foreclosure can be well worth it. You can also seek out the assistance of a housing counselor who is free to you.
We offer our services and assistance to negotiate through this maze of foreign lingo and endless hold times. We may be able to help you avoid foreclosure through one of the federal programs recently unveiled or refer you to a housing counselor or loan modification company. So if you find yourself in a potentially bad situation, contact us today!
Post new comment