Foreclosure Isn’t The End

There’s no shame in falling behind on your mortgage. It happens more frequently than you might think, but you have to ask for help when you need it. Thankfully, your mortgage company is more than willing to help you through a difficult time.  Your mortgage company has many helpful services available to you, including options to help you if you’re struggling with making your mortgage payment.

You Have Many Options!

Bankers are in business to make money. If you can’t afford your mortgage and don’t make your payments, then they aren’t making money. If they’re forced to seek foreclosure, they lose even more money. Fortunately for you, your bank can provide foreclosure relief with plans that include:

Loan Modification

This option may make a lot of sense to you. Your banker works with you to change the terms of your loan to make it more affordable. A loan modification changes the structure of your loan. Your banker can do one or more of the following to reduce your monthly mortgage payment:

• Reduce the interest rate
• Lengthen the term of the mortgage
• Change the interest rate from a variable rate to a fixed rate

In order to be eligible for a loan modification, you must show that:

• You can’t afford your current loan structure
• Complete a trial period to prove you can afford the new loan
• Provide documentation to the lender for consideration

You may have to write a letter to your lender that details the financial hardship that prevents you from being able to afford your current mortgage. Your banker will likely require a financial statement, proof of income, recent tax returns, and bank statements for evaluation purposes.

Forbearance Agreement

A forbearance agreement is similar to a loan modification, but rather than being a permanent loan restructure, it is a short-term solution for foreclosure relief. The lender reduces or suspends your mortgage payments for an agreed-upon time and they also agree not to initiate foreclosure during the forbearance period.

At the end of the forbearance period, the borrower agrees to resume the full amount of the monthly mortgage. The borrower must also bring the loan current by paying additional amounts to make up the missed payments. This additional amount may also include interest and late charges and the terms will vary by lender.

Repayment Plans

If you’ve fallen behind on your mortgage payments due to a temporary hardship, your lender can offer a repayment plan. Lenders typically offer to allow you to spread the missed payments out over an agreed-upon period. The lender adds the overdue amount to your regular mortgage payment until they’re paid in full. At the end of the repayment period, you will resume your normal monthly mortgage payment amount.

The Bottom Line

You have options. Just remember that most lenders are happy to offer foreclosure relief to their mortgage customers. They want you to keep your home if you want to keep it and they are more than willing to work with you.

You can find out more about foreclosure relief at USA.gov. Read up about government programs that might help you and your family.