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I can't pay my mortgage! What are my options?

If you're having problems paying your mortgage and don't know where to turn, there is help available! Before you get behind in your mortgage payment, contact your lender. Ask to speak with someone in their loan modification department. Make sure you make notes of your conversation with the department (such as the name, phone number, and outcome of call). Explain your situation (job loss, health, divorce, hour reduced, mortgage escalation) and ask for the documentation needed to do a loan modificaton or forebearance. With a loan modification, the lender should renegotiate the loan to a more manageable payment. With a forebearance, the lender would allow you a certain number of months where you wouldn't make payments, but those missed payments would have to be paid back over time.

Why would a lender modify my mortgage?

Lenders have realized that in some cases it is better for them to work with their current borrower to lower their payment or possibly improve their terms in order to keep them in their property. The average foreclosure can cost a lender from 35 to 50% of the value of a property (or more) so keeping a borrower in their home is better for everyone.

What do I need to qualify for a mortgage modification?

According to the Making Home Affordable government website (www.makinghomeaffordable.com) you will need the following information for your lender to consider a modification:

  • Information about your first mortgage, such as your monthly mortgage statement.
  • Information about any second mortgage or home equity line of credit on the house.
  • Account balances and minimum monthly payments due on all of your credit cards.
  • Account balances and monthly payments on all your other debts such as student loans and car loans.
  • Your most recent income tax return.
  • Information about your savings and other assets
  • Information about the monthly gross (before tax) income of your household,including recent pay stubs if you receive them or documentation of income you receive from other sources.
  • It may also be helpful to have: A letter describing any circumstances that caused your income to be reduced or expenses to be increased (job loss, divorce, illness, etc.) if applicable

How do I qualify for a mortgage modification?

The first call you make should be to yourlender, have the information above ready to discuss with them and call your customer service line to ask them what options you have available. If the person you speak with does not understand what you are asking about you can ask to be referred to one of the following departments (different lenders have different names for this department):

  • Loss Mitigation Department
  • Mortgage Modification Department
  • H.O.P.E. Department

Prior to contacting your mortgage lender you can quickly complete an eligibility test at www.MakingHomeAffordable.gov. This test will let you know if you are eligible for a modification through the government sponsored Home Affordability and Stability Program (HASP).

For a list of mortgage lenders and servicers with contact information your can visit www.HopeNow.org. If Fannie Mae or Freddie Mac owns your mortgage you may be eligible for a Home Affordable Refinance. This will allow you to refinance your home and often lower your payments.

What is a Home Affordable Refinance?

  1. You are the owner occupant of a one to four unit home.
  2. The loan on your property is owned or securitized by Fannie Mae or Freddie Mac (see resources in this blog)
  3. At the time you apply, you are current on your mortgage payments (current means that you haven't been more than 30-days late on your mortgage payment in the last 12 months or, if you have had the loan for less than 12 months, you have never missed a payment)
  4. You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house
  5. You have income sufficient to support the new mortgage payments, and the refinance improves the long-term affordability or stability of your loan.

What if I Don't Qualify, Can't Afford My Home and Owe More than It is Worth?

You are not alone and foreclosure is not the only option. If your mortgage lender or servicer will not work with you to reduce your payment you may want to consider a short sale, A short sale allows you to sell your home for less than what you owe and avoid foreclosure.

RESOURCES - HUD APPROVED COUNSELORS:

Posted Thursday May 28