What To Do When You Fall Behind On Your Mortgage

If you've found yourself in the nerve wracking and precarious position of not being able to make your mortgage payments - or you're consistently paying late and receiving phone and mail contacts - this information is custom made for you. It may surprise you that most mortgage servicers (the company that collects your payment) want to work something out with you. However, if you don't answer their phone calls or respond to mail inquiries - then you're not going to get any help and will probably lose your home and ruin your credit for years to come.

Based on the reason why you've become delinquent, the mortgage company may suggest plans to help get you current again. But, be aware that ignoring them will not make the situation go away and the longer you wait, the worse things will get. So buck up and follow these basic rules.

First determine exactly why you can't make your monthly payment. Is it because of a long term issue in your life or a short term problem? How you decide if the problem is short or long term is pretty simple. If your car broke down and you will need a few months to get back on track again after unexpected costly repairs, then that is short term. If you lost your $50,000 a year job, had a family member become ill, or your spouse died, these are considered life altering long term situations.

Next, collect all your paperwork that the lender sends you - be sure to keep the envelopes that they were mailed in. You may need to prove when you received a piece of correspondence to protect your rights. You also need to make notes of each phone call you have with the mortgage company. Jot down the name, date, and time of call and just a brief description of what you discussed. If you aren't "getting anywhere" with the person on the other end of the line - then request a supervisor. If you still don't get anywhere you may need to seek an additional level of outside help. There are legitimate professional companies that handle negotiations between lenders and borrowers - you may just need some simple credit counseling or budgetary help. That may mean cutting out things like cable TV and long distance telephones or it may mean taking more severe steps like not paying unsecured credit card debt until you can get back on your feet - just be sure to let those creditors know what is going on in writing too.

Then prepare your personal paperwork that documents your assets and income. Put together two to three years of your W-2s, a month's worth of payroll stubs, six months of your bank statements, and prepare a list of all your other household expenses, such as car and health insurance payments, utility bills, child care obligations, etc.  Be prepared to show the lender that you are no longer in a position to pay the complete payment - be honest.  Don't try to make the situation rosier than it is, nor, make it worse. You're trying to save your home and you need their help to do that.

If the situation is short term, most likely the lender will offer a forbearance plan. Simply put this permits you to pay the "missed" payments over a period of time while still making the current payment. If that is not possible then ask them to modify your note. Modifying the note is more difficult simply because the lender is obligated to return to the investor the amount of money that they sold them the security for, but if there's no hope but a foreclosure instead of a modification - the lender may well agree. You must persist if it gets to this stage. Lenders are less likely to grant modifications unless you can prove to them the situation is not likely to improve at all. Therefore, have those personal documents ready in advance.

Last, if none of this works, you can offer the bank a deed in lieu of foreclosure or ask them to allow you to put your home on the market for sale. If the lender determines that the market value is less than what the mortgage is - they may grant you a short sale situation. If the home doesn't sell and the lender is forced to start the foreclosure proceedings, offer them the deed in lieu of foreclosure. It will save them some attorney's fees, smooth the process, and avoid an actual foreclosure on your credit report. You won't get any money from the sale of your home and you may owe taxes on any forgiven mortgage balance, but at least you won't totally ruin your credit in the process.

And finally, what shouldn't you do?  These are very basic as well - don't ignore the lender's communications, don't take out a high interest rate second mortgage that you can't afford to pay, and don't fall for foreclosure scams where you turn over ownership of your home and "rent back" only to lose all your equity and your home to boot.

If you're having trouble with your current mortgage payments, please feel free to contact us at Metro Mortgage Company. We'll be happy to discuss your current situation and offer our advice including whether or not the new FHA Secure refinancing program might be an option for you to consider.

• Rate this Post!

  Select Your Rating:

  • 5 Stars (Excellent!)
  • 4 Stars
  • 3 Stars
  • 2 Stars
  • 1 Stars (Poor)

• Share this Post

  Share With A Friend:

  Your Name Your Email

  Friend's Name Friend's Email

  Optional Message

  Send

• Print
• Social Bookmarking

  Add to Bookmarks: