I’m behind on my mortgage payment.
What are my options?
If you have fallen behind on your mortgage you will receive information – and lots of not so subtle suggestions – from many people who want to take advantage of your temporary misfortune. They will tell you that time is your enemy and that you must act immediately to save your credit. That will normally be followed by a proposal to solve your problem by selling or deeding your property to them. Don't Do It! Don’t do anything until you understand your options.
1. Reinstatement - Pay the Mortgage Company all of the back payments to bring your mortgage current. This option is rarely attainable. The Mortgage Company will add late fees and Attorney fees on top of your back payments making this amount much more than people are able to come up with.
2. Workout - You can negotiate with your Mortgage Company to bring your loan back in good standing. There are many options available to you to get a workout approved. Some examples are:
a. Negotiate a Forbearance Agreement with your mortgage company. For those borrowers who experienced a very temporary event that caused them to fall behind on their mortgage, a Forbearance Agreement with the lender is a good option. In most cases, the mortgage company is going to look for two things when considering a forbearance agreement: First, why the loan became delinquent in the first place. It helps greatly if the problem was something beyond the control of the borrower – serious illness or injury, temporary disability or a one-time disruption in income. Second, that the borrower’s financial difficulties have been corrected. The mortgage company wants to know that the borrower is now on a solid footing and can be counted upon to make regular loan payments as agreed. The new payment will probably include some amount to go towards the delinquent amount.
b. Loan Modification - The term "loan modification" refers to a readjusting of your current mortgage. If you can currently make your regular payment, but you can’t catch up with the past-due amount, you can negotiate with your lender to fold any past-due amounts, including interest and escrow, into the unpaid principal balance. This new amount will be re-amortized over a new period of time. Or, if you are unable to make payments at this rate, you can negotiate with your lender to extend your loan for a longer period of time, modifying the loan amount to a more affordable level. A Loan Modification or Loan Restructuring will change your existing mortgage note and give you a fresh new start in managing your home. Your account will be brought up to date immediately.
3. Refinance - We have established partnerships with very reputable lenders who can give loans on mortgages that are in pre-foreclosure if there is enough equity available.
4. Sell Your Home - You may simply sell your home before the Foreclosure Sale Date. Sometimes the home owner is unable to sell the home outright at the desired sale price and this is not an option. We may be able to negotiate a Short Sale on your behalf with your Mortgage Company. In this instance the Mortgage Company may take less than what you owe on the loan to avoid a lengthy and costly foreclosure process.
5. Deed-in-lieu of Foreclosure - You can arrange to simply give the home back to the Mortgage Company and walk away with a clean slate.
6. Bankruptcy - This is a last resort. This will only save your home temporarily. If you miss one payment during this process the lender will put you right back into foreclosure. This is like putting a band aid on a bullet wound... you will still need to come up with a permanent repayment solution to get your house payments back on track.
7. Do Nothing! - You may elect to allow the home to be entered into mortgage foreclosure. Many go this route because the situation seems overwhelming. It is a heavy burden, but the consequences of a foreclosure are serious. The Mortgage Company will take your home and all of your equity. If there is no equity they may come after you to pay the shortage or "deficiency". This is, also, the most damaging to your credit and your ability to acquire another home loan in the future. You should, at least, consider potential solutions that help you avoid foreclosure.