When homeowners face delinquency on their mortgages, or even foreclosure, it is easy for them to feel all alone.  The inability to pay for your home is devastating – but, unfortunately, it is more common than ever before.  If you have an adjustable rate mortgage, your mortgage payments may have shot up to levels you can’t afford.  This, combined with slow economic growth, can make paying for your home difficult but maybe not impossible.

 

When you are facing mortgage payment problems or foreclosure, your lender or lenders may be the last people you want to talk to.  This is certainly understandable, but they should be one of your first stops when tackling this problem. Something that you need to remember is that the bank does not want to own your house.  They don’t want to take it away.  This isn’t necessarily because they are altruistic but because they would rather hold money than property.  If they foreclose on your house, they are stuck with a property that they cannot sell for enough to recoup on your loans. Whatever their reasoning, foreclosure is something that neither party wants.

 

The first step is to talk to your lender.  Present yourself as a reliable, honest person.  You are not missing mortgage payments because you’re a degenerate gambler or you would rather spend your money on clothes and shoes.  Maybe you are ill or injured which prevents you from working; maybe your job has been downsized; maybe you’ve recently gotten divorced; maybe you have a variable rate mortgage that is out of control.  For these reasons, you might be able to work out a deal with your lender. 

 

Explain your hardships and provide documentation.  This may include pay stubs, income statements, bank statements, or other financial records.  The key is to do this early: if you find you can’t make a payment or have already missed one or two, contact your lender.  Don’t ignore calls or letters.  Your lender can actually help you keep your home if you act early.

 

Your lender will probably send you a loan workout package, which contains forms and instructions.  Fill these out fully and truthfully and send it back quickly.  The faster you do this, the more options you have to pursue.  Some of these options include forebearance (in which you are given a reprieve from making payments for a specified period of time), a repayment plan, or reinstatement (in which your lender accepts the total repayment in one lump sum by a certain date).  You may also be able to modify your mortgage or get an interest-free loan from your mortgage guarantor.  These options may save you from having to foreclose on your house.

 

If you are hesitant to talk to the bank, then immediately contact a housing consultant that is approved by HUD.  These consultants can provide advice on steps you can take.  The HUD website has a list of HUD-approved counselors.

 

With either option, act immediately.  Don’t wait until you are months behind on your mortgage payments.  This decreases the options that are available to you.  Losing your home is traumatic, but if you contact your lender, speak truthfully, and work out a plan, you may avoid having to deal with that.   An important thing to remember is that the bank is not the enemy.  They don’t want your house; they would rather have you live there and pay them money.  The amount and payment schedule, though, can be negotiated.  Don’t let things go until it’s too late.  Act now and save your home.