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Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them? If you do not pay your monthly mortgage payments over a period of time, the mortgage company can foreclose! This means you will lose title to your property and you may be evicted from your home. It will not do any good to just sit by and wait for the mortgage company to take over your property, especially when there may be a way to save your home or at least save your credit enough to get into another home very soon. I cannot stress to you enough, that you need to stay in communication with your Mortgage company if you have fallen behind in your payments!
What if you Cannot Pay your Mortgage?
1. Call your mortgage company NOW!!
As soon as you realize that you are unable to make your payments, pick up the phone and talk about your circumstances with the mortgage company to which you send your monthly payment to. Your options to retain your home are most effective when you are only one or two payments behind. Even if you are more than two months behind, it is still worth a try!
Too many people in financial trouble wait until the last minute to call their mortgage company. Some hope that their problems will quickly resolve themselves. Others worry that the mortgage company will rush to collection. The truth is: the longer you wait, the greater the chance of losing your home. If you are unable to make your mortgage payment, do not delay- call your mortgage company immediately! In a significant number of all foreclosures, the borrowers did not return their mortgage company's calls or written invitations to discuss payment options. Remember, the mortgage companies are in the business of loaning money for houses, not in the business of selling real estate...especially real estate that they are losing money on themselves.
Depending on your situation, your mortgage company may be able to provide you with temporary financial relief. Here are a number of alternatives to discuss with your mortgage company.
Short Sale... is the sale of property on which the outstanding mortgage debt exceeds the property value. Lenders are beginning to be very cooperative with sellers having to sell their homes for less than what is owed on the loan. It takes a great deal of work to negotiate with your mortgage company, deal with the massive amount of paperwork, constant contact with the lending institution, obtaining a buyer as quickly as possible and getting the sale through escrow. I have personally handled many of these short sales for past clients, with some of them buying a new home in as little as 6-12 months. From what I have found, it is far less detrimental to your credit and much safer for you to pick and chose how much to get for the home as apposed to the bank foreclosing and just "unloading" the home in an auction or sale after foreclosure. With either a short sale or foreclosure, you are facing possible tax and credit consequence's, so I highly advise talking to a licensed CPA and possibly a lawyer.
Forbearance...is an agreement to temporarily let you pay less than the full amount of your mortgage payment, or nothing at all, during the forbearance period. Mortgage companies may consider forbearance when you can show that funds from a bonus, tax refund, or other source will let you bring the mortgage current at a specific time in the future.
Reinstatement...occurs when you pay your mortgage company the total amount you are behind, in a lump sum, by a specific date. this is often combined with forbearance.
Repayment Plan...is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
Loan Modification...is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable. Common loan modifications include:
- Adding missing payments to the existing loan balance
- Making an adjustable-rate mortgage into a fixed-rate mortgage
- Extending the number of years you have to repay
Deed-in-lieu...your mortgage company may agree to a deed-in-lieu of foreclosure if you agree to voluntarily transfer title of your property to your mortgage company in exchange for cancellation of your mortgage debt. In most cases, you must attempt to sell your home for at least 90 days before a mortgage company will consider this option. This option may be unavailable if there are other liens on your home, such as judgments from other creditors, second mortgages, or tax liens.
Beware of Scam Artists...
Predatory lenders often target people in financial distress! They try to panic you into high cost mortgages, making financial problems even worse and increasing your risks of losing your home. Predatory lenders usually offer loans with...
- High interest rates
- Broker fees
- unnecessary costs like pre-paid life insurance
- unaffordable repayment terms
Tips to protect you from predatory lenders...
- be suspicious of anyone who offers you "bargain loans," whether they mail, fax or e-mail an offer to you, call you on the phone, or come to your door.
- beware of promises of "No Credit? Bad Credit? No Problem!" and offers that are only "good for a very short time."
- Avoid lenders that encourage you to borrow more than you need or more than the value of your home.
- Beware of terms that "change at the last minute" or offer next-day approval based on pre-payments or up-front fees.
- Do not sign ANYTHING that you do not fully understand!!! It is your right and duty to ask questions.
- Beware of phony credit counseling agencies charging high fees for financial counseling services.
REMEMBER: Anything too good to be true, usually is!! If you need any help to get through this difficult time, please feel free to call me or e-mail me anytime!
Robert Mitchell, GRI, SRES, Realtor
(559) 250-3442 OR rmitchell@londonproperties.com
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