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Having problems paying your mortgage?
HAVING PROBLEMS PAYING YOUR MORTGAGE?
The Problem
------------------------------
You may be having difficulties in making your mortgage payments
on time, due to problems such as ill health, a job cutback, a
strike, emergency home repairs or even family stress. Fear of
losing your home, as well as the money invested, can only add to
your distress. If you are experiencing one or more of these
problems that could make your mortgage payments late, you must act
immediately!
First Things First
------------------------------
It is a human tendency to hope a problem will vanish. But, if
you want to save your home don't avoid the problem. The first
thing to do is to visit or telephone the company that loaned you
the money to buy your home. Lenders who do not have offices in
your community usually provide toll-free long distance telephone
numbers or collect call service to borrowers. Be prepared to
discuss your problem in detail. Your lender needs complete
information to assist you.
Questions You Must Answer
------------------------------
Before you call or visit your lender, think about the questions
you'll be asked and make some notes to help you answer them.
1. Why Did You Fall Behind in Your Payments? Be prepared to provide
facts about the circumstances that led to your problem, such as a
lay-off notice, medical or utility bill.
2. What Are Your Current Resources? Write down on paper your
current monthly income. Include ALL sources of dependable income,
such as wages, union or disability benefits, welfare payments, VA
benefits, Social Security, savings accounts, your spouse's or
children's income. Include insurance policies or other things
against which you may temporarily borrow money.
3. What is Your Plan to Bring, and Keep, Your Mortgage Payments
Current? List the choices open to you. List your total debts and
your current monthly payments for purposes other than the
mortgage. This list should include food cost, utilities bills,
payments on other loans, insurance premiums, alimony or child
support payments, and all other obligations. Think in terms of
your needs, rather than your desires. It is better to sacrifice a
second car, boat, snowmobile, or credit cards than to lose your
home. Be realistic in your thinking.
Cooperate With Your Lender
------------------------------
Be open and honest. Your attitude about meeting your
obligations will influence the lender's decision to help you.
Lenders make money when loan payments are made on time and,
generally, find it costly to collect on late (deliquent) accounts
or to foreclose on a mortgage. But, don't rely on the lender's
interest in curing your mortgage delinquency to protect you if you
fail to keep the agreements you have made with the lender.
How Your Lender Can Help You
------------------------------
The lender can provide several types of help but it will be up
to YOU to help in developing a plan to cure the default so that
you can eventually pay your mortgage payments on time. Here are
some possibilities.
1. During the delinquency, you can work out a
repayment plan before foreclosure is considered.
2. The lender may reduce or suspend your regular monthly mortgage
payments temporarily or reduce the delinquency by increasing your
payments over an extended but specified period of time. (These
actions are known as granting forbearance.)
3. Under certain conditions, your lender may agree to rework
(recast) your mortgage. Your interest rate would not increase but
the unpaid principal balance on your mortgage would be increased
by the amount of money you are behind. The length of time to pay
off the loan also may be increased.
4. Under certain conditions, if your home mortgage was insured
by HUD/FHA, it might be assigned to HUD. The Department would
then become the lender, helping you to work out a repayment plan.
5. If you are sure you would be unable to begin making regular
monthly payments on the mortgage within a reasonable period of
time, your lender may advise you to protect your investment by
selling your home or reduce your loss by signing your property
over to the lender. Either course of action can help you avoid
foreclosure and protect your future credit record but each should
be considered only as a last resort.
Who Else Can Help?
------------------------------
When you fall behind in your payments, you may have a difficult
time getting back on your feet. One or more of the agencies below
may be able to advise and assist you in ways to avoid losing your
home. If you need help, seek them out.
1. If your home loan was insured by HUD/FHA or guaranteed by the
Veterans Administration, contact their local office. The
telephone directory should have the listing under "U.S. Govern-
ment". (Cities in which HUD has offices are listed on the last
pages of this database.) However, call these agencies ONLY after
you are sure your lender cannot help.
2. Often, your community government or local United Fund agencies
sponsor organizations which can give you credit counseling or more
direct assistance.
3. The Local HUD office can provide a list of HUD-approved
homeownership counseling agencies which may be helpful.
4. Your credit union, labor union, and some religious or social
service agencies may offer sources of help and counseling.
You may have to pay a small fee for some of the services
provided by nongovernment agencies, but with their assistance you
might be able to bring your mortgage payments up-to-date.
What to Avoid!
------------------------------
1. Unfortunately, there are people who prey on the difficulties of
others. They will offer to speak on your behalf with the
lender-for a fee. The fee may be better used to help cure your
delinquency. The lender wants to hear directly from you, not
someone else.
2. Don't borrow more money to pay off the default. This will
only add another debt for you to pay. Too much borrowing or
buying on credit may have gotten you in trouble in the first
place.
Definitions
------------------------------
Delinquent Payment-When a mortgage payment is not made by the
date it is due.
Late Charge-A fee, charged by your lender, to help pay for the
added work of collecting late payments. Payment of the fee,
however, doesn't give you the right to pay late repeatedly.
Repeated late payments are a violation of your contract with the
lender.
Default-A mortgage is in default when more than one payment is
due but unpaid. Mortgage contracts generally allow for foreclosure
to start when a default exists, though most lenders will not act
that quickly.
Forbearance-An oral or written agreement to repay the
delinquency over a period of time so that the loan can be brought
current.
Foreclosure-The process by which the lender acquires your
property when you fail to meet the terms of your mortgage.
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