Understand Your Options
If you are late o
n your mortgage payment or if you haven't been able to pay your mortgage for several months in a row, your lender may consider foreclosing on your house.
Regardless of the reasons why you are behind on your mortgage payments, the important thing is that you understand your options going forward.
The Making Home Affordable Program
In case you are behind on mortgage payments or you anticipate that you won’t be able to repay the monthly mortgage payments on time that would put you at risk of foreclosure, the Home Affordable Modification Program (HAMP) could be the best starting point for getting help.
IMPORTANT: ***********HARP HAS BEEN EXTENDED TO SEPTEMBER 30, 2017**********
The program has been put in place to help homeowners achieve mortgage payments that are more affordable. The program features three options: the Home Affordable Refinance Program (HARP), the Home Affordable Modification Program (HAMP), and Home Affordable Foreclosure Alternatives (HAFA).
Unlike the standard refinancing, HAMP pays your current lender to rework your existing loan terms to lower your monthly payments. Act now to determine whether you are among the millions of homeowners who will qualify. Visit www.MakingHomeAffordable.gov for more information and to use the self-assessment tools provided.
Workout Options to Keep Your Home
If you are not eligible for the refinance or modification options available through the Making Home Affordable Program, work with your lender to consider other traditional workout options:
A refinance is the best option if you are facing foreclosure as its impact on credit is minimal. Refinancing your loan will allow you to take out a new loan to pay off the existing loan, including the delinquent amount. If you have enough equity in your home, you can refinance your mortgage and get back on track.
You can stop foreclosure by reinstating your loan. With this option, you can bring the delinquent loan current in one payment. You will be requested to make one payment for the value of all the missed payments, including fees and interest. The reinstatement quote usually includes:
- The amount you owe in back and current payments that are now due
- The amount for applicable late fees
- The cost of property inspections
- Attorney/ trustee fees and costs incurred when foreclosure proceedings were started
- A fee for canceling the sale
Once the loan is reinstated, the borrower resumes making regular payments on the mortgage.
If you are facing a short-term financial hardship a mortgage forbearance can be a great solution. Forbearance is an offer received from your mortgage lender to reduce or suspend mortgage payments for a short period of time. In exchange for a forbearance, the borrower has to resume the mortgage payment at the end of the forbearance period.
This option is one of the most common solutions offered by lenders. It allows you to get current over a short period of time by taking the amount of the mortgage payments missed dividing it up over a specific period of time, and pay that in addition to the monthly mortgage payment.
Your loan servicer may be able to restructure your mortgage by agreeing to change one or more of the terms of the mortgage contract in order to make your payments more manageable. The lender may agree to add the missed payments to your mortgage, adjust your interest rate, or extending the number of years you have to repay. A loan modification can prove to be a great solution if you are facing a long-term reduction in your income or increased payments on an adjustable rate mortgage.
Personal bankruptcy should be considered a last resort option. Bankruptcy can temporarily stop the foreclosure proceedings. Chapter 13 bankruptcy is usually recommended for homeowners who wish to hold onto their homes. In this type of bankruptcy, you can pay off all your unpaid payments over the length of a repayment plan you make; usually spread over a period of 3-5 years.