Loan Payments

Act Now To Stop Foreclosure And Save Your Home

The biggest mistake you can commit when you fall behind on your mortgage payments is to wait too long to tell your lender what is going on. It’s never too late to do anything but to prevent foreclosure, it is better to be proactive than reactive.

Acting fast is very important. It is extremely important to contact your lender as early as possible, after you find yourself unable to make your loan payments. Most of the major lenders have programs for mortgage modification, forbearance, or other remedies that can help you prevent foreclosure. More than half the people who go into foreclosure never respond to letters from the lenders, nor contact the lenders. Your options become limited as time passes by. Contact your lender immediately and tell the lender about your situation. Once you contact your lender, they can allow payment delays, mortgage modification, and come up with new repayment plans, or they may negotiate a lump-sum payment.

When it comes to preventing foreclosure, every minute counts. Early contact – within the first 15 days of missing a payment – is critical in saving homeowners from the devastation of foreclosure. More than half of those in foreclosure did not call for help when they fell behind in their mortgage payments. Do not hesitate to contact you lender. There is nothing to fear about or be embarrassed.

You can get emotional or fear contacting the lender when you face foreclosure. But you must contact the lender. You are not alone. There is nothing to be embarrassed about missing a mortgage payment.

Remember your loan servicer – who you get your monthly statements from may be different from the one who actually owns your loan. If you are not sure whom to contact, call the number on the statement and they will advise you.

Explain your situation to the lender. Once the lender appreciates the situation, he may come up with a workable suggestion. Remember, all this time his aim would be the same as yours – you are able to pay and the house remains in your hands. This can be done by increasing the number of installments which you were required to pay. This will ease the situation for your and lender’s money also remains the same. In fact, as a simple calculation may tell, the lender gains financially. Depending on your situation and the status of your mortgage, there may be different options available to you including

• restructuring

• refinancing

• selling your home

• deed in lieu of foreclosure

Be honest about your situation, so they can help you find the right solution. Lenders usually offer a variety of solutions for people who have fallen behind on their mortgages including temporarily reducing or waiving payments, setting up short-term repayment plans to help you make up the deficit, adding the unpaid balance to the principal of your loan and increasing your payments slightly to cover the extra amount, refinancing the debt, arranging a repayment plan or modifying the loan by adjusting the interest rate or extending the terms to make it more affordable. These options are discussed in detail in the following chapters.

However, if your situation is really bad, the lender may even agree to make other concessions. For example, the lender may be willing take less money in settlement of your dues. Once the lender realizes that the situation of the borrower has become very unviable, it is time for the lender to retrieve whatever possible from a potentially bad situation.

If the lender feels that the only way of saving the situation is to reduce the financial burden on the homeowner, the lender may also agree to reduce the interest.

The lenders have even been known to reduce the principal. It all depends on what sort situation the borrower finds himself in. It goes without saying that the lender will not be happy to do this, but then again, he has to reassess the circumstances and then decide.

 If you cannot keep your home, your lender can work with you to avoid foreclosure and reduce the negative effect on your credit reputation. For example, the lender can permit a qualified buyer to take over your mortgage debt and pay the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.

Don’t just sign your home away and walk out. Negotiate. Whatever be your situation, never ever enter into any deal without consulting an attorney. Never make an impulse decision. Your instincts will drive you to make quick decisions in order to resolve defaults as soon as possible. Before taking any decision, weigh the pros and cons.