Delinquent on Your Mortgage?

No one is immune to financial problems. A medical emergency, divorce or job loss can wreak havoc for even the most financially secure. There is no embarrassment in seeking help; in fact, that is the responsible thing to do. If you are worried that you will not be able to make your mortgage payment or have already missed a payment, here is some basic advice that we routinely offer our clients:

Prioritize Your Mortgage
If you have missed a mortgage payment, it is time to put your finances in some kind of order. Take a hard look at all your bills and list them in order of priority. Paying your mortgage and keeping your basic utilities on should be at the top of the list. You might have to reduce your food budget, stop spending on discretionary items or miss a credit card payment in order to keep up with your mortgage. Your home is a large investment, and you do not want to lose it because of missed payments. This is going to require some sacrifice on your part.

Reach Out to Your Lender
It is important to let your lender know about your situation. Many lenders are willing to work with you so that you can keep your home. They have programs to help you. Do not ignore their calls or letters. That only makes things worse. If you have missed a payment, you do not have much time to come up with a solution. Foreclosure proceedings can begin as early as 120 days after the missed payment. You have this brief window to work out an alternative to foreclosure.

Get Educated about Your Options
Your situation is not hopeless. There are a wide variety of options that can help you out. Here are just a few:

• A Payment Plan: It is possible to create a payment plan for your delinquent payments. If your financial hardship is short-term, this is a way to get back into good standing. You have to be able to afford your mortgage payment and the additional payment toward your delinquent balance. This is sometimes called a forbearance agreement.

• Refinancing: If you have equity in your home, you could try to refinance your mortgage to lower your monthly payments. The Federal Government offers the Home Affordable Refinance Program (HARP) to assist those who would not normally qualify for refinancing.

• Mortgage Modification: This is a process where your lender agrees to modify the terms of the mortgage in order to lower your monthly payments. This is an option for those with little equity in their home and suffering from long-term financial distress. The government offers the Home Affordable Mortgage Modification Program to help distressed borrowers modify their mortgages.

• Mortgage Release: In this option, you turn the deed of your home over to your lender, and you leave your home. The lender winds up as your landlord. You get to stay in your home and avoid foreclosure. This is also known as deed-in-lieu of foreclosure.

• Short Sale: Your lender agrees to allow you to sell your home for less than it is worth. You use the proceeds to pay off what you can of your mortgage. Then you are free from further responsibility. This may get you out of a situation where you owe more than your house is worth and avoid a foreclosure.

Consult a Mortgage Counselor
There are HUD-approved mortgage counselors available to help you navigate this complicated situation so that you can mitigate your losses. A good mortgage counselor can assist you in understanding what resources are available to help you out.