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Foreclosure Prevention Options

Below are some of the foreclosure prevention options that your lender may offer you. As your counselor works with you and your lender, it is important that you provide all the documents on the Document Checklist in the Intake Packet to help your counselor understand the details of your situation and help guide you toward the best solution. Once your lender offers you a workout plan, your counselor can review the documents with you to help you understand if it is a solution that will help you.

If your problem is temporary:

Reinstatement: If you are behind in your payments lenders are generally willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option.

Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time. You may qualify for this if you have recently experienced a loss of income or some other emergency situation, but can show you will be able to make payments.

Repayment plan: You may be able to get an agreement to resume making your regular monthly payments, plus a portion of the past due payments each month until you are caught up.

If it appears that your situation is long-term and you cannot afford your mortgage payments and cannot bring your account current:

Mortgage modification: If you can make payments on your loan, but don’t have enough money to bring your account current or you can’t afford your current payment, you should try to get your lender to change the terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways:

  • Adding the missed payments to the existing loan balance.
  • Reducing the interest rate, including making an adjustable rate into a fixed rate.
  • Extending the number of years you have to repay.
  • Reducing the principal.

Short Sale: If you can no longer afford your home and the lender will not agree to modify your mortgage you may need to sell your house. If you cannot sell it for the full amount of the money you owe on your mortgage, you can request that the lender accept less than the amount owed. You have to get the lender to agree to this – you cannot just sell the house and expect the lender to accept whatever money you get for the house.

Deed In Lieu of Foreclosure: If you are unable to sell your house and cannot afford the mortgage you can try to “give back” your house to the lender in exchange for the lender forgiving your debt. This will not save your house, but it is less damaging to your credit rating than foreclosure. The lender must agree to this.

Contact Me For Foreclosure and Financial Counseling Information

Cindy Pendergast

Trouble With the Mortgage? We Can Help.

Jon Wu first came to NeighborWorks® Southern Mass in January of 2009, after attending one of our foreclosure clinics. At that time, he was struggling to make his mortgage payments because he was out of work with medical issues. His wife had also lost her job. Working with NWSOMA staff member, Joe Madaio, Jon began to understand the paperwork required to request a mortgage modification from his lender. He also worked hard with Joe to be persistent in several submissions of the paperwork to his lender and was finally able to get some relief on his mortgage with his first modification. In 2011, Jon was struggling again, this time with a different lender when his mortgage was sold. His disability became permanent and his wife was out of work for the second time. Again, working with Joe through multiple submissions of paperwork, the lender asking for more and different financial information each time, he was able to secure a lower payment for a period of time. Eventually, that became a permanent change in the mortgage with the payment at a level that Jon can sustain.
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