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When you are getting behind in your payments on a mortgage the first thing that you want to do is contact your mortgage service provider and tell them that you are having financial difficulties and why. They may refer you to the lenders loss mitigation department who will then try to work with you in a variety of ways. For example, if you lost your job but are expecting to get a new job in a few months, they may allow you to skip a few payments and then start paying again but this sometimes entails you making up for the back payments when you re-start your payments whether in a lump sum or increased monthly payment. A lot depends on the cause of the non-payment and what potential monies you will have in the future to pay off the mortgage debt. Some work outs entail monies due being paid out at the end of the loan extending the term of the loan but keeping the payments the same or lower so that you can afford to stay in your home. The work out process is often time consuming and can take months. Hopefully that will change. Unfortunately the bank's attorneys file foreclosure and continue with their foreclosure action until a deal is actually worked out with you and the bank.
Here is a nutshell of the options that a borrower has until the Right of Redemption period (up to auction) ends:
- pay arrears, become current on the loan
- negotiate loss mitigation with lender (deed in lieu, forbearance, loan modification)
- sell property, negotiate a short sale
- refinance with another lender, reverse mortgage (elderly homeowners)
- file for Chapter 7 or 13 bankruptcy
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