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Contacting Your Bank About Modifying Your Mortgage

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The key is to come up with an alternative that is better from the bank's point of view than letting the foreclosure continue.

Banks may consider one of the following alternatives to modify a loan that would otherwise go into default: 

  • Forbearance Agreement: 
    • You pay extra per month to catch up for the money owed - in some cases up to a two year maximum. 
    • The bank may agree to a forbearance for up to 18 months during which you pay nothing or reduced payments. Repayment occurs later.
  • Modification Agreement: 
    • The interest rate of your loan may be reduced and/or the arrears you owe may be added to the amount due to extend the terms of the loan and make monthly payments more affordable.

Calling before there is a problem lets the bank know you are a responsible homeowner who wants to do the right thing. This is a good time to let the bank know about your health condition, attendant expenses and resulting decrease in your income.

When you talk to the bank, keep a written log of whom you speak to, when and what you discuss. Follow up regularly with the people you speak to if they do not send you the information or forms that you need. Some banks are very large and you are only one person of many accounts that they handle. If you are persistent, honest, courteous and professional, you have a better chance of reaching a solution.

Some banks will tell you to talk only to their lawyers. If you don't have or can't afford a lawyer, you can talk to the bank's lawyer yourself. Remember, you have the right to be treated courteously and taken seriously. The lawyer is not your enemy and is only trying to do the work the bank requests.

Keep in mind that banks don't want your home. They want to recoup their investment. If you think creatively, you may be able to work out a payment arrangement that works for both parties.   

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