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Mortgage Payments: Difficulty Paying

Alternatives To Consider To Help Keep Mortgage Payments Timely Or If You Are Behind In Payments

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The following alternatives can help keep mortgage payments timely:

  • You be allowed to pay the amount of the back payment in installments over a period of time, such as two years. This is known as "forebearance."
  • The mortgage be rewritten to lower the monthly payments. This usually involves extending the term. For example, if you have a 15 year mortgage, extend the term to 30 years. This is known as a "Loan modification."
    • You may be eligible for a modification under the government backed 2008 FHASecure plan. To learn more, see the section below.
    • If your mortgage involves Fannie Mae or Freddie MAC, you may be eligible for a refinancing or loan modication to reduce payments under the government's Making Home Affordable Program. To learn more, see the section below.
  • That you be given an opportunity to sell the property voluntarily. Advantages of this alternative as compared to letting the lender foreclose are:
    • You avoid owing the high default interest rate which would otherwise be due both on the outstanding amount of the mortgage and on the taxes. A default interest rate can quickly eat up any remaining equity.
    • You don't have to pay the bank's attorney fees for which you're responsible in foreclosure. These fees can range from $8,000 to $10,000 or even more - money down the drain.
  • If you are arguably approaching end-of-life, it may be possible to get an agreement to permit you to continue to live in your home provided there is an agreement to sell the house within an agreed number of days after death.

HOPE NOW ( offsite link) is a White House backed non-profit organization that was created to help homeowners avoid foreclosure. A call to the hotline at 888.995.HOPE (888,895.4673) should connect you with a counselor who will provide additional advice about financial planning and avoiding foreclosure. You (or someone else on your behalf) will still have to contact the lender or company that services the mortgage yourself.

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