Are you behind on your mortgage payments or worried about getting behind? Perhaps your work hours have been reduced or maybe you've been laid off. For whatever reason, you may have already missed a mortgage payment or perhaps several.
When economic problems occur and we know we won't have enough money to pay our house payment, the stress kicks in and we start to worry. Once we miss a mortgage payment or two, there is a strong tendency to start avoiding the mortgage company when they begin to call us looking for their money.
If you or someone you know is in this predicament, you should take heart. There are things you can do if you want to fight for your home, avoid foreclosure and get straight with your mortgage company.
Here are some of the most essential details you need to know if you are in danger of foreclosure and do not know what to do or where to turn:
1. Help Yourself By Starting Early – usually you have to be around 3 months behind before the mortgage company really begins to pay serious attention to your case. Don't wait 3 months to contact them and let them know you have a problem.
If you contact them shortly after missing the first payment and ask them for a “hardship package” to report a legitimate and documented hardship, such as “losing your job” for example, you may be able to buy some time and get back on track. The lender is willing to work with you, if they feel you have a legitimate hardship. Health problems, accidents or being laid off, are usually viewed as legitimate hardships. If, on the other hand, you're in jail because you got fired from work for stealing – your hardship may be denied.
If the lender accepts your hardship, they may work with you to allow you time to get back on track.
2. Communicate Regularly With Your Lender: When they don't hear from you, they assume that you do not care or may have abandoned the property. They don't know what to think, so they think the worst – that the borrower has moved and left the property at risk of damage from vandalism or theft.
You must communicate regularly even if nothing has changed. They want to help you, but you have to make yourself available for that to happen. If you are not able to answer the lenders phone calls, be sure to respond to their messages and call them back. It may seem like the questions they ask are redundant, but allowing the lender to keep tabs on your situation may help delay a foreclosure filing for months and allow you time to get caught up or find a new job.
3. The lender does not really want your house – they want their money:
Foreclosures cost money. Lenders don't want to foreclose, but if you do not respond and keep in touch, they'll decide that they have no choice.
4. Do your own research to determine what programs you might qualify for: There are numerous programs available today, in the post 2008 era, to help struggling home owners get their loan refinanced at a lower interest rate or get your payments reduced. Lenders will usually recommend programs to you and check to see if you'll qualify.
5. Keep on Keeping On Till You Get A Modification Done: You may be turned down for numerous programs before you actually hit on one that allows you to refinance your delinquent mortgage and lower your monthly payment. But the key is this – the very act of trying to save your home via applying for a loan modification is the essence of what you need to do in order to stop the foreclosure permanently and bring your loan current.
I've personally worked on cases where the borrower was more than a year behind before we got an actual loan modification worked out. I have been successful at getting a 6 month forbearance where the borrower did not have to make any payments at all, then got the loan modified twice for a total payment reduction of $247 per month.
This borrower was unemployed for 18 months during 2009 – 2010, but did not lose his home because of our strategy of applying for any program or package that the lender offered and staying in constant communication with the lender.
The borrower had never missed a payment in 10 years, then the recession of 2008 wiped out the company he worked for. He was unemployed, and was told that he did not qualify for several different programs. But we persisted by pursuing different types of programs until one of them finally “stuck”.
The borrower was more than $8000 behind on his mortgage, and only one week away from the foreclosure auction in March of 2010, but we still succeeded in getting a loan modification in spite of being turned down several times before. The key was in the borrowers refusal to give up.
Due to unemployment, he faced foreclosure two different times, and had two different loan modifications approved between 2010 and 2014. His mortgage payment went from $750 per month down to $636, then down to $503 per month where it is today.
6. Appeal Your Property Tax Bill To Help Reduce Your Monthly Payment Even Further:
Property taxes are an item that is included in the monthly mortgage payment of 90% of all home mortgages. Appealing your property taxes can reduce your monthly mortgage payment by a significant amount. You'll need to provide accurate property value data. I'd recommend using a real estate broker for this if you have no experience with comparable sales, and are not sure what to do. Some brokers may charge a fee, but it's worth $50 to $100 bucks to cut $50 or more per month off your mortgage payment. There are also special services that will file an appeal for you for a fee. Consult your local property tax assessor for information on how to appeal your property taxes in your particular county.
7. Provide Complete Information: When filling out the various packages that may be sent to you over time, it's important to be very complete and as detailed as possible. If your package is sloppy, incomplete or unrealistic, your application may be denied. Be as professional as possible for best results.
I've seen a lender agree to stop a foreclosure as late as the day before the auction. But I strongly recommend that you not wait until the last minute. The key to success is being proactive, and willing to hang in there until there is a final solution. It may take months or even a year or two to find that final modification that “sticks”. It's a process of persistence and determination.
About the author: Donna S. Robinson is an 18 year veteran of the real estate industry and residential real estate market expert. She is the author of "Real Estate Investing Fundamentals & Strategies". Follow her on twitter @donnaconsults Watch her videos here. read more articles and contact her about real estate business consulting services on her website.
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