When a Mortgage Overwhelms, Change the Terms
Dear Alpha Consumer,
Two years ago, my husband and I purchased a home for $217,000. My husband works in construction and is paid a salary plus a bonus, but the new-home-building industry in our area has hit an all-time low, and he has not received any bonus pay in at least six months. Also, part of his wages are garnished to pay child support fees. We are now unable to make our monthly mortgage payments, but the option to sell the house for something smaller is no longer possible. Our $217,000 home is now valued at $165,000. Our savings are depleted, and we have lowered all the other expenses that we can, but we still cannot pay our home loan on time this month. What options do we have besides foreclosure?
That's a tough situation, but you may be able to avoid foreclosure yet. The first step is to call your lender. Lenders don't want to see customers fail to make payments and lose their houses, either. Your lender will most likely work with you to get you back on track.
According to Pam Hamrick, vice president of LendingTree Loans, one option is forbearance, where borrowers temporarily make reduced payments or none at all. To qualify for this option, borrowers usually need to show that they are experiencing a temporary problem and that a tax refund, future bonus, or other form of income will let them catch up. Also, interest may still accumulate, so you may have to make bigger payments down the road.
Another option is to ask the lender to modify the terms of the loan so the payments are more affordable, Hamrick says. For example, you may be able to extend the term of the loan so monthly payments are lower.
When asking your lender for these options, Hamrick recommends showing that you are making a good-faith effort to pay your mortgage. "If you can demonstrate that you've reduced other expenses, the lender will be more inclined to negotiate," she says. If your situation is more long term, however, then it will be harder to persuade the lender to change its terms.
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Reader Comments
It sounds like your daughter has an adjustable rate mortgage, and yes, that can adjust as often as once a month or quarterly -- it depends on the mortgage. It sounds suspicious that she was unable to even talk to her lender. She should be able to talk to any company that she is sending her hard-earned money to.
prederatory lenders are not fair or helpful
it's not strange. my lender - saxon mortgage would not offer me any assistance or forebearance. believe me there is nothing like begging them and they won't offer you any resolution, but to give up your house.
mortgage problems
My husband lost his job last year. And because our daughter has cancer he took a job at a twelve thousand dollar paycut so we would have health insurance. Well we have gone throught our 401k money. no more stocks. Our family has helped to where they can not help any more. I have called, written begged, pleaded with our mortgage company, I have done as they told us to do a hardship letter and all the info they wanted. After all that they told us NO. They would not work with us. Our debt ratio showed us in the hole by about $900.00 a month. They told us "if you can't pay your mortgage then we need to sell our house" I have called them each month to let them know that we can not pay the mortgage, we are now 4 months behind and are going to lose our home. We can not afford to re-finance. My husband last week lost his job again. The mortgage company said they will take this to forclosuer.
We have been having issues woth paying our mortgage on time for the past 4 months. This is the first time in the 7 1/2 years that we have owned the home. Our mortgage was just sold to Citimortgage 4 months ago and now Citimortgage has not been willing to help us out with trying to get back on track. Even though the reason that we have been having such a hard time is because my husband has been out on disability and the cost of oil and gas is over $3 a gallon to heat our home and get me back and forth to work. Electricity has been increased by 30%, also the fact that I was laid off and just recently got another job making half of what I was making prior.
From what I heard Citimortgage had purchased alot of bad loans and is now taking it out on everyone. Looking back at our loan history shows them that we had never been late prior to being with them. We are just hitting a difficult time. Our mortgage payment just went up another $100 a month this year also.
They are not willing to allow us a forebearance. Stating that we do not qualify because our income is less than our bills. We also asked to extend and they said we do not qualify for that either.
They send someone out to check the home to verify someone lives there every 45 days and charge us an additional amount of money to do that. And they threaten foreclosure.
How is this supposed to help peoplke stay out of foreclosure? I am sure that I can not give you an answer to that.
loan question
Has she tried to refinance at all? If not, I know people in Ohio that can help her with her situation
My sister recently contacted her mortgage lender to explain the situation that her family is in, knowing that they can no longer afford their home/mortgage and are going to have trouble making (near) future payments. When she told me that they explained to her that her best option would be to file for bankruptcy, I almost fell over. I cannot believe that a lender, who should be working with the client to help figure out the best solution, even suggested purposely defaulting on the loan, waiting three months and then filing for bankruptcy. Isn't that adding to the current problem in this nation? Does she have any other options, since working out a solution with her lender isn't one?
Don't believe the hype.
This advice is bunk. Your lender is not going to "work with you." The only way they'll "work with you" is though a refi, but you can get that anywhere.
I think its ridiculous how many homes are in foreclosure yet a lender doesn't do anything to help someone in a bad situation. I called my lender 3 months ago trying to get a modification to my adjustable rate mortgage (tried to refinance) got the complete run around for THREE months, sat on hold for 40 minutes each time, was spoken to in the rudest manor, and NEVER once got a return phone call! Now my mortgage has adjusted an additional $150.00!! How many more homes to the banks want to own? I can't believe they would rather have another foreclosure on their hands instead of doing something to help!!!
Yep yep yep, the Lenders not quite as helpful as one would think when your trying to be proactive. I called my Lender(s) recently and was told I had to be at least 2 payments behind before they would start the process to "help" get things back on track. So, in other words I have to ruin my good credit to get extended their attention. Credit is money and thats not what I'm look to do at this point or any point.
I agree with most persons on this comment list regarding mortgage companies and payments. Our company was govt. run and the program was for first time homebuyers in a certain income brackett. My husband worked and I was unable to get employment in the area. Our financial situation kept getting worst. When we called to let them know our situation, they stated we still owe payments. We asked twice about half payments or giving what we had towards the mortgage payment. Both were denied. I understand with many of these persons situations. Mortgage companies are not that easy to work with you on payments. We were close to foreclosure but we had to take more money out of a college loan to get out of debt. Many Americans are in our same situations and it is sad.
try to stay away from CHASE
I have a mortgage with "Chase"and i ask them what i have to do in order to lower my monthly payment. First they told me 'Give as 90.000 and you dont need to make any payment for 3 years' that was their offer.I ask't them to let me pay $100,000.00 towards may principal (33%of my mortgage) and to lower my payment and waive the P.M.I. They said OK.After i paid my mortgage went down only $500.00 and is being 3 month's and i can not get them to take out the P.M.I. they find any reason to say 'next month' and i dont know for how many mor months.....I dont now what to do anymore.
I have a mortgage with "Chase"and i ask them what i have to do in order to lower my monthly payment. First they told me 'Give as 90.000 and you dont need to make any payment for 3 years' that was their offer.I ask't them to let me pay $100,000.00 towards may principal (33%of my mortgage) and to lower my payment and waive the P.M.I. They said OK.After i paid my mortgage went down only $500.00 and is being 3 month's and i can not get them to take out the P.M.I. they find any reason to say 'next month' and i dont know for how many mor months.....I dont now what to do anymore.
THIS WILL HELP YOU
Anyone behind on their mortgage payments needs to seek a loan modification from you lender. If you ask for this directly, they will not help you.
My home loan is with Countrywide, and they gave me the run around for 2 months before I finally spoke to someone who could help, but it wasn't someone at Countrywide. Countrywide finally forwarded me to the Homeownership Preservation Foundation (http://www.995hope.org/), where I was helped by a specialized debt agency that submitted a loan modification application/request to Countrywide on my behalf (for free).
It takes about 30-40 minutes to speak with someone on the phone, and then they do the rest of the work.
It is amazing to me that these lenders will listen to requests from this Foundation, but have no interest in working with their customers directly, but I guess that is the game they are playing right now.
tell me
well im looking in buying is that a good idea or not please let me know , thx nina
Loan mods - why so hard to get?
Wow! I wish I would have known about 995hope.org before I paid someone $1000 to fix my problem. I am somewhat educated in mortgages and the terms and I couldn't get them to off me a loan mod either - only a VERY expensive repayment plan. Amazingly, though, having someone else call at least got me a forbearance - they want $8000 down and then in after four months of timely payments, we'll talk again. I'm not sure what to think about this - is that really a forbearance anyway?? I guess is does get me out of my property sale date in March - no guarantees after four months and $30,000!! (My house payment is $2500 a month, but they want me to pay $3000 for four months.) I think that several people are in my shoes - they can afford their current mortgage, but they can't afford making up taxes that the mortgage company paid for them, or a few payments that they got behind 2 years ago - along with all of the interest, late fees, attorney fees, etc. Why are loan mods so hard to come by for people like me who have the income to make our payment? I figured that if they put my $40,000 I owe them in a loan mod, they would make $120,000 over the life of the loan. Isn't that their business? Interest? Not sure the reason that I can't get this - can anyone enlighten me?
Payments too high to pay for my mortgage
I have a mortgage payment that is too high for me to pay. I don't want to lose my house. I am having a hardship here because of being so sick and all the ailments I have. I had to retire in July 2006, which is making it hard on me. Do you have any ideas about what I can do about this?
The 411
I've done some investigating on my own, setting all ego aside! Not fun but maybe it will help people who, like me were scratching thier heads going, this just doesn't make sense. What gives?
When we first knew we were going to have troubles, we phoned our lender. They said, "No can help pal, until you fall behind at least - at least, 3 payments. "
So, o.k. if you insist...we did. A myriad of options became available but it does go on your credit report which leads me to this next part.
After you skip the payments you save your mortgage, but all of the sudden your C.C. will lock, even if you've made regular payments and DID NOT want to fall behind on your mortgage. So, it's a bit of a catch 22 but leads to just this...
My husband is a vet. His own government official took him outside and said, "FILE BANCRUPTCY! You have no idea how many people are getting rich off of utilizing the bancruptcy law and you actually need it. Most of the people who use it, don't and file every seven years. They live life styles you and I will never see."
We haven't even begun to see all of the numbers yet in foreclosures. The banks that will not work with you, well let's just say will be holding the bag with unwanted properties. They're probably overworked anyway with the latest in mortgage issues, accounting for some of the attitude, but still.
If you can refinance, take your business somewhere else! If it's feasible. If not cut the loss and sell or do a "Deed in Lieu of Foreclosure." The house has to be on the market for at least 6 months.
Our bank actually told us we couldn't do that, but turns out that was a misgiving like many things. That's exactly what we're doing. They just didn't want the property.
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Mortgage Tips 2008
Great read. I think I'll subscribe to this as it has some good info! Thanks. I do apppreciate the blog :-)
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my daughter tried to contact her lender for help but refused to talk to her later she found out her mortg co went bankrupt what should she do now? she has a loan that keeps going up .and also can it go up 3 times in about 3 months?
Jan 28, 2008 14:43:34 PM [permalink] [report comment]