What If I'm Behind On My Mortgage? (continued)
Keeping
Your House
If you want
to keep house, there are multiple options here as well. You should
expect the process to be stressful, but if you stick with it and cooperate
with the lender, you may be able to stay. At some point in the process,
you will need to resolve the underlying cause of your mortgage problems.
If you got behind because you lost your job, you will need to be working.
If your problems stem from a divorce, you will need to demonstrate
that you can make payments on your own.
One of your
first temptations will be to pay someone to help you. With rare exceptions,
this can be a major mistake. Most lenders have departments set up
to work with borrowers in hardship situations, and Maryland law requires
lenders to pursue alternatives to foreclosure before foreclosing on
a property. If you do need someone to help you, there is free assistance
available. A list of FREE HUD-certified counselors can be found at
www.HUD.gov. There
have been numerous borrowers who have paid for help from organizations
and individuals that weren't very effective (or in some cases, just
took their money). To make things worse, the borrowers gave up resources
that could have been used towards a solution to their hardship.
If you think
there is even a remote possibility of needing assistance from your
lender, keep ALL financial documents. Don't throw away pay stubs,
bank statements, leases, W-2's, 1099's or tax returns. If the bank
requests information and you don't have it, that may prevent approval
for hardship assistance. You will probably need to send copies of
original documents (don't send the originals). The lender may not
accept online printouts.
Be prepared
to make sacrifices. You may have to give up some luxuries, treats
and habits to keep your house. It might be best to skip the vacation,
if you won't have a house to come back to. If you have a $500 a month
cigarette habit, you may need to decide if your cigarettes or your
house is more important. Groceries can be budgeted. Heating and air
conditioning expenses can be cut. You may be able to spend less on
entertainment, gas, cable TV and telephone (but make sure you have
a number where they can reach you). Keep receipts and a careful record
of everything you spend money on, so you can figure out your actual
budget and determine where you can make cuts.
Don't be
defiant. Just like in a short sale, the process can be frustrating,
but again, if you don't cooperate, your file can be closed. If your
file is closed because the lender did not receive information (whether
you sent it or not), send the requested information and then contact
the lender to request that your file be reopened. You may receive
a letter suggesting that the lender considers the matter closed, but
that doesn't mean it really is. Make sure the lender has received
everything they need, and if they say that they have, make sure that
your file has been reopened. Foreclosure proceedings will not stop
while your file is open, but they can move faster when your hardship
assistance file is closed.
Make sure
you know what is happening with your file. There have been many cases
where a file has been closed, and the homeowner was not aware of it.
Lenders are under pressure from the federal government and from Fannie
Mae & Freddie Mac to get through files quickly, and this pressure
is passed on to their employees. One way they can get through a file
quickly is by closing it down. If the file is reopened, it is treated
like a new request for assistance, so lenders can report they are
getting to people quickly, when they may actually be taking a year
or more to help someone.
Be aware
that any temporary agreement to skip payments or lower your payments
WILL make you delinquent (or more delinquent), and WILL affect your
credit (even if the representative on the phone tells you it won't).
If you follow the temporary agreement with a permanent agreement to
bring your loan current, that can be a good thing, but you have to
qualify for the permanent agreement. If you got into trouble because
you lost your job, and you're still unemployed, you may not get that
permanent agreement. On top of that, you will go back to owing your
regular monthly payment, plus additional money. Most likely, you will
sign an agreement that says you will need to bring yourself current
if a permanent agreement can not be made. Analyze your situation and
think ahead, so you can make the best decision for yourself.
Remember
that the counselor assigned to you may be working with hundreds of
people. If you can, include a cell phone number in your application
and keep it with you at all times (but don't do anything that will
cost you your job). It may be easier for your counselor to reach you,
then it is for you to reach them, and they may get more phone messages
than they can return. The best thing you can do to help yourself is
to answer the phone when the lender's negotiator calls.
Selling
Your House
Tax Implications
Tips For Dealing With Your Lender
©Copyright
2011 Douglas R. Barry.
