| If you fall behind in your mortgage payments, you | | | | an increase in living expenses. In this case, you |
| face the threat of foreclosure. | | | | must be able to furnish your lender with financial |
| Foreclosure means your lender can take over | | | | information showing that you can meet the |
| your home, and you must move out. If your | | | | requirements of the new payment plan. |
| house is worth less than the amount you owe on | | | | Mortgage Modification |
| your mortgage loan, your lender may even seek | | | | A second alternative is to refinance your debt or |
| a deficiency judgment. If this happens, you not | | | | extend the term (length) of your mortgage loan. |
| only lose your home, you may owe the | | | | This can help you catch up by reducing your |
| mortgage holder an additional amount of money. | | | | monthly payments to a more affordable level. |
| For example, if your house is worth, say, | | | | You may qualify for a refinance or an extension. |
| $180,000 and you owe $190,000, you could be hit | | | | if you can show that you have recovered from |
| with a judgment for $10,000 that you would have | | | | your financial problems and can afford the new |
| to pay out of your pocket. Both foreclosures and | | | | payment amount. |
| deficiency judgments will have a very negative | | | | A third alternative is a pre-foreclosure sale. This |
| effect on your credit record, which makes it | | | | allows you to avoid foreclosure by selling your |
| harder for you to get credit in the future. | | | | house for an amount less than the amount you |
| Do not ignore any letters you receive from your | | | | need to pay off your mortgage loan. To qualify |
| mortgage company. Contact the company | | | | for a pre-foreclosure sale, you must be at least |
| immediately. Explain why you are having trouble | | | | two months delinquent in your payments, you are |
| meeting your payments. Be prepared to provide | | | | able to sell your house in three to five months, |
| financial information showing your monthly income | | | | and a new appraisal of your home's value shows |
| and expenses. If you can show your mortgage | | | | that it is worth less than the amount owed on |
| company that the problem is short term and that | | | | the mortgage loan. |
| you have a plan for resolving it, the company | | | | As a last resort, you maybe be able to voluntarily |
| may be more willing to work with you. | | | | "give back" the house to your lender. Obviously, |
| If you have a FHA-insured loan, contact a | | | | this won't save your house but is not as |
| HUD-approved housing counseling agency. Call | | | | damaging to your credit rating as foreclosure. This |
| 800-569-4287 to get the address and phone | | | | is called deed-in-lieu of foreclosure. To qualify: |
| number of the counseling agency nearest you. A | | | | 1. You are in default and do not qualify for any of |
| housing counseling agency is a valuable resource | | | | the other options; |
| as it will have information on services and | | | | 2. You tried to sell the house before foreclosure |
| programs offered by the U.S. Government, and | | | | but were unsuccessful; and |
| by private and community organizations that may | | | | 3. You don't have another FHA mortgage in |
| be able to help you. The agency may even offer | | | | default. |
| credit counseling. And its services are usually free. | | | | How do you know if you qualify for any of these |
| What are your alternatives? | | | | alternatives? Your lender will help you determine |
| Special Forbearance. | | | | this. If you have an FHA loan and use a housing |
| If you are honest with your lender and have | | | | counseling agency, the agency can help you |
| legitimate reasons for having missed mortgage | | | | determine which, if any, of these options might |
| payments, your lender may be willing to arrange a | | | | meet your needs, and will also help you with your |
| repayment plan based on your financial situation. | | | | lender. |
| The company may even offer a temporary | | | | Foreclosure is always bad news. The good news |
| reduction or suspension of your payments. This is | | | | is that you can avoid foreclosure. All it takes it |
| especially true of you have recently experienced | | | | honesty and a lender who will work with you. |
| a reduction in your income, the loss of a job or | | | | |