|Explore Loan Workout Solutions
and foremost, if you can keep your mortgage current, do so.
However, if you find that you are unable to make your mortgage payments,
you may qualify for a loan workout option. Check with your lender to find
out which of these options may be available.
If Your Problem Is Temporary - Call Your Lender
- Reinstatement: Your lender is always willing to discuss accepting
the total amount owed to them in a lump sum by a specific date. They
will often combine this option with a Forbearance.
- Forbearance: Your lender may allow you to reduce or suspend payments
for a short period of time after which another option must be agreed
upon to bring your loan current. A forbearance option is often combined
with a Reinstatement when you know you will have enough money to bring
the account current at a specific time in the future. The money might
come from a hiring bonus, investment, insurance settlement, or a tax
- Repayment Plan: You may be able to get an agreement to resume making
your regular monthly payments, in addition to a portion of the past
due payments each month until you are caught up.
If it appears that your situation is long-term or will permanently
affect your ability to bring your account current:
Mortgage Modification: If you can make the payments
on your loan, but you do not have enough money to bring your account current
or you cannot afford the total amount of your current payment, your lender
may be able to change one or more terms of your original loan to make
the payments more affordable. Your loan could be permanently changed in
one or more of the following ways:
- Adding the missed payments to the existing loan balance.
- Changing the interest rate, including making an adjustable rate into
a fixed rate.
- Extending the number of years you have to repay.
Claim Advance: If your mortgage is insured, you may qualify
for an interest-free loan from your mortgage guarantor to bring your account
current. The repayment of this loan may be delayed for several years.
If Keeping Your Home Is Not An Option -- Call Your Lender
Sale: If you can no longer afford your home, your lender
will usually agree to give you a specific amount of time to find a purchaser
and pay off the total amount owed. You will be expected to obtain the
services of a real estate professional who can aggressively market the
Pre-Foreclosure Sale or Short Payoff: If the property's
sales value is not enough to pay the loan in full, your lender may be
able to accept less than the full amount owed. This option can also include
a period of time to allow your real estate agent to market the property
and find a qualified buyer. Monetary help may also be available to pay
other lien holders and/or help toward paying a few moving costs.
Assumption: A qualified buyer may be allowed to assume
your mortgage, even if your original loan documents state that it is non-assumable.
Deed-in-lieu: Your lender may agree to allow you to voluntarily
"give back" your property and forgive the debt. Although this
option sounds like the easiest way out for you, generally, you must attempt
to sell the home for its fair market value for at least 90 days before
the lender will consider this option. Also, this option may not be available
if you have other liens such as judgments of other creditors, second mortgages,
and IRS or State Tax liens.
Help for Homeowners Facing
the Loss of Their Home