Facing Foreclosure? Talk to Your Lender First

If you have fallen behind on your mortgage payments, or are afraid that you might soon fall behind on your payments, the first thing that you should do is talk to your lender or “loan servicer” collecting your payments. Be proactive. The earlier that you contact your lender, the better your chances are of coming to a workable solution.

Here are some options that your lender might offer:

• Forbearance. Lenders may let you make a partial payment, or skip payments, if you have a reasonable plan to catch up. Tell your lender if you expect a tax refund, a bonus, or a new job.
• Reinstatement. Reinstatement refers to making a payment that covers all your late payments, usually at the end of a forbearance period.
• Repayment Plan. If you can’t afford reinstatement, but can start making payments to catch up, the lender may let you pay an additional amount each month until you are caught up.
• Loan Modification. Your lender may agree to amend your mortgage to help you avoid foreclosure. The options include: 1. Adding all the missed payments to the loan amount and increasing the monthly payment to cover the larger loan.;  2. Giving you more years to pay off the loan, lowering the interest rate, and/or forgiving part of the loan, to lower your monthly payment.; 3.  Switching from an adjustable rate mortgage to a fixed rate mortgage, so you aren’t exposed to increases in your monthly payment.; 4.  Requiring amounts for taxes and insurance to be included with your monthly mortgage payment so you avoid big bills in addition to your mortgage.
• Sign Over the Property to the Lender in Exchange for Debt Forgiveness. This can hurt your credit, but is better than having a foreclosure in your credit history.

The worst thing to do is nothing. The Northeast Atlanta Metro Association of Realtors has a web site, www.UnnecessaryForeclosure.com, which can offer more advice and helpful resources to homeowners facing foreclosure.