For some individuals, initial reactions to lenders' contact
regarding late mortgage payments is to avoid communication entirely until the
individuals feel in a better financial position to address the overdue mortgage
payments. However, this approach only
lessens the options available to individuals for rectifying and getting out of
their late mortgage payments. In fact,
lenders want consumers to keep their homes.
Banking industry statistics note that lenders actually lose an average
of $50,000 per foreclosed home. Instead
of looking at lenders as antagonists in personal financial hard times, many
individuals will be surprised to find a collaborative approach is more
beneficial for both parties.
- Establishing contact with lenders early on and consistently
produces many positive results for late payment on mortgages including:
- Providing all necessary information on the
mortgage debts outstanding and any lien options a lender may be able pursue
- Ascertaining the timeframe of a mortgage debt
from being in default to facing foreclosure
- Offering financial assistance and other
- Persuading lenders of individuals good-faith and
collaborative intentions as well
- Be weary of anyone claiming to be a foreclosure "expert", as there are many for-profit foreclosure scams that do more harm than good
- Avoiding late fees and other fines for loans
debts in default
- Preventing commercial collections agencies from
overtaking individual debt collections process
Options for Individuals under Late Mortgage Payment Pressure
Falling behind on mortgage payments is not necessarily a bad
thing in itself, if proper actions are taken early on to obtain the best
possible solutions to rectifying these debts.
For many consumers, the assistance of a real estate attorney is
beneficial in not only reviewing the existing mortgage agreements and laws in a
given state, but also, negotiating solutions for late mortgage payments and
preventing the next step that lenders usually take, which are foreclosure
Some suggested foreclosure prevention options that will help
also solve late mortgage payment problems include:
- Mortgage Debt Repayment Plans-
Lenders may offer a repayment plan that is tailored to individuals'
specific financial situation and accounts for rectifying missed payments
over a period of time in the future.
For this reason, communication with lenders early on is essential.
- Forbearance- Forbearance is the
process of lenders allowing for payment reduction or suspension for a
period of time to allow for serious, documentable, and communicated
hardships in income, with the expectation of this income to return. After the forbearance period, homeowners
will be expected to make consistent payments as usual in addition to those
missed payments in the months previous.
- Loan Adjustments- Loan
modifications occur between homeowners and lenders and allow for one or
more terms of the mortgage contract to be altered, which allows homeowners
a better chance at repaying the mortgage debt in a timely manner. Potential adjustments to loan include
interest rate modification, lengthening the life of the loan, or
consolidating the remaining balance of outstanding loan debt.
- Reinstatement- For mortgages that
are in default or facing foreclosure, homeowners can reinstate their
mortgages to good standing and save their home via paying off the
entire-past due mortgage amount and the associated late fees. If future
payment of the loan obligations will be manageable for individuals, this
the most ideal solution.
Last Ditch Options for Addressing Late Mortgage Payments
A number of options are available that will address the
issue of outstanding mortgage debts, but that will involve the loss of a home
or property. Rather than risk
foreclosure proceedings that may or may not leave consumers will revenues to
find another dwelling place, individuals have several last resort options
- Private sale of their home- This
strategy can allow individuals to get the most out of their home's value,
while still maintaining some level of control over the process of the home
- Bankruptcy- Bankruptcy is assuredly
a last ditch effort, however, may be an applicable solution offering
individuals the fresh start they desire.
These options, both last resort and the others above,
are applicable depending on the offers from a given lending institution and
their loss mitigation, or foreclosure, department. Additionally, each state possesses specific
rules, laws, timelines, and guidelines for determining when late or defaulted
mortgage payments are candidates for foreclosure proceedings. A real estate attorney can assist clients
worried about foreclosure, counsel them on their rights, and represent clients
in all action necessary to preventing foreclosure.