Falling behind in your mortgage?
When you fall behind on your mortgage
payments, your options dwindle as time passes.
If you confront the problem quickly, you can give
yourself time to keep the house or at least sell it for a fair price.
Let the situation drag out, and you'll get stuck in foreclosure.
Sounds like common-sense advice. But even sensible
people deny reality in a financial crisis caused by unemployment
or towering medical bills or some other calamity.
"The first thing we encourage people to
do is contact your mortgage company," says Susan Hunt, housing
counselor for Consumer Credit Counseling Service of Greater Atlanta.
"Contrary to what seems to be a prevalent belief among consumers,
mortgage companies really want to find a way to help consumers stay
in their homes."
Mortgage lenders say the same thing: Call when you
know you're going to fall behind on your payments. Consumers often
complain, though, that mortgage servicing companies don't always
back up the rhetoric. Customer service reps tell borrowers that
no help is available until they're 30 days past due, or condescendingly
advise borrowers that it's important to pay bills on time.
It's a problem faced by an increasing number of homeowners.
More homeowners were at least 30 days late on their mortgage payments
from April to June, according to the Mortgage Bankers Association.
The MBA reports that 4.62 percent of home loans were delinquent
in the second quarter -- more than in the first three months of
the year, and less than in the same period a year before.
Doug Duncan, chief economist for the MBA, says the
weak economy contributed to the slight rise in late mortgage payments.
He points out that the number of homes in foreclosure decreased.
Foreclosures probably will increase later because they tend to lag
If you find yourself behind on your home loan, stay in contact with
your mortgage servicer. Be persistent if you don't get help immediately.
Ask to talk to someone in the loss mitigation department. Have the
calls logged so there will be a record that you are handling the
Your options depend on whether the financial problem
is permanent or temporary. At first, you might not know. When you're
laid off, you know you'll find another job eventually, so unemployment
looks like a temporary problem. But Hunt says that many people find
they've taken a permanent tumble down the salary ladder. If you
lose a $60,000 job and eventually have to take one that pays $35,000,
you have a permanent problem that requires a drastic restructuring
of the budget.