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Falling behind in your mortgage? Act fast

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.

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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 behind delinquencies.

Persistence counts

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 problem responsibly.

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.


-- Posted: Sept. 11, 2003




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