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What To Do If You Are Falling Behind On Your Mortgage Payments

Sometimes situations occur that cause you to fall behind on your mortgage. An unexpected job loss, a medical emergency, or a change in marital status are just a few of the issues that can bring about financial hardship. It’s important to know what options are available to you when you are having a tough time making ends meet. Here are three tips to help you if you are falling behind on your mortgage payment.

Contact your mortgage lender.

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The normal reaction of most individuals when they fall behind on their debts is to pretend that the problem does not exist. They ignore phone calls, bill statements, emails, and all forms of communication from a creditor. This is a mistake! Don’t run from your bills. The first part of clearing up an outstanding debt is to acknowledge that you have the debt. Contacting your mortgage lender demonstrates that you are serious about trying to catch up on your payments. There are a number of options that are available to you. Mortgage lenders can work out loan modifications and repayment plans that are affordable. A lender can temporarily reduce your mortgage payment until your financial situation improves. Lenders can also defer payments and place the principal on the back end of the loan. Your mortgage lender could renegotiate your interest rate, thereby saving you money on costly interest payments. In extreme cases, some lenders have been known to even forgive principal.

Talk to the appropriate government agency.

If your lender won’t work with you, there are several free resources that can help. If you have a FHA loan, contact the FHA’s National Servicing Center. The FHA will apprise you of all current federal programs that are available to you. If you have a conventional loan, visit the US Department of Housing & Urban Development’s website. Individuals with VA loans can contact the US Department of Veteran Affairs. There are foreclosure avoidance counselors in your state that will assist you with your foreclosure issues. These services are provided at no cost to you. All of these agencies can help you with workout programs that your lender may not have informed you about. You can contact any of these agencies by letter, email or phone.

Be wary of foreclosure scams.

Some organizations and individuals will try to take advantage of your financial problems by offering “quick fix” solutions. “Foreclosure specialists” promise to save your home for a fee. These fees can run from a few hundred dollars to a thousand. There is little that most of these specialists can do that you can not do for yourself. Many homeowners end up losing their homes and money while waiting for a foreclosure specialist to try and save their homes. Foreclosure rescue specialists will offer to lend you money to stay in your home. These specialists take advantage of many homeowners, getting them to sign their home away for a few thousand dollars. The home owner ends up making mortgage payments on a house that they no longer own. Homeowners need to be wary of any individual that contacts them promising to save their home. Contact a lawyer before agreeing to terms or signing any document. Keep in mind that there are some reputable organizations that can provide you with assistance. But be sure to check with the Better Business Bureau to see if these companies are legitimate.

What do you think is the most important thing to do when you are behind on your mortgage payments?

(Photo credit: brownpau

Mark Riddix
Mark Riddix is the founder and president of an independent investment advisory firm that provides personalized investing and asset management consulting. Mark has written financial columns for Baltimore and Washington, D.C. area newspapers and is the author of the book, "Your Financial Playbook."

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