Ask for forbearance. This allows you to delay payment for a short period of time, with the understanding that another option will be used afterward to bring the account current… for example, if you know you’ll have the funds to bring your account current by a specific date because of a guaranteed sum of money you’re receiving.

Ask for a repayment plan. This is where the lender agrees to add a certain amount of the first missed payment onto each of the next subsequent two payments. The plan provides some breathing room for you if you only have short-term financial problems, such as a sudden expensive repair or a medical expense that makes it too difficult to pay your mortgage for one month.  If you have already missed two or three payments and owe a couple thousand dollars in lender legal fees, the lender of your mortgage may still try to arrange a repayment schedule. But you will likely have to pay a third to a half of the delinquent amount up front, and then pay off a portion of the remaining balance each month for a year or more.  Also, never ignore the lender’s letter or phone call. Ignoring the problem won’t make it go away and if you’re going into a foreclosure process, there are other fees and costs involved and ignoring them only makes these worse.

You may also be eligible for a loan modification plan, designed for people who can’t afford repayment plans. In a modification, the lender actually adjusts the terms of the loan to make it affordable. It may lengthen your amortization schedule or lower the interest rate to cut the monthly payment, or roll the past due amount into the loan and re-amortize the new balance so you can pay the additional debt over time.

Some companies may be willing to offer you a “Short refinance” too.  With these, the lender agrees to forgive some of your debt and refinance the rest into a new loan. This way, the lender still gets more money than they would by foreclosing on you.

A Deed in Lieu of foreclosure (DIL) is an option in which you voluntarily deed your property back to the lender in exchange for a release from all obligations under the mortgage. Unfortunately, there is no way to do this without hurting your credit, unless you get the mortgage company to report your mortgage account as paid in full. You may face income tax issues resulting from the lender forgiving part of the debt (which the IRS will likely treat as income to you, even though you don’t receive any cash in the transaction) but you might be able to get yourself out of the hole and start over again sooner rather than later.

Considering filing Chapter 13 bankruptcy. If you can afford your normal monthly mortgage payment, but can’t afford to make up the delinquent amount and the legal fees because your lender offered a really harsh repayment plan, you may want to consider filing a Chapter 13 bankruptcy. Doing so temporarily halts the foreclosure process and can force the mortgage lender to accept a more friendly repayment plan. This is a last resort, and will still negatively affect your credit.

If none of these strategies work, there is still one other option. As you may know, a foreclosure is devastating to your credit rating and can affect it for 7 to 10 years. What’s more, buying or even renting another home in that time period may be impossible for you. But there is one more option where I may be able to help you personally.

If you need more information or have questions, then contact Mr. John Kalua (707) 965-2372 for additional information to stop foreclosure today!