Maybe you're among the increasing number of borrowers struggling to make mortgage payments. Help is available.
The key: Act as soon as you sense you're having trouble.
"Borrowers may think that they are delaying foreclosure by not calling the lender - the opposite is true. The longer a borrower waits, the faster foreclosure will proceed and the fewer options there are to slow or reverse it from happening," says Carol Gilbert, program officer with the Goldseker Foundation.
She advises troubled borrowers take two immediate steps: Set up an appointment with a housing counselor. Contact the lender to start reviewing your options.
A counselor can look over your finances, advise on budgeting, alert you to mortgage programs or be on the phone with you when you talk to the lender. Baltimore residents can call 311 to be connected to a free counselor at a HUD-approved nonprofit. Others can call 888-995-HOPE (4673).
Or, Marylanders might go directly for free counseling at St. Ambrose Housing Aid Center at 410-366-8550. St. Ambrose also offers free legal help for those with low to moderate incomes.
Like you, a lender wants to avoid the costly process of foreclosure, says Keith Gumbinger, vice president with HSH Associates. "No lender in the world really wants to own real estate. That's not what they are there for," he says.
Lenders have a range of options, but which one you're offered will depend on your financial situation. Is your problem short- or long-term? Do you have equity in the home? Are you contacting the lender before falling behind, or are you deep in arrears and ignoring the bank's calls?
You might be able to refinance into another type of loan that's not as onerous, Gumbinger says. Or a lender might modify the loan by lowering the interest rate or extending the term. A lender might temporarily defer payments, but that's rare, experts say.
At Wachovia Corp., three-quarters of homeowners' problems are resolved with a repayment plan where borrowers get three months or so to make up one or two missed payments, says Jennifer Darwin, a Wachovia spokeswoman in Charlotte, N.C.
Another method is to modify the loan so that missed payments are added to the principal, she says.
Wachovia doesn't deal in subprime mortgages, which are at the root of many problems now. Residents here have a few options for getting out from under subprime and so-called "exotic" mortgages.
