When the Subprime fallout first occurred, borrowers were being told to call their lenders to work out a deal versus go into foreclosure. This may not have been so easy because the servicer they called did not own the loan. It was the investors who owned the loan. Therefore it was difficult to renegotiate the terms of the loan with a servicer who did not have ability to negotiate.

It is important to understand the options available to you as a borrower. If you are having problems dealing with a lender, get a hold of a HUD approved housing counselor to make the connection for you. You can contact a housing counselor by calling 800-569-4287. Make sure to find out about the foreclosure laws involving timing of foreclosures in each state because they are different.

The options available to you will be based on your individual situation. Is your situation temporary? Is it long term? What method of resolution should you follow?

REFINANCE

If you are facing hardship due to a rising loan payment but you have been making your payments on time before your adjustable rate adjusted, you may be able to qualify for a FHA Secure loan. This loan is designed to help borrowers facing foreclosure due to a rise in payment.

The rules for qualifying for this loan are before your payments increased, you must have paid your mortgage on time six months prior to payment rate rising, a history of sufficient income to make the mortgage payment, and the loan amount must not exceed 97% of the value of the property.

TEMPORARY SITUATIONS

If you are unable to make a mortgage payment and your situation is temporary, you may utilize the following options:

Reinstate your mortgage by speaking with your lender about accepting a lump sum payment within a certain period of time.

Forbearance will allow you to reduce or suspend payments for a short period of time and then another option must be designed to make your loan current. This method is often combined with reinstating your mortgage.

Repayment plan would involve you being able to reach an agreement to start making your regular monthly payments, along with a portion of past due payments until you are able to be catch up.

LONG TERM

Modifications of loans take place when you have a long term situation which permanently affects your ability to become current on a loan. In this instance the lender may be able to change the terms of your loan to make your payments more affordable. Your loan could be permanently changed by adding missed payments to the loan balance, changing the interest rates, and extending the number years you have to repay the loan.

If you need to sell your home, talk to your lender about your situation and ask the lender to give you the time needed to sell your home in order to pay off your mortgage. If your home is not worth as much as your loan, work with your lender to accomplish a short sale. Make sure to research new tax laws on how to handle tax ramifications of paying off less than what is owed on the mortgage loan. You may also want to speak with your lender about doing a deed in lieu of foreclosure. This is where the lender allows you to voluntarily give back your home and forgive the loan.