Some things from the Bankruptcy Course

Below is a brief description of the most common options you should explore if you are behind on your mortgage. Remember, regardless of what path is taken, Lenders can’t help you unless you communicate with them.

• Reinstatement. Give the bank all of the back payments you owe and start making your regular monthly payment. With a partial reinstatement you generally pay at least one-half of the back payments first and agree to a repayment plan for the rest of what you owe.
• Repayment Plan. Make your regular mortgage payment plus an additional amount toward the back payments until you are caught up. The plans usually last no longer than 12 months. If you are able to set up a repayment plan, make certain it is reasonable and do not agree to a plan that you cannot keep.
• Forebearance. The Lender agrees to accept a lower monthly payment or no monthly payment for a limited time. By the end of the forebearance agreement, you must bring the account current.
• Modification. The Lender agrees to change one or more terms of the mortgage. Possible changes include: reducing the interest rate, extending the term of the mortgage and/or adding the arrears to the unpaid principal balance of your loan.
• Refinance. Take out a new mortgage to pay off the old mortgage. Sometimes it makes sense to refinance, but be certain to contact a legitimate Lender and proceed carefully. Beware of large fees and high interest rates.

If it becomes impossible to keep your home, some last resort options include.

• Short Sale. Sell your home for less than you owe on the property. The Lender may agree to accept an amount less than what you owe on the property as payment in full. You must have a buyer and a signed purchase and sale agreement. Anyone else who has a lien on the property and the private mortgage insurer, if there is one, must also agree to the short sale.
• Deed-In-Lieu. Give the house back to the bank because you cannot afford to keep the home. This is an option you may want to consider if you do not have much equity in your home. Do not ask for a deed-in-lieu when you have equity in the property or when a short sale is possible. The bank will not accept a deed-in-lieu if there are other mortgages or liens on the property.
• Bankruptcy. Explore legal options to stop foreclosure. An attorney can advise you of the pros and cons of the process and whether it is an appropriate option to stop the foreclosure process.