Can’t Make Mortgage Payment? What are your Options?

Do you have options to avoid foreclosure?  YES!  You do! 

If you are unable to make your mortgage payments, please know that you do have options.  Here at Giraffe Realty, we have helped many Houstonians facing foreclosure,  just like you.  Please read your options below, and if you would like to discuss these in greater detail, please contact us at your earliest convenience.


Giraffe Realty Can Help you Avoid Foreclosure

When you fall behind on the payments, you’ll talk first with someone from the mortgage servicer’s collections department. The collections department’s aim is to get you caught up, and the sooner the better. The employees there will demand at least a partial payment now and the rest of the payment soon — and a promise that you’ll pay on time each month after you’re caught up.

The loan servicer might agree to suspend payments for a few months, until you get back on your feet financially. A forbearance isn’t for an indefinite period; it might be for one or three or six months, and after that, you’ll be expected to make full payments on time.

Forbearance is most commonly offered to disaster victims and people who have lost their jobs but who feel confident they’ll find well-paying employment quickly. After the forbearance period ends and you’ve resumed making monthly payments, the service will expect you to pay extra each month until you’re caught up. In most cases, you’ll be expected to catch up within a year or 18 months.

A loan modification is similar to a refinance: The lender agrees to alter the loan, but with few or no fees. The lender might reduce the interest rate, change the loan from an ARM to a fixed-rate mortgage, or raise the monthly payment by a few dollars so you pay off the entire loan, including the past-due amount, by the loan’s original end date.

Less frequently, the servicer will tack the missed payments onto the end of the loan. In other words, if you got a mortgage in June 2004 and it’s supposed to be paid off in June 2034, but you miss three payments, the servicer could add those three payments to the back end and push the payoff date to September 2034.

This option often is referred to as a “deed in lieu” or “DIL”.  The borrower offers to hand over the deed to the property so the lender can take possession of the house and sell it. The lender can refuse to accept a deed in lieu of foreclosure, and it often does, for a couple of reasons. First, the lender has to incur the costs of fixing up the house and paying real estate commissions. Second, the lender inherits any problems with the title. Foreclosure clears away many title problems.

PARTIAL CLAIM – available only for HUD loans
Under the Partial Claim option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months PITI). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or “Partial Claim” notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property.

In a short sale, you sell the house for less than you owe. You can’t do a short sale without the lender’s permission. It is imperative that you work with a realtor who specializes in short sales.  You have a one-time shot to sell your house, and if your realtor is not experienced enough to handle your case, you will risk your house going into foreclosure.

A homeowner filing a Chapter 7 Bankruptcy will forfeit property and eliminate any potential deficiency.  Chapter 13 Bankruptcy provides the homeowner the ability to cure the default over an extended period of time (30-60 months) while maintaining the current monthly payment.  However, this does not change the terms of the mortgage, and since the homeowner cannot afford the current regular monthly payment, they may not be able to afford the current payment plus the delinquency amount.

Effect of a bankruptcy on your credit record: Severe.

Sources: http://www.bankrate.com