A:

The most important thing for you to remember if you find that you may not be able to make this month's mortgage payment is to act immediately. You do not want several months to pass without making a payment or taking some initiative towards working out your debt.

First, you should contact your lender and communicate your current financial situation with them. Due to the recent increase in short sales and foreclosures, lenders are much more willing to work with borrowers in order to keep them in their homes. The last thing a lender or bank wants is to take possession of your home as it only adds another home to their growing current inventory, adds additional property taxes, and increases their monthly expenditures.

Secondly, don't avoid calls or letters from your lender. Be prepared to talk with your lender about your finances, discuss why you cannot make the current payment, and what you can afford to pay until your financial situation improves. Lenders will acknowledge your sincerity and desire to work with them, thus possibly leading to a reduced mortgage amount until you can get back on your feet again.

Third, seek the help of a financial planner or debt counselor to help you with your budgeting, balance sheet, and other financial items that you might be overlooking. Direct communication with some of your other creditors with the presence of a financial professional can help you reduce balances, consolidate, or get reductions on interest rates.

Fourth, seek legal assistance. Since foreclosure has become common practice, many attorneys are able to get creative and utilize legal options modifications, forbearance and recasting. All of these are special agreements with the lender and the borrower to either recalculate a mortgage schedule or delay a foreclosure.

In a worst case scenario, you may have to consider options such as short-sale, selling the home, or maybe even filing for bankruptcy.

For related reading, take a look at Behind The Scenes Of Your Mortgage and Watch Out For "Junk" Mortgage Fees.

This question was answered by Steven Merkel.


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