If you are one, two or three payments behind on your mortgage then you would be wise to take immediate action regarding the following information. Homeowners, just like you, are often caught in unexpected hardships such as divorce, death in the family, job loss, or medical emergencies that lead them to falling behind in foreclosure. The good news is that there are ways to avoid foreclosure and save your home.

To avoid foreclosure you must prevent a Notice of Default (NOD) from being filed against you by the lender. A NOD is a public notice that states a homeowner is at least 60-90 days behind on mortgage payments and unless payments are made current the lender will seize the home. Lenders would much rather not file for foreclosure, it is a costly process for them (~$30,000 - ~$40,000) and they are not in the business of owning homes. However, most lenders will file a Notice of Default to protect their interests. If you feel that you will be unable to pay your mortgage due to hardships or an ARM-reset then you should consider the following solutions.

If contacted in a timely fashion a lender may be willing to reach an agreement that involves one of the following:

Forbearance agreement

A lender will give you time to get your finances in order before requiring you to make up back payments and bring your mortgage current.

FHASecure refinance or lender finance

The government provides FHA-insured refinancing loans to qualified homeowners who may be facing foreclosure due to adjustable-rate mortgages or interest-only mortgages that are set to reset. This program is available to anyone who has a non-FHA insured loan, regardless of their payment history. You also have the ability to roll your first and second mortgage into a single FHASecure loan. To find out more information about this program you should visit:
http://portal.hud.gov/pls/portal/url/page/fha/fhasecure

Your lender may also be willing to refinance your existing mortgage, depending on your situation.

Repayment plan

Here, the mortgage company will let you payback missed payments over time by adding it to your mortgage bill. For instance, if your mortgage is $1,000, the lender will add $100 over the course of 12 months to repay a missed payment.

Partial claim

Under a Partial Claim the mortgage company will loan you the amount necessary to reinstate your loan. Currently, partial claims loans are interest free and not due until the homeowner pays off the first mortgage or sells their home. To qualify, you must meet certain criteria and have a government-backed loan.

Note modification

Under situations that involve adjustable-rate mortgages, the lender will freeze a homeowner's interest rate to a more manageable rate. Alternatively, the lender may extend the amortization period, allowing you more time before the interest rate reset.

Debt forgiveness

This is very rare, but it does happen on occasion. Under this agreement the lender will waive your obligation for the missed payments so long as you make payments on time going forward.

Before attempting any of these strategies, you should consult with a financial advisor and real estate attorney who can better help you understand these options. There are also many other strategies available to you depending on your situation and resources available that explain them such as "The Foreclosure Solutions Manual". Make sure that you explore all of your options before giving up and letting your home fall into foreclosure.

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