It is normal for the economy to go through a period in time where defaults and delinquent payments are up following a real estate market boom. To listen to the news, you would think the terms foreclosure and loan defaults are brand new. This is not the case. After the hot real estate market of 1985 to 1988, there were many families who had problems keeping up with their mortgage payments.
Here again, after the red-hot real estate market of 2004 to 2007, defaults are up again. In the 80's, it was variable rate mortgages causing most of the problems, now it is negative amortization mortgages that are the culprit. Either way, the problem is lenders have become very good at sneakily qualifying people who are not quite ready to purchase properties as expensive as the ones they end up buying.
In any event, people becoming dangerously late on their mortgage payments, even to the point they are facing foreclosure, is nothing new. There is a way most late payment situations can be dealt with. This article will discuss how to approach the late payment problem and how to get your mortgage company to help you get back on track.
Make a budget
First, you have to make a budget and make it look like an official document. You have to take all your daily, weekly, biweekly and monthly payments due and have them down on paper so you can show your lender you know exactly how much you are paying out from every paycheck.
Then, of course, you must document all your earnings. Even if you have a shortfall, it will be all right. If you are showing responsibility by noting how much you need to cut back on your expenses each month, a lender who knows anything about business will usually make an offer that will fill this need.
Change something
Your ace in the hole, however, is you need to show it was some sort of temporary situation that helped get you into this mess. Being out of work, having some extra large
unforeseen expense or any thing you can show helped get you behind and is very unlikely to happen again would be a good thing to bring up with the lender.
Any other thing you can due to help balance your budget you should do and mention it to the lender. Did somebody in the household get a part time job? Did you got a raise or retire an old gas-guzzler? Anything you can do along the lines of bringing in more money or cutting expenses will show responsibility and look good to a banker.
Approach the lender, hat in hand
After figuring your current budget to the tee and changing some things about your financial situation toward the good, you are ready to approach the lender. Usually, doing so will bring fear to the most brazen of borrowers. However, there is one thing you should remember, banks do not want to foreclose on you. It will cost them a lot of money and it is their last possible recourse to recover losses.
If the value of your property has been declining, and this would be normal during this temporary real estate market downturn, the lender doesn't want to pay through the nose to take a wasting asset away from you. They will be glad you are making an effort and will do all they can to help you save your house. The lesson here is, look nervous when you approach them, but there is no reason to be.
At this point it is likely the lender will have some sort of program available to help you and they will make you an offer. Maybe, they will even offer you a refinance.
The point of no return
If after doing all this good work, the lender says no. You may think you are at the point of no return. You are not. However, you need help from someone specializing in keeping families from being foreclosed upon. Much has been written lately about government programs that have been designed for those who are in your situation. You need to find people who are in the know about these things.
This information is changing all the time and you need to find the latest information on the subject. In other words, 1990 slowdown information won't help in the 2008-2009 slowdown. Only the latest information will help. Some specialists have this information and you will find one if you search for one.
Just remember, go as far as you can by making a new budget, changing a life situation, and approaching your lender. You will be surprised how hard they will work to help you once you take the initiative. If your lender won't help, someone will. Don't give up!