Foreclosure prevention options.

If you are having problems paying your mortgage, you have the following foreclosure prevention options to consider, and to communicate with your loan servicer or mortgage counselor.

Mortgage repayment plan: The company that services your loan provides you with a predetermined amount of time. This will help you repay the amount of the mortgage that you are behind on by adding a portion of the loan that is past due to your regular monthly mortgage payment. This option is a very good choice if you have missed a small number of mortgage payments and are not too far behind on your loan.

Mortgage reinstatement: You agree to pay the loan servicer the entire past-due amount of your loan that you are behind on. You also agree to pay any overdue fees or other costs by an agreed upon date. The reinstatement option is likely to be very successful if your are experiencing a temporary, short term problem and your need for mortgage or foreclosure help is for short term assistance only.

Forbearance: This is when your loan servicer and you are to suspend or reduce your mortgage payments for a short period of time. At the end of this loan forbearance period, you will begin to immediately resume making your regular monthly mortgage payments along with a lump sum payment to help catch up on payments that were missed. In addition, the homeowner may also agree to make partial mortgage payments for a limited period of time in order to bring the loan current. However, please keep in mind that the mortgage forbearance is not going to help a homeowner if your need for mortgage help is so great that you will not be able to afford the home long term.

Loan modification: Mortgage loan modifications are becoming more common. This is when you and your loan servicer agree to permanently modify and change the existing terms of your mortgage in an effort to make your monthly payments more manageable. Loan modifications come in many forms. It can include changing the total principal on the mortgage, lowering the interest rate on your loan, extending the length of time you have to pay the mortgage, or adding missed payments to the loan balance. Many experts say that a loan modification is often the best option if you are facing a long term reduction in your income or long term financial difficulties.

Chapter 13 Bankruptcy: Your option of last resort may be to review a Chapter 13 bankruptcy filing. If you still have a salary, or a regular income stream, a Chapter 13 bankruptcy filing may allow you to keep property you are having trouble paying for, like a car or mortgaged home. During the process of a Chapter 13 bankruptcy filing, the bankruptcy court will approve a repayment plan for you that will allow you to use your future income stream to pay your mortgage, debts, and bills during a limited three-to-five time frame and keep the property. Then, at the conclusion of this process, after you have made all the required payments under the bankruptcy plan, the court will provide you what is known as a discharge notice that will eliminate certain debts.

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