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Mortgage Payments: Difficulty Paying


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As soon as you realize that you may not be able to make timely mortgage payments, take action. Do not wait until you fall behind. Making mortgage payments on time is important both for your credit rating and to avoid unnecessary fees or a forced sale through a foreclosure.

Whether you are being proactive and taking steps before you fall behind in mortgage payments, or you are already behind, consider the following steps, each of which are described in other sections of this article:

Step 1. Find out if you qualify for help under the federal government program known as FHA Secure.

  • If your mortgage is more than the value of your residence, you may qualify for a government program known as Making Home Affordable. 
  • You can find out about whether you qualify for one of these programs and other relevant advice by contacting a HUD-approved housing counselor. HUD-approved housing counselors work for free. Other professional advisors are also available.

Step 2. If you do not qualify for one of these programs, seek professional advice. When you tell the professional about your situation, be sure to include your diagnosis and what it is doing to your income and expenses. A professional:

  • May have advice about how someone in your position could best negotiate with the lender or company that services the mortgage. 
  • May be in a better position to have the discussion with your lender than you are. 
  • Can let you know about a defense you hadn't thought of. For instance, some states have laws against taking advantage of a vulnerable person. Vulnerable person could include people over age 65 or people who are otherwise vulnerable to exploitation (including people with a health condition).

Before hiring a professional, speak with one or both of the following people:

  • A government-certified housing counselor. A counselor can give you advice, help you organize your finances and prepare documents for your lender. Counselors are free or low cost. To locate a counselor, see the U.S.Department of Housing and Urban Development Website at   offsite linkor Neighbor WorksAmerica: offsite link
  • A real estate broker who is knowledgeable about foreclosures.

Step 3. It is time to approach the lender, or the company that services the loan. If you feel comfortable with the situation (or have a family member or friend who has negotiating expertise), you can approach the lender yourself.  Otherwise, consider hiring a professional to do the negotiation for you. For instance, a lawyer, a financial planner or a foreclosure rescue company. There are also nonprofit groups that can help. One alternative to help you find a solution or to engage a professional is to contact the nonprofit organization HOPE Now (888.995.4673), a counseling service backed by the White House. (For information about finding a lawyer who works for a reduced fee or for free, click here.)

If you are to contact your lender or the entity that services your loan to find out if you can modify (restructure) the loan:

  • Over the phone, you will likely be asked about the amount of your income and expenses. (You will have to provide proof later.)
  • While the lender cannot legally ask about your medical condition, this is a good time to bring it up because it likely explains substantial increases in your expenses and a decrease in your income if there is one. Bringing up your condition will also:
    • Help individualize your situation 
    • Explain why you are having financial difficulty and that you are not a spendthrift, and 
    • Perhaps get some sympathy which will help sway the lender to do what you need. Just about all contractual rules can be changed if you get to a decision maker if the situation warrants. (Yes, even bankers are human). 

Step 4. If a modification that works for you isn't possible, consider selling the house before it goes into foreclosure. If the mortgage is higher than what you would receive, ask the lender to allow you to sell it for what you can get for it and to forgive the rest of the debt. This is known as a "short sale." (You may have to pay a tax on the amount which is forgiven, but that's better than having to pay off the whole debt).

As you move through the above process:

  • Send all important documents via certified mail or by overnight delivery with delivery confirmation.
  • Keep copies of everything including every letter you send, every fax confirmation, 
  • If you can, record your phone calls with the company every time you call. There are inexpensive recorders and free services such as Skype.
  • Watch for scams.
  • Do not give up!  Getting a loan modification is likely to be a pain and take time. Be persistent!

For more information, see:

NOTE: For information about dealing with a financial crunch, click here

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