Options for Saving your Home
Loss mitigation is one of the terms used by mortgage companies to describe their programs and department that can assist borrowers in bringing their mortgages current. The number one requirement of Loss Mitigation is affordability of the mortgage. To be able to assist you, the mortgage company must see a budget that demonstrates to them that the income coming into your home is enough to support all the household bills.
When speaking to your mortgage company, ask to speak to their Loss Mitigation Department, which is sometimes called the Loan Counseling Department. These are the people that have the authority and knowledge to assist you with becoming current on your mortgage.
Find out what type of loan you have (i.e. Freddie Mac, Fannie Mae, VA, or FHA). When you contact your mortgage company, ask them who the investor is on your loan, or if you have mortgage insurance.
Home Budgeting Form (pdf)
Options You May Have
This is when the mortgage company can take the amount that you are delinquent and add it on to your regular payment, and spread it out over 3-12 months.
This is when the mortgage company adds the amount that you are delinquent to the principal balance of your loan. If they think that it is necessary, then they may consider extending your loan term to 40 years and/or adjust your interest rate.
This strategy is used on FHA loans or those with PMI insurance only. This is when the insurer of your mortgage gives you a loan for the amount that you are delinquent. This is a non-interest loan that does not require payment until the sale of the home or until you pay off the first mortgage.
If you have a reasonable chance to recover from the crisis and begin paying again, the lender may agree to reduce or suspend payments for up to 12 months. Usually they are only 3 to 6 months at a time. After the period ends, you make the original payment and will need to qualify for a loan modification to catch up the amount missed during the forbearance plan.