If you are delinquent in mortgage payments, and intend to keep your house, there may be several options available to you-
A Forbearance Agreement is a contract entered into between you and your mortgage company where you make your regular home loan payment, plus an additional sum of money over a period of months until your account is current--usually 6 to 12 months of extra payments. This option may work for you if you are only three to five months behind in payments. Usually the mortgage company demands a "down payment" at the time the contract period starts, and also usually adds additional fees and costs to the amount that you owe. The down payment on the forbearance agreement may be substantial, two to three thousand dollars in some cases, so start setting some money aside as soon as you can afford to.
HAMP Modifications are often referred to as the Obama Making Housing Affordable plan, and is a Loan Modification program. This is a defined process, requiring that you submit financial information and documents to your lender with a hardship letter explaining how you fell behind, and your future finances. The purpose of the Modification is generally twofold-to forgive delinquencies and to lower the interest rate and monthly payments. Generally, a lender will look at Pay stubs, Bank Statements, a Financial Statement prepared by you, as well as Tax Returns. If your lender offers you a modification, review the terms carefully. The mortgage company may add extra fees and costs to your loan balance and extend the terms of the loan to more than thirty years.
Informal Agreements are modification of mortgage payments that are temporary and short term. These agreements are negotiated between the borrower (you) and the lender. If you call the lender when you are only one or two months late on your mortgage payments, your lender may agree to reduce payments on a temporary basis if you can catch up the late payments within a fairly short period of time--about four to six months from the date you first became delinquent.
A Chapter 13 Bankruptcy can provide up to four years to repay mortgage delinquency and avoid foreclosure while you continue to make current mortgage payments. Loan Modification may also, in many cases, be processed while the borrower is in Bankruptcy.
