If you can make your regular payment now, but cannot catch-up the past due amount, the lender might agree to modify your mortgage. One solution is to add the past due amount into your existing loan, financing it over a long term.
Modification might also be possible if you no longer have the ability to make payments at the former level. The lender can modify your mortgage to extend the length of your loan (or take other steps to reduce your payments).
This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.
You may qualify if:
1) The loan is at least 2 months delinquent;
2) You are able to sell your house within 3 to 5 months; and
3) A new appraisal (that your lender will obtain) shows that the value of your home meets program guidelines.
Deed in Lieu of Foreclosure
When the lender allows you to give-back your property--and forgives the debt. Although it does have a negative impact on your credit record, it is not as detrimental as foreclosure.
The lender might require that you attempt to sell the house for a specific time period before agreeing to this option, and it might not be possible if there are other liens against the home.
For FHA Loans
The lender might be able to help you receive a one-time payment from the FHA Insurance fund. Your loan must be at least 4 months but no more than 12 months past due and you must show you are able to begin making full mortgage payments.
• You must sign a promissory note which allows HUD to place a lien on your property for the amount received from the fund.
• The note is interest free, but must eventually be repaid.
• The note becomes due when you pay off the loan or when you sell the property.
For VA Loans
VA Regional Loan Centers offer financial counseling that's designed to help you avoid foreclosure. Call us to discuss options for your specific situation.