How to Get Help with Your Underwater Mortgage

First, Happy New Year from everyone at Team Aguilar!

Second, unfortunately there are still a lot of homeowners who are underwater on their home but hopefully some of this information will help you.

2012 will bring little relief for the vast majority of homeowners struggling to maintain their mortgage payments. According to Hope Now, a non-profit real-estate cooperative, more than 2.6 million households across the country will start the new year two or more months behind their mortgage payments.

Catching up with your monthly mortgage payments once you’ve fallen behind, as many homeowners know firsthand, can be extremely challenging. With all the economic pressures weighing down on the average American family, maintaining regular mortgage payments is harder than ever. For most homeowners, falling behind on their mortgage payments can have far-reaching consequences like:

· Additional penalties with late charges as well as various legal and administrative fees
· Negative impact on their credit rating
· Constant emotional stress and worry
· And finally, the ever-present specter of foreclosure

If you are one of the unfortunate 2.6 million who has fallen behind, it is in your best interest to deal with this situation as quickly as possible. The longer you delay in dealing with the problem the more debt you will incur, making it even more difficult to get back on the road of financial solvency. Homeowners who are behind one or two payments can usually make a speedy recovery, but those who are more than 3 to 6 months behind will have a much tougher time getting out of the red.

There are plenty of steps, however, that a determined homeowner can take to get out of the financial hole they’re in and get back on track for complete financial recovery. Even if you are incapable of making immediate payments on what you owe, you can still meet with the lender, credit counselor or real estate mortgage specialist and discuss your options. These range from modifying the terms of your loan, drawing up a repayment plan and applying for federal homeowner’s aid or moving forward with a real estate short sale of your property.

Steps you can take for immediate relief on your overdue mortgage payments:

Real Estate Short Sale – A short sale is where the lender allows the delinquent owner to sell the home for less than the amount owed on the mortgage. Lien holders will often pursue short sales with homeowners who have lost their jobs or are otherwise suffering financial hardships and are running the risk of foreclosure. Short sales are preferable to lien holders since it gives them the opportunity to take a smaller loss upfront and avoid a much greater loss down the road with a foreclosure. It is also advantageous to homeowners struggling to keep up with their mortgage as it allows them to avoid the stigma of foreclosure, gives them the opportunity of a fresh start and (in most cases) is far less damaging to their credit rating than a foreclosure.

Repayment Plan – Repayment plans help spread out your delinquent payments, allowing you to bring your overdue accounts up to date within a specified time frame. Repayment plans will also allow part of the overdue amount to be added to your regular monthly mortgage payments. Repayment plans are most effective for homeowners who have fallen behind on a couple of monthly payments, but are committed to catching up with their regular monthly payments. It gives homeowners an achievable goal and allows them to move forward in the knowledge that their mortgage loan is secure.

Loan Modification – Modifying the terms of your mortgage loan allows you to consolidate past due interest and escrow with the unpaid principal balance and re-amortize this new amount into a new mortgage. Modifying the repayment terms of the original loan can result in more affordable monthly payments. It also has the advantage of wiping out past due payments and allowing the borrower to start fresh with his or her monthly payments.

Partial Claim on a FHA Insured Loan – This federal program grants a borrower a second, interest free loan on their delinquent FHA mortgage. This second loan cannot exceed the equivalent of 12 months of past accrued mortgage payments, and must be paid off at the same time the homeowner’s original loan is paid off.

Home Affordable Modification Program (HAMP) – A joint effort by the Departments of Treasury and Housing and Urban Development, the Home Affordable Modification Program aims to help borrowers who are most at risk of imminent default by lowering their monthly mortgage payments so it does not exceed 31 percent of their verified monthly(pre-tax) income. HAMP can essentially save eligible homeowners hundreds of dollars from the monthly mortgage bill. Several preconditions have to be met before you can apply for HAMP; it is best to contact your mortgage provider to see if you are eligible for this program.

Deed in Lieu of Foreclosure – this procedure allows the homeowner who is (a) unable to make mortgage payments and (b) unable sell the home at current market value, to voluntarily transfer legal ownership of the property to the lender. As with short sales, a Deed in Lieu of Foreclosure has the advantage of avoiding the lengthy and unpleasant process of undergoing a foreclosure and can also be less damaging to the homeowner’s credit rating. Lenders will only agree to a Deed in Lieu of Foreclosure, however, if the outstanding indebtedness of the borrower does not exceed the fair market value of the property.

These are just some of the steps homeowners struggling with their monthly mortgage payments can take to improve their financial situation. Be wary of companies offering quick fix solutions to your mortgage problems – the vast majority are scams that will promise everything, charge a hefty fee up-front and then disappear forever. San Diego residents looking for mortgage relief should contact one of our short-sale experts at Team Aguilar – we have been in business for over 30 years and are experienced in finding long-term solutions for all your mortgage problems.

8 thoughts on “How to Get Help with Your Underwater Mortgage”

  1. It is critical to go over this sort of information with your potential listing clients. I have known some people in my neighborhood who had a few surprises hit them after closing because they were uninformed by their agent.

  2. Maintaining Regular Mortgage Payments is very very important for the Homeowners to protect from far-reaching consequences.

    Thanks for Sharing. Great Websites!

  3. Hi Alex,
    Hope your holidays were fabulous. This is a great list of options for a homeowner. I think the hardest thing is to actually accept that you are i trouble and the only solution is a difficult process. Most have already lost a hefty amount in equity (that didn’t exist) and now they are loosing their home with no replacement in sight. With so many people out of work or with their salaries cut in half, I guess the 2.6 million is a low number. Your list is very thorough and should be taken seriously by homeowners in trouble. They need to act before their mortgage company does.

  4. Nice blog and you have shared some informative points here, Now i am looking forward to your upcoming articles. Thanks for Sharing. I really love the way information presented in your post. I always prefer to read the quality content and this thing I found out it in here. Great Websites!

    The Verv @ RV

  5. Mortgage is the most common issue of almost all household in the United States. People who can read this will be thankful of the ideas and tips shared in the article. Another valuable post Alex!Thanks

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