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Mortgage troubles? Consider your options

If you are having trouble paying your mortgage, or think there’s the slightest chance that you will have trouble paying it, do not ignore the problem.

The single biggest mistake homeowners make is waiting too long to seek help — or not seeking help at all, experts say.

“There are all kinds of options for being able to keep the home,” said Joscelyn Stephenson, certified consumer credit counselor for Housing and Credit Counseling Inc. The nonprofit agency, based near Fort Riley in Manhattan, Kan., is approved by the Department of Housing and Urban Development.

A house is usually foreclosed within six months of a lapse of payments in Kansas. “If we can see them when they are one month behind, it is 100 times better,” Stephenson said, adding that the earlier you get help, the more options you have.

Your options also will depend on your lender and your state’s laws, regulations and timelines.

If you’re having trouble, here is some advice from HUD, military personal finance managers and civilian credit counselors:

• Immediately contact your lender. You can probably find a phone number or Internet address on your last statement or your payment coupon book. Ask for the loan mitigation department, explain your situation and let them know your military status.

There may be options you don’t know about. For example, if you are a member of the National Guard or reserve and you took out the home loan before you were activated, you can have the interest rate reduced to 6 percent if your active military duty imposes a financial hardship. This also applies to loans that active-duty members took out before joining the military.

Mortgage lenders cannot foreclose while reservists are activated or within 90 days after they return from active duty, without court approval.

In general, lenders may be able to work out temporary or permanent solutions. According to the National Foundation for Credit Counseling, a lender might reduce or suspend your monthly payments for a certain period of time, after which you agree to resume regular payments and pay an additional amount each month. Or a lender might agree to refinance or change your mortgage to make the terms more favorable, with lower monthly payments.

• Contact a HUD-approved counselor for assistance. Find one in your area by calling (800) 569-4287 or go online to http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. You also can contact the national foreclosure hot line at (888) 995-4673 or http://www.995hope.org.

Assistance also is available through Military OneSource, a free Defense Department-sponsored counseling service that can be accessed by phone or on the Web at http://www.militaryonesource.com or (800) 342-9647.

• Contact USA Cares at http://www.usacares.us.

Through a partnership with the Homeownership Preservation Foundation, USA Cares can help military homeowners talk directly with their mortgage company. (The foundation also is managing the new national foreclosure hot line.)

Those who are at risk of losing their homes as a direct result of hardships related to military duty — to include reassignment moves and deployments, among other issues — may qualify for a special financial assistance grant. As of Dec. 1, the program had provided $617,787 to help save 178 homes for service members, said Cecelia Jeffery, USA Cares senior resource coordinator.

USA Cares also can help with other expenses — for example, when military families are having trouble buying food and making utilities payments because of mortgage issues.

• Counselors can help you evaluate your finances and build a budget to squeeze every penny possible toward paying the mortgage. They say that after payments related to health costs, your mortgage should be your first priority. Review your spending to find ways to cut costs, and make the mortgage payment before the credit card payment and other “unsecured” loans.

• Find out whether you qualify for FHASecure, a new government-backed mortgage product aimed at helping borrowers refinance their adjustable-rate home loans. For more details, or to find the nearest FHA-approved lender, call (800) 225-5342 or visit http://www.FHA.gov.

• Don’t be tempted to take out a short-term loan or seek a second mortgage or line of credit in order to make the payments on your first mortgage. Talk to your original mortgage lender first, or to a housing counselor. A second mortgage may make the original lender less inclined to work with you on a solution.

• Know your rights. Read through your loan documents, and find out if and when your interest rate will change. Check the consequences if you miss payments, and write a list of any questions for a housing counselor. Find out about foreclosure laws and timelines in your state by calling your state government housing office.

• Understand foreclosure alternatives such as short sale and deed in-lieu-of foreclosure.

• Avoid foreclosure rescue scams, which are becoming more common. The scams usually revolve around deals supposedly designed to stop foreclosure. They claim to be helping you save your home, or pay your mortgage, but are actually generating a quick profit for the scammers.

“Scam artists can evict a family from their own home and then sell it on the open market before the homeowner has any idea of what is going on,” said Gail Cunningham, spokeswoman for the National Foundation for Credit Counseling.

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