Mortgage Counseling

If You're Having Trouble Paying Mortgage
If you are having difficulty making your monthly mortgage payment or even facing foreclosure you cannot afford to wait and hope that you can resolve the issue later. If you are behind on your mortgage, you can be faced with foreclosure, and sooner than you may realize. Your immediate first step should be to contact your lender to discuss your situation and see what options may be available to help you stay current on your loan and stay in your home. However if you are nervous about approaching your lender or would like additional assistance you may want to consider working with a mortgage counselor in your area. Mortgage counselors are helping thousands of homeowners nationwide determine how to pay their mortgage and stay in their home.

What Mortgage Counselors Do

Mortgage counselors can help you begin working your way out of your current mortgage concerns or crisis by:

• Identifying the cause of your mortgage payment difficulty
• Creating a realistic budget
• Setting financial priorities
• Determining next steps and options for you to avoid foreclosure and meet your mortgage obligations
• Working with your lender to develop a plan that will enable you to stay in and keep your home
• Avoiding predatory lenders and scams that could potentially cause you to lose your home

Types of Mortgage Counseling Organizations

• There are both nonprofit and for-profit companies that advertise and provide mortgage counseling. These organizations typically offer a wide array of services including debt consolidation, budget counseling, credit counseling and bankruptcy counseling, as well as mortgage or housing counseling help for people who are behind on their mortgage payments and/or are in danger of defaulting and going into foreclosure.

• All organizations providing mortgage counseling are not alike. Because credit and mortgage counseling is not a highly-regulated industry, it’s important to know what to look for before choosing an organization to work with.

Finding a Mortgage Counseling Organization

You should look for a housing counseling agency approved by the U.S. Department of Housing and Urban Development (HUD). HUD-approved housing counseling agencies have information on both federal and local services and assistance for homeowners facing financial crises, as well as support from private or community organizations. Access the list of U.S. Department of Housing and Urban Development's list of (HUD)-approved counselors. You may see several organizations in your area that are HUD-approved housing counselors. Some organizations may specialize and only provide housing-related counseling (for first time homebuyers, homeowners facing mortgage difficulties, etc.) while others may provide an array of counseling services related to a broad spectrum of financial topics including how to manage or consolidate credit card debt, pre-bankruptcy counseling, etc.

Check to see which organizations on the HUD list of approved counseling agencies:

• Offer the services you need
• Provide services in the language you primarily speak
• Are located in an area that you could reach my car or public transportation

If you're unclear about one of those three topics call the office and ask or visit their web site.

Once you have found a potential counselor, you should do two things:

1. Check to see if it has had any complaints filed against it with your state Attorney General's office or the Better Business Bureau, and then

Options You May Be Offered

• Special forbearance - your lender may be able to arrange a new repayment plan based on your current financial situation, and temporarily reduce or suspend your payments.
• Mortgage modification - you may qualify to refinance your debt and/or extend the term of your mortgage loan.
• Partial claim - with this option you may be able to obtain an interest-free loan from HUD to bring you up to date on your mortgage payments. To qualify your loan must be at least 4 months and no more than 12 months delinquent; your mortgage cannot be currently in foreclosure; and you are able to begin making full mortgage payments.
• Pre-foreclosure sale - if you are at least 2 months delinquent on your mortgage payments, your lender may be willing to put foreclosure proceedings on hold while you try to sell your home in a "pre-foreclosure sale." This option allows you time to try and sell your property and then pay off an agreed-upon percentage of your existing mortgage debt (as determined by your lender) through the proceeds from the home sale. This process can help you avoid foreclosure which can have a serious negative impact on your credit rating and your ability to qualify for loans and credit in the future.
• Deed-in-lieu of foreclosure - with this option you may be able to voluntarily "give back" your property to your lender. It won't save your home but it could help you to be in a better position to obtain another mortgage in the future. You may qualify if you are in default and don't qualify for any of the aforementioned options; if you have failed to sell your home prior to foreclosure, and if you don't have another FHA or VA mortgage in default.

Working with a HUD-approved, reputable housing or mortgage counseling organization can help provide you with the tools, resources and support you may need to stay in your home, get current on your mortgage and avoid foreclosure. Free phone counseling by HUD-approved counselors is available 24 hours a day, 7 days a week through the 888-995-HOPE hotline. The hotline's foreclosure counselors listen to the homeowner's situation, and then offer a customized workout plan.

If more counseling or contact with the lender is needed, the counselors will link callers to their lenders, to local NeighborWorks^® organizations and to other nonprofit organizations for specific help. In 2006, more than 40,000 homeowners at risk for defaulting on their loan, called the hotline and nearly half of them avoided foreclosure. You can also find information on U.S. Department of Justice-approved credit counselors who may be able to help you learn and consider various options to facing foreclosure or filing for bankruptcy, depending on your financial situation.