foreclosure, but it assumes you have sufficient income or other means to make temporarily higher payments. Perhaps you’ve gone through a short-term financial problem because of a layoff, decreased work hours, illness, or some other reason. If you’ve already recovered and are back to your full earning potential, a temporary repayment plan might work well. Perhaps you’re expecting a financial windfall. As HUD’s website (hud.gov) suggests, “The money might come from a hiring bonus, investment, insurance settlement, or a tax refund.” However, if further financial trouble lies ahead, a repayment plan may be setting you up for more trouble.
LOAN MODIFICATION
Loan modification is also known as restructuring. Your lender might be able to extend you some form of modification, which would make your loan more affordable. Your lender could modify the loan’s interest, extend the repayment period, or re- amortize the loan balance. Such modifications make it easier to continue repaying your mortgage, should your financial status change due to unavoidable circumstances (such as job loss or unexpected medical expenses). One advantage of loan modification is that if approved, it pauses the foreclosure process, giving you more time to save your home. There are many different loan modification programs, such as the Hardest Hit Fund (HHF) available in 18 states, meant to help struggling homeowners. There are also special loan modification programs for VA and Federal Housing Administration (FHA) loans, as well as bank programs. To qualify for a loan modification, you must prove that you’ve suffered a financial hardship and can no longer continue with your current loan payments. This means you provide your lender with supporting documents, such as paychecks, tax returns, and bank statements. You will then go through a trial period to prove
38
Powered by FlippingBook