Lenders Can Help Struggling Homeowners

For homeowners who find themselves struggling or unable to make their mortgage payments, there are several options that mortgage lenders can provide for temporary or long-term relief.  Each lender has specific solutions and not all options may be available, but the following can provide a starting point to a homeowner’s research.

For temporary problems:

1. Reinstatement: Generally, a lender will accept payment on the total amount owed in a lump sum by a specific date determined by the homeowner’s circumstances.  For example, the money may come from a tax refund or insurance settlement.
2. Forbearance: A lender may reduce or suspend payments for a short period of time.  A forbearance is often combined with a reinstatement.
3. Repayment Plan: A lender may allow a homeowner to catch up on missed mortgage payments by adding a portion of what is past due to the regular monthly payments until caught up.

For long-term or permanent challenges:

1. Mortgage Loan Modification: A lender may be able to permanently change the terms of a loan by:
   1. Adding missed payments to the existing loan balance.
   2. Lowering the interest rate which would decrease the monthly payment.
   3. Extending the number of years you have to repay, and by stretching out the time frame that should decrease the monthly payment.
2. Partial Claim: If the mortgage is insured, there is a possibility to get a one-time interest-free loan from the mortgage guarantor to bring the account current.  To qualify for an FHA partial claim:
   1. The loan must be between 4 and 12 months delinquent.
   2. The borrower must be able to resume making full mortgage payments.

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