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What You Can Do When Your Mortgage Payment Seems Impossible

If You Are Having Difficulty Making Your Mortgage Payments

Getting behind in mortgage payments can seem overwhelming. It is important to get a good support system or help in making choices. Don’t make this decision alone! Here are some things to think about to help improve the situation:

· Call your lender to negotiate arrangements to avoid further delinquency
· Consider all financial resources to draw from to make your next month’s payment such as a 401K hardship withdrawal or a part-time job
· Read all your mail from your lender to make sure you understand the situation
· Contact your local HUD-approved counseling agency to discuss all your options

Your local HUD-approved counseling agencies in Fort Collins are:

Neighbor to NeighborNeighbor to Neighbor
provides housing counseling concerning home ownership, reverse mortgages and foreclosure prevention.
Consumer Credit CounselingConsumer Credit Counseling
provides assistance on avoiding foreclosure, reverse mortgages and credit assistance.
Colorado Foreclosure HotlineColorado Foreclosure Hotline
is a free service of Brothers Redevelopment, a HUD approved non-profit housing counseling agency. They work with Neighbor to Neighbor and Consumer Credit Counseling in a cooperative effort to provide clients options when facing default and foreclosure. Call 1-877-601-HOPE.

Foreclosure Prevention Options

If you have been served with a foreclosure notice or have become two months behind on your mortgage payments, here are some things to keep in mind: Foreclosure on your home is always the worst possible resolution of a mortgage problem and it doesn’t have to happen. Even if you have been served with a foreclosure notice, there is still time for you to “cure” the foreclosure and reinstate your loan. Your housing counselor can help you to explore ways to do this including:

1. Applying for a special second mortgage loan
2. Selling assets (car, boat or the house itself)
3. Cashing in retirement accounts (hardship withdrawal)
4. Asking for help from family and friends

You should contact your mortgage lender as soon as possible to see if the lender would accept a plan for you to “catch up” on your payments over a period of months. Your lender may also be able to provide a temporary reduction or suspension of your payments if you have had a family emergency or a loss of income. You may also want to work with your lender to refinance your loan to something you can afford, including a temporary “interest only” loan. If you have an FHA loan, your lender is generally required to accept payments of at least half of the total amount due unless you are more than four full payments behind in payments. Declaring a Chapter 7 or 13 bankruptcy could delay a foreclosure action, but has serious consequences for your credit. This is something you must talk to an attorney about before you proceed.

Options Involving Leaving Your Home

This legal action results in the public sale of your property which will cause you to lose any equity (cash value) your home may have. You may also face a deficiency judgment for other debts from a second mortgage or other liens after the sale. This should be a last resort and you need to do everything you can to avoid foreclosure. This also causes very serious problems in your ability to get credit for up to seven years.

Selling Your Home.
You may sell the home any time before it is auctioned in a foreclosure action and up to 75 days after the sale during the “redemption” period. You need to seek the help of a realtor to make sure your house is sold at the best price within the time limit.

FHA Pre-foreclosure Sale. If you have an FHA loan, please contact your lender to see if this program is right for you.

Short Sale. Even if you need to take a loss to sell your property, your lender may be willing to accept a loss (short pay) to make up for the insufficient market sales price. Have your realtor contact the lender to see if this is an option.

Deed in Lieu of Foreclosure. This is when you sign your property over to the lender to fully satisfy the debt. You will lose your home, but you will not face foreclosure.

Cash for Keys. If you are unable to sell your home during the redemption period after a foreclosure has taken place and you are about to be evicted, your lender may simply allow you to hand the keys over to the mortgage company without the embarrassment of a legal eviction.

TO UNDERSTAND MORE about foreclosures and Colorado Law, contact your housing counseling agency, mortgage lender, attorney or visit The Colorado Housing Counseling Coalition.