Loan Workout Solutions
to Avoid Foreclosure
and foremost, if you can keep your mortgage current, do so.
if you find that you are unable to make your mortgage payments, you
may qualify for a loan workout option. Check with your lender to find
out which of these options (or others) may be available.
Your lender may be willing to discuss accepting the total amount
owed to them in a lump sum by a specific date. They will often
combine this option with a forbearance.
Your lender may allow you to reduce or suspend payments for
a short period of time after which another option must be agreed
upon to bring your loan current. A forbearance option is often
combined with a reinstatement when you know you will have enough
money to bring the account current at a specific time in the
future. The money might come from a hiring bonus, investment,
insurance settlement, or a tax refund.
Plan: You may be able to get an agreement to resume making
your regular monthly payments, in addition to a portion of the
past due payments each month until you are caught up.
it appears that your situation is long-term or will permanently
affect your ability to bring your account current:
Modification: If you can make the payments on your loan,
but you do not have enough money to bring your account current
or you cannot afford the total amount of your current payment,
your lender may be able to change one or more terms of your
original loan to make the payments more affordable. Your loan
could be permanently changed in one or more of the following
the missed payments to the existing loan balance.
the interest rate, including making an adjustable rate into
a fixed rate.
the number of years you have to repay.
Advance: If your mortgage is insured, you may qualify for
an interest-free loan from your mortgage guarantor to bring
your account current. The repayment of this loan may be delayed
for several years.
workout options include expenses that you will be expected to
pay, such as recording fees for a loan modification. Because every
situation is different, you should be sure that you understand
all the fees before signing any papers. To minimize the costs
and particularly legal fees which can be very expensive, call
your lender as soon as you realize you may be in trouble.
information is brought to you through the collaborative efforts
of HUD/FHA, the Department of Veterans Affairs, Department of Labor,
Fannie Mae, Freddie Mac, and members of the mortgage industry.