How to Talk to Your Home Lender
If your mortgage is delinquent, or if you fear it may be in the near future, the most important thing to do is to take action and contact your lender.
Many lenders engage in responsible loss mitigation practices. For example, if you have the amount of money required to bring your loan current, the mortgage company will reinstate your mortgage. You may also contact your mortgage company and work out a repayment plan. Some other alternatives to foreclosure include a partial claim, straight modification, a permanent hardship, and a deed in lieu of foreclosure.
Before it gets to that point, you can (and should) start a dialogue with your lender to figure out the best option for your situation.
Tips for Asking for Hardship Assistance from Your Mortgage Lender
Better too early than too late
Don't wait until you've missed payments. Reach out as soon as you anticipate financial difficulties. Lenders may be more willing to work with you if you're proactive. But more importantly, you may have more options the earlier you take action. If you wait too long and fall too far behind, you may be too delinquent to find a suitable solution.
Have all of your information ready
Before contacting your lender, gather relevant financial information such as income statements, expenses, and any documentation that can support your situation. This will help you present a clear picture of your financial status and provide the kind of detail your lender may need before offering assistance.
Be transparent and truthful
You may be feeling bad about your struggles, but it doesn't help to make up a reason why you need help. Clearly explain your situation, including the reasons behind your financial difficulties. Lenders appreciate honesty and may be more willing to work with you if you're upfront about your circumstances.
Know your finances
Be prepared to discuss your budget and demonstrate that you've thought about how much you can realistically afford to pay. This helps in negotiating a solution that is feasible for both parties.
Ask about available options
Inquire about any assistance programs or resources that the lender may have to help homeowners in financial distress. Some lenders offer special programs or can direct you to organizations that can provide assistance.
Alternatively, you may benefit from a loan modification or forbearance. In a modification, the terms of the loan are altered to help you manage the payment. In a forbearance, you're able to suspend or reduce payments for a set period of time.
Follow up in writing
After your conversation, send a follow-up letter summarizing what was discussed. Include any agreements or arrangements made during the conversation. This serves as a written record and can be useful for reference later.
Keep communication lines open. If you've agreed on a modified payment plan, make sure to adhere to it. If your financial situation changes, inform your lender promptly.
Seek professional advice
If you find the process overwhelming, consider seeking advice from a housing counselor or financial advisor. They can provide guidance on navigating the conversation and exploring available options.
If you're worried about a potential foreclosure, seek help from a Department of Housing and Urban Development (HUD) approved counseling agency, like MMI. We offer help for homeowners and have housing counselors who are trained on loss mitigation techniques and can help you navigate all of your options.