If you're struggling to maintain your mortgage and you're falling behind in your payments, modifying your mortgage may give you the additional time you need to get back on your feet, get your loan current and protect your credit history. While companies may advertise mortgage modification assistance for an upfront fee, understanding the laws protecting you as a consumer and where to find free help will prevent you from getting taken advantage of, or of falling victim to mortgage fraud scheme.
MARS Rule Protects Consumers
The Federal Trade Commission protects consumers from paying upfront for any mortgage modification assistance. The Mortgage Assistance Relief Services Rule makes it illegal for a company to charge you for services before performing any work on your behalf or getting any results. Additionally, if a company does charge a fee, they must clearly disclose and present those fees to you in writing beforehand.
Talk With Your Bank
Housing counselors and lenders alike agree the first step in preventing foreclosure or getting really behind in your mortgage is to call your lender as soon as you believe you're likely to have problems meeting your monthly payment. Talk with your lender about your current financial hardship and whether it's temporary or long-term. Be prepared to support your case with documentation.
Mandatory Mediation In Judicial Foreclosures
If you're three to four payments behind on your mortgage you may be facing foreclosure in the near future. If you live in a judicial foreclosure state, mediation may be mandatory for you and the lender. For example, in Delaware a housing counselor will sit down with the lender's representative and the borrower to find a way to avoid foreclosure. Mediation is an opportunity for you and the lender to discuss options such as a loan modification or repayment plan that allows you to make additional payments on the loan until it is current.
Making Homes Affordable
The Making Homes Affordable program offers several solutions to borrowers based on a number of criteria and scenarios. For example, if you've lost your job or you're underemployed you may qualify for the Home Affordable Unemployment Program which could lower your mortgage payments to 31 percent of your income or suspend payments for 12 months. A HUD approved counselor can work with you during the process and help you prepare the necessary documents for your mortgage company.
Hope Now Program
The HOPE NOW Counseling Alliance consists of partnerships between lenders, housing counselors, investors and industry mortgage leaders. Created to provide housing counseling and foreclosure avoidance advice, the HOPE NOW Alliance offers free counseling with HUD certified counselors to help you work with your lender and find the right solution if you're considering foreclosure or need to modify your loan. Additionally, through the Homeownership Preservation Foundation, the alliance established a 24-hour hotline you can call to speak to a counselor if you need free assistance or advice.
HUD Approved Housing Counselors
In addition to non-profit agencies, foreclosure prevention and housing counseling is available to you through your local HUD office. Counseling agencies participating in HUD's counseling programs can't charge fees for these particular services if you are unable to afford them. The housing counselor will help identify what programs you qualify for and help determine alternatives to losing your home to a foreclosure.
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