Talk to your lender: What to expect

By Jan Lindsey

If you have missed a payment on your mortgage or think you are about to, the best thing you can do is call the company to which you send your payments.  You don’t want to wait to make the call until they are hunting you down.

Your lender will be as interested in keeping you out of foreclosure as you are in sparing your credit and staying in your home, said Jim Eberle, vice president of communications for the American Bankers Association. Foreclosures are very expensive for the lender.

During the process of trying to find an appropriate fix for the situation, the lender will assess your situation -- so you need to be prepared to provide income and expense information for your household. Unless your mortgage will be too big for you to pay no matter what steps are taken, Eberle says one of three things is apt to happen.  Eberle says the lender may – in this order – extend your mortgage period, which means adding months to the back end of your loan to give you more time to pay; reduce your interest rate; or reduce the principal owed. It is rare that the principal amount owed on a mortgage is reduced.  Any loan modification or refinancing will be expected to remove the risk or default to protect both you and the lender.

How long will this take?

Settle in. This is likely to be a drawn-out process.

As the global recession has dragged on and jobs have continued to be lost and homeowners have faced furloughs and pay cuts, lenders have been deluged with requests for help.  Persistence will pay off, Eberle says.  When you are ready to contact your lender, call the number on your mortgage bill or payment book.

If you are uncomfortable calling your lender directly, call HOPE NOW. The organization is an alliance of professionals from the mortgage industry assembled to help troubled homeowners. They will do a lot of the legwork for the lender and can act as an intermediary for you.  To reach HOPE NOW, visit hopenow.com or call 888-995-HOPE (4673).