Federal Deposit
Insurance Corporation

Fall 2010

Audio (MP3 5.4 mb)

Having Difficulties Paying Your Mortgage? Pay Attention to These Tips

Mortgage payment problems and foreclosures continue to dominate the news. What should you do if you are having difficulty paying your mortgage? Here are reminders and updates from FDIC Consumer News, mostly about refinancing opportunities and loan modifications available through the federal government's "Making Home Affordable" program.

Ask your lender or loan servicer about options for avoiding foreclosure. "Inquire about your eligibility for the government program and the possibility of lowering your monthly payment by reducing the interest rate, extending the length of the loan or forgiving some of the principal," suggested Sam Frumkin, an FDIC Senior Policy Analyst.

If you think you need help working with your lender, contact a housing counselor approved by the U.S. Department of Housing and Urban Development (HUD). A trained, reputable, non-profit counseling agency will provide free or low-cost services. For a referral to a HUD-approved counselor, call 1-800-569-4287 or visit www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.

Beware of foreclosure rescue and loan modification scams. These frauds typically involve criminals who charge large upfront fees and falsely "guarantee" to rescue a home from foreclosure. Homeowners should avoid any company or individual who requires a fee in advance, "guarantees" to stop a foreclosure or modify a loan, or recommends to stop paying or speaking with the lender. In some cases, homeowners have lost their homes while waiting for results from con artists who had promised to help them. A new Federal Trade Commission rule prohibits these practices by nonbank providers of mortgage relief services.

The use of a HUD-approved housing counselor also can help you avoid foreclosure rescue scams.

Learn more about the government's programs. Go to the Web site www.makinghomeaffordable.gov for detailed information. You can also learn more by speaking with your lender, loan servicer or housing counselor. The Web site can help you determine if you may be eligible, but only the servicer of your loan can tell you if you qualify. Here's a snapshot of the main programs:

• The Home Affordable Modification Program is designed to help as many as three to four million homeowners at risk of losing their homes by reducing the monthly payments on their mortgages.
• The Second Lien Modification Program enables homeowners to reduce the cost of their second mortgage if their first mortgage has already been modified under the Home Affordable Modification Program. Examples of second mortgages include some home equity loans and loans that homeowners may have taken to help with the down payment on their home.
• The Home Affordable Refinance Program is intended to help people who have been unable to refinance into mortgages with a lower interest rate because their homes have decreased in value.
• The Home Affordable Foreclosure Alternatives Program is designed for homeowners who can no longer afford to stay in their homes but want to avoid the stigma of foreclosure. This program is for people who agree to leave their property for more affordable housing after either selling the home for less than what they owe on their first mortgage or voluntarily transferring ownership to the loan servicer.