If you can't keep up with your mortgage payments, you stand a much better chance of saving your home from foreclosure than you did just a few weeks ago.
Although banks and mortgage servicing companies have loudly proclaimed their desire to help families rework loans they can't afford, they've been very difficult to deal with over the past year.
Lenders have repeatedly refused to do what's necessary to lower monthly payments and avoid evictions, such as cutting interest rates and forgiving debt or refinancing borrowers into cheaper, fixed-rate loans.
But this fall the financial industry and a couple of government agencies have announced new foreclosure-prevention programs that might finally deliver the relief homeowners have been promised.
If the lender that made, services or owns your loan is among them, start by calling to see if you qualify for this assistance. (Click on the links for more information on how the program works, eligibility requirements and how to apply.)
Bank of America settled a lawsuit by agreeing to modify or refinance 400,000 deceptive subprime mortgages and option ARMs made by Countrywide Financial. Rate freezes and debt forgiveness are on the table.
Citigroup has halted new foreclosures and hopes to move more than 500,000 borrowers into loans that require them to pay no more than 38% of their pretax income each month.
JPMorgan Chase & Co. has also stopped filing new foreclosure cases and will modify 400,000 deceptive option ARM loans made by Washington Mutual, EMC Mortgage Corp. and Chase Bank.
IndyMac Federal Bank began cutting interest rates and lowering balances on unaffordable mortgages after it failed and was taken over by the Federal Deposit Insurance Corp.
3 ways to dodge rising fees
Why fees are up: President Obama just signed off on major reforms. Card issuers aren't happy. They're doing everything they can to make money off you before the regs kick in next year. What you're getting socked with: Up to 3% extra for foreign goods you buy in dollars (such as a ticket on Air France). Balance-transfer fees are up too: Several issuers have raised them as high as 5%.<img src="http://feeds.feedburner.com/~r/rss/money_pf/~4/FLWuWrCUHI0" height="1" width="1"/>
States fire shots in Internet sales tax war
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Retired? Flex your investing muscle
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Visa's surprising resilience
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Historic sites struggle during downturn
As the recession continues and Americans look for cheaper local summer getaways, historic sites are seeing visitor traffic tick up, and hope attendance will help them offset the painful drop in donations.<img src="http://feeds.feedburner.com/~r/rss/money_pf/~4/L2OqXhJYCMs" height="1" width="1"/>
How does your net worth stack up?
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Invest for the rest of your life
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Plenty of savings, no investing strategy
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Do the right thing in a recession
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Betting your retirement on real estate
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Retirement: How much should you save?
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Stress-test your retirement
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Find a financial adviser you can trust
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'Lock in losses'? Go for it
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target=_blank>Freddie Mac and Fannie Mae, the two government-controlled companies that buy billions of dollars worth of loans from banks and mortgage companies, have a new program to lower payments to 38% of borrowers' income. To find out if they own your loan, call and ask the mortgage servicing company that you send your check to each month.
If you can't qualify for one of these programs, you need to call your lender's loss mitigation department and ask to restructure your loan.
Our step-by-step advice on how to negotiate with your mortgage company can tell you what to ask for and what to expect.
But it's always a good idea to have professional help to make the right decisions and deal with all the phone calls, paperwork and roadblocks you'll encounter.
Here are three places you can get the assistance you need:
THE NATIONAL FOUNDATION FOR CREDIT COUNSELING is the nation's biggest and oldest credit-counseling organization.
One of its credit counselors can evaluate your finances, devise a plan to restructure your mortgage so that you can afford the payments and take that plan to your lenders.
Here's where to locate an NFCC member in your area.
BANKRUPTCY ATTORNEYS can negotiate with your bank or mortgage company and advise you about any legal action that might save your home.
You might, for example, sue to cancel your mortgage, claiming a mistake on your paperwork violated the Truth in Lending Act, a federal law that requires lenders to accurately disclose important aspects of your loan.
Such errors are fairly common, especially on loans written during the real estate boom when mortgage brokers were pushing documents through the system at a frantic pace.
Judges also have become more willing to grant what's called a rescission, even when the mistakes are relatively minor.
Filing for bankruptcy is another option. While judges can't force lenders to refinance or modify your loan, a Chapter 13 filing will:
- Temporarily stop foreclosure proceedings while your case is in court.
- Give you time to catch up on late mortgage payments.
- Reduce other debts so that you'll have more money available to spend on your mortgage.
Here are five questions that will help you decide: Is bankruptcy a way to save my home?
If you think you might qualify for free legal aid, go to www.findlaw.com to locate help in your area.
If you don't qualify for free legal help, a bankruptcy lawyer will cost anywhere from $2,000 to $5,000, depending on the complexity of your case and where you live. Many attorneys will accept a modest down payment and the balance over time.
To find an attorney who's an expert in this field, use the locator created by the American Board of Certification, a nonprofit group that tests and accredits bankruptcy lawyers.
The next best places to look are STATE FORECLOSURE PREVENTION PROGRAMS. Thirteen states are helping homeowners with unaffordable adjustable-rate loans save their homes.
Most assign a credit counselor to help you refinance into a fixed-rate mortgage with lower payments. Two states provide the money homeowners need to catch up with missed payments and keep their existing loans.
Not everyone can qualify for these programs, but if you can, they can save your home.
Check our complete list of state foreclosure prevention programs, including how they work and where to apply.
There's no magic solution if you're embroiled in a mortgage that's beyond your means. But for homeowners who see foreclosure looming, the worst thing to do is nothing at all. Work the phones, ask for help and ask again. When your home is at stake, all options are worth a try.
