When you fall behind in your mortgage payments on your New Jersey home, it can feel like you’re drowning in debt.
Even if you’re able to make your monthly payment, catching up on a past due balance can be an overwhelming challenge.
There’s a few options that can help you to avoid foreclosure in New Jersey and maybe even keep your house, even if you’re seriously behind in payments. Lots of properties in New Jersey have been lost to foreclosure, but there are many ways to avoid it.
This is usually the tool of last resort. If you’re being crushed by lots of debt, bankruptcy can be a good way to negotiate with lots of lenders at once. It’s a lot of work, and it won’t help you avoid your mortgage. Different lenders will treat your circumstances in unique ways. You’d benefit from serious professional help – the best you can afford.
2. Making Home Affordable (MHA):
If your mortgage qualifies, you might be able to participate in MHA (Making Homes Affordable). Any loans backed by Fannie Mae or Freddie Mac must be considered for MHA, and other lenders choose to participate in MFA.
With MFA, your payments and/or interest rates might be lowered – even the principal balance (if your home is worth less than you owe). If you’re unemployed, you might be able to get your payments temporarily suspended or reduced.
MHA is a government program, so be prepared to deal with lots of paperwork. It ain’t free money – you gotta work for it.
3. Negotiate with your bank:
Lots of lenders routinely offer some level of assistance. You have to work hard at it, but you might be able to get your interest rate reduced, or a temporary reduction in your payment.
Most of the time, lenders will want to steer you to refinance your loan – but by the time you’re a few payments behind, you probably don’t qualify for a reduction in interest rate.
You have to work really hard to negotiate with a bank. Usually it takes lots of calls and the patience of a saint to get through the bureaucracy. Never, ever act rude. Ask for help from everyone you speak with, but don’t sound desperate. Explain your situation, offer supporting documents, and reassure the bank that you want to live in your home for the long term.
If you’re in need of a temporary fix and want to stay in your home, most banks can be forgiving. Sometimes they’ll be willing to add a few months of payments back onto the primary balance of your loan. It’s all dollars and cents to them, so remind them that you need their help to give them a lot more money in the long run. If they have to sell your house at a foreclosure auction, they’ll take a huge loss.
That sounds obvious, but for some reason bankers seem to forget it when saying no to someone in need of help.
A deed in lieu of foreclosure is a process which conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings.
The deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. Another benefit to the borrower is that it hurts his/her credit less than a foreclosure does. Advantages to a lender include a reduction in the time and cost of a repossession, lower risk of borrower revenge (metal theft and vandalism of the property before sheriff eviction), and additional advantages if the borrower subsequently files for bankruptcy.
A short sale is an option agreed upon by borrowers and lenders. In a short sale, the home is sold for less than the outstanding balance of the mortgage. The unpaid balance (known as the deficiency) may or may not still be owed by the borrower.
This option typically takes some time, as a few different lending institutions may own the mortgage. All parties who have a stake in the property must agree to the terms of the sale, and a potential deal could fall through if even one lender doesn’t agree.
We work with homeowners in New Jersey to find solutions to foreclosure problems.
We’ll let you know how we can help.