by Thomas D. Richards, Lawyer Referral Service Panelist
There are a variety of options during what is called the “pre-filing” stage of foreclosure. This is the early stage when you are behind a few months (60 to 90 days) on your mortgage, the collection is still being pursued by your lender (typically a bank), and the matter has not gone out to a law firm yet for foreclosure filing. The first option is a “repayment plan,” in which you pay the amount that is back owed over a period of time, but you also keep up with your current monthly payment. A second option is a “reinstatement plan,” in which you pay the full amount that is back owed, including interest and penalties, the lender reinstates your mortgage, and you are back where you were before you got behind in payments. A third option is called “loan modification.” This is when the lender actually changes the terms of your loan, perhaps giving you a lower monthly payment or a little better interest rate. These loan modifications may be temporary or permanent, and are part of the federally sponsored Home Affordable Mortgage Program (HAMP) legislation that was passed a few years ago. HAMP encourages lenders to help qualified borrowers avoid foreclosure by modifying their loans to make them affordable and sustainable.
In those first two to three months of missed mortgage payments, it is critical that you talk to the lender to try to work out your situation.