In the past, if you missed three house payments, the mortgage company would file for foreclosure in the fourth month, and would take your house 90 days later. Today, there are many opportunities for modifications and other remedies. Foreclosures are not filed as quickly as in the past.
If you miss some payments, the lenders usually assign a "loss mitigator" to your account. They will usually work with you to send you a "hardship" package, where you give information on income and budget and give some explanation for the missed payments. Often, your monthly payment has become far higher than the market rate monthly payment for your property. There are now many circumstances where you can negotiate lower payments. Sometimes, you can even get a reduction on the principal balance of the loan!
You should be aware that you may be liable for a tax on any foregiveness of a debt. If you negotiate for reduction in the balance of a first or second mortgage on a residence, or if they accept a short sale or payoff for less than full value, they may send you a 1099 and charge you with taxable income in the amount of the debt that is foregiven.
Please contact our office if you have questions about your circumstance.
