In Boulder County – contact the Boulder County Department of Housing and Human Services to speak with a HUD-approved counselor.
Outside of Boulder County – contact the U.S. Department of Housing and Urban Development (HUD) to locate a housing counselor near you.
Refinancing is when you get a completely new loan that will pay off and replace your current loan. It could be from your current lender or from another bank. There are costs associated with refinancing, the same as any other loan. You will also have to qualify for a new loan, which could be difficult if you are already delinquent.
Refinancing can be a good option if you are not yet behind on your mortgage payments but you’ve had a change in financial circumstances that makes your current mortgage payments unaffordable in the long-term.
Forbearance is an agreement with your lender to temporarily suspend or reduce your mortgage payments. These agreements can last 3–12 months, but not more than 12 months. Once your financial circumstances have improved you will have to make arrangements to pay off the amount that you delinquent.
Forbearance agreements are most useful for temporary financial hardships, like job loss or unexpected expenses. Forbearance is often combined with a loan modification or a repayment plan once the borrower’s financial situation has improved.
- Repayment Plan
This is an agreement to pay off the amount you are delinquent on your mortgage within a certain amount of time. This payment is in addition to your normal mortgage payment.
Repayment plans are typically useful when the borrower is only a few months behind on the mortgage and had a temporary financial hardship that has been resolved. For example, a repayment plan might be useful after a short period of unemployment where the borrower is now making the same amount or more than before the job loss.
- Loan Modifications
Loan modifications are a change to some terms of your current loan designed to make payments more affordable. Increasing the term of the loan or reducing the interest rate are a couple ways to achieve a lower payment.
Loan modifications are useful where the borrower has had a long-term change in financial circumstances that make the loan unaffordable. This could be a job loss followed by a new job that pays less, or a long-term increase in expenses, like a new child or recurring medical expenses.
No matter what the reason for the modification, it is only useful if it decreases your payment to an affordable level. Never agree to a loan modification that does not make your payment manageable! If the new payment is not affordable, then you have not solved the problem.
There are many different types of loan modifications. The federal government has loan modifications programs that have very specific requirements. Lenders might have their own private loan modifications programs too, with different requirements than federal programs. If you don’t qualify for a federal loan modification program, it is worth asking if the bank has a private loan modification program.
- Pre-Foreclosure Sale
A pre-foreclosure sale is where the borrower sells the house before the foreclosure waiting period is over to pay off the mortgage. If the house is worth less than the borrower owes, this is called a “short sale” and has to be approved by the lender.
A pre-foreclosure sale is useful if you can’t or don’t want to stay in the home, but you do want to minimize your losses. Selling the house in a pre-foreclosure sale will generally mean you receive a higher price than if the home is sole in a foreclosure sale.
- Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is where the borrower offers the house to the lender in exchange for the lender forgiving the loan. Whether to accept the deed is up to the lender. The borrower cannot force the lender to accept the house.
A deed in lieu is useful if you can’t or don’t want to stay in the home, but you want to minimize your losses and speed up the process.
Talk to a bankruptcy lawyer if you are interested in bankruptcy.
For more information about foreclosure avoidance options, contact:
Boulder County Housing and Human Services
Colorado Foreclosure Timeline & Options fact sheet: http://www.bouldercounty.org/doc/hhs/foreclosure-timeline-options.pdf
U.S. Department of Housing and Urban Development
Locate a HUD-approved counselor near you: http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm