When you fail to make your mortgage payment on time, your mortgage is said to be delinquent. There are various ways to resolve delinquency. However, if this is not possible, the lender may have to proceed with the foreclosure of your property.
Understanding delinquent mortgage
If you miss your payment, you will be charged with a late fee. The amount of this fee depends on the lender and the terms and conditions on the borrower’s mortgage. Some lenders usually choose to wait for a minimum of 30 days of late payments before declaring and commencing delinquency procedures.
Since foreclosure is an expensive procedure for the lenders, which usually leads to them losing money, it is the last action taken by lenders in the case of a delinquent mortgage. However, if your financial difficulties are temporary, you could ask your lender for a forbearance agreement. Under such an agreement, the bank can allow you to pause your payments or pay as much as you can afford to for a little while.
Ways to get your delinquent mortgage payment forgiven
Other than affecting your credit score, a delinquent mortgage can also affect your ability to get loans in the future. So, if you have a mortgage, make sure you try and pay on time without defaulting. However, if you do default, there are some options that might help you. Here are some ways that your mortgage payment could be forgiven:
Repayment at the end
If the late payment is due to a financial hardship, you could get repayment plans that will allow you to tackle your mortgage with a little more ease. Your lender may allow you to skip the payment for now and put it as due for the term end of the loan.
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Forbearance
If you are experiencing a temporary hardship, under a forbearance agreement, the lender may let you pause on your payments for up to 90 days. In such a case, you will have to repay the missed payments later, for which you can also set a plan that will let you spread out the balance.
Loan modification
There are two types of loan modification programs—private and federal—that reduce your interest rates and extend the term of your loan. You might even qualify for a principal reduction under a loan modification program.
If the foreclosure procedures haven’t started, you can apply for a repayment program that helps you spread out the balance and pay the loan without losing your home.
Sale
If you have permanent financial difficulties and can’t even sell your home since you owe more than your home’s worth, you can try and convince your lender for a “short sale.” In such a scenario, the bank will allow you to sell your home and even forgive the balance you owe. Some lenders might allow this and some might not. To find out if you have the option, you can have a discussion with your bank.
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