Jim WinsettQ: I lost my job last year when my company downsized. I have done all I can to pay my mortgage on my own and I've even borrowed from family, but I'm at the point I may have to foreclose on my house. Are there any other options left for me?
A: Unfortunately, you're not alone in this situation. Fortunately, there are several state and federal programs that can help some people having difficulties making their mortgage payments.
Your first step should be to contact your mortgage company directly. Many are willing to discuss your current situation and to try to come up with a solution, including a loan modification, deferment, or repayment plan. Look at your mortgage bill to find the name and contact information for your particular mortgage provider.
For consumers who began experiencing difficult times within the last 36 months, both Tennessee and Georgia offer several programs. If you live in Tennessee, you can visit www.keepmytnhome.org or call 1-855-890-8073, and if you live in Georgia you can visit, www.homesafegeorgia.com or call 1-877-519-4443 to find summaries of the programs available, requirements for eligibility, and how to start the application process. Some of these programs are provided in the form of a loan at zero percent interest, and the loan is forgiven after five years if you stay in your home.
Keep My Tennessee Home does note, though, that as of July 31, 2014, the program has been limited to only those Tennessee homeowners who are having difficulty paying their mortgage due to either a long-term medical disability or to being in the military. It doesn't hurt, though, to contact them further to find out other resources available to you if you are not in either one of those categories.
The Georgia mortgage assistance programs are:
• Mortgage Payment Assistance -- Provides monthly mortgage payments directly to lenders for up to 24 months to assist unemployed and underemployed homeowners.
• Reinstatement Assistance -- Assists homeowners experiencing a hardship by offering a one-time payment to catch up on missed mortgage payments.
• Mortgage Payment Reduction (Recast and Modification Assistance) -- Assists homeowners experiencing a permanent reduction in income by paying the lender a one-time $30,000 payment to lower the monthly mortgage payment.
The federal government also has several loan modification programs available to struggling homeowners. Unlike the states' programs, the federal programs aren't loans, but ways to change the actual terms of your mortgage to make the payments more manageable. You can find out more about these programs at www.makinghomeaffordable.gov.
The federal programs include:
• Home Affordable Modification Program (HAMP) -- Modifies the terms of the mortgage to lower the monthly payments.
• Principal Reduction Alternative (PRA) -- Assists homeowners who owe more than their home is worth by reducing the total amount owed.
• Home Affordable Unemployment Program (UP) -- Assists unemployed homeowners by temporarily reducing or suspending mortgage payments.
BEWARE! Unfortunately, foreclosure prevention scams have increased because of recent tough economic times. Before consulting a provider who claims it can prevent your foreclosure, there are a few things you should do to avoid getting ripped off. For example:
• Avoid individuals/companies promising they can halt your foreclosure -- These companies cannot guarantee a particular outcome, so their promises are unrealistic (and, most likely, a lie).
• Always send your mortgage payment to your lender or the mortgage servicer. Even if someone is assisting you in the process, make sure to send your payments directly to your mortgage company or someone approved by your mortgage company, not to any other intermediary.
• Avoid providers who charge up-front fees. Federal law makes it illegal for mortgage assistance relief services to collect fees before you enter into any negotiated agreement about your mortgage with your lender.
• Never sign over your deed to anyone without consulting an independent lawyer whom you select. Some companies will attempt to have you sign over your deed, often claiming that you'll remain in the home under a lease while they negotiate on your behalf. This situation almost never ends well, because you no longer have ultimate control over the ownership (or occupancy) of your home. You should never sign over your deed without first consulting an attorney who hasn't been chosen by the provider.
• Always read what you are signing. Some individuals may attempt to trick you into signing over the deed to your property by burying it in other paperwork. If you don't understand every item and every page of all documents you're being asked to sign, DO NOT sign any of them until you have received a complete explanation from someone whom you trust, and who does understand.
• If the provider makes any promises, get all of them in writing.
• Don't do business with any provider who tells you not to contact your mortgage company. Any legitimate service provider should, and will, encourage open communications between you and your lender.
Before making any decisions, contact a counselor or organization to assist you in making the right choices regarding your mortgage.
HUD sponsored counseling agencies may be able to provide free advice to help you avoid foreclosure. Locate an approved counselor near you by going to www.hud.gov.
The Home Ownership Preservation Foundation is a nonprofit organization providing free counseling to help you learn about the programs available to you. Call them toll free at 1-888-995-HOPE (4673). Working with mortgage companies to avoid a possible foreclosure can be overwhelming, but with proper support, you can make the best decision for your family and your home. Be proactive and seek out the programs and counselors that will work in your best interest. And, don't wait until the last minute to do so -- give yourself as much time as possible to seek a solution that fits your situation.
Jim Winsett is president of the Better Business Bureau of Chattanooga.