subject: What Are the Options For Loan Restructuring If You Lose Your Job? by:Patricia Payne [print this page] National jobless figures released in March 2009 have revealed that the national unemployment rate stands now at 8.1 percent - which is the highest it has been in 26 years. Among those recently laid off or unemployed are millions of homeowners who still have to meet a monthly mortgage obligation, regardless of their job status. But is there something that a mortgage lender can do to help the unemployed during this economic crisis?
Mortgage lenders are usually willing to work with a borrower during a financial hardship, and all one has to do is ask. Rather than face the extreme expense of foreclosure on a home, a mortgage lender may offer some type of temporary adjustment, moratorium, forbearance, or even a permanent loan modification to help keep a borrower's loan current and out of default.
Interest Only Payments
One option a lender has is to agree that a borrower may make interest-only payments for a temporary time period. Depending on how long you have been paying on an amortized mortgage, you could save hundreds per month by paying only the accrued interest on your principal balance. If you just acquired a 30-yr mortgage last year, however, don't expect to save much since most of your monthly payment still applies mostly to interest.
Forbearance
A mortgage lender may opt to simply grant you forbearance on your required monthly mortgage payment for a limited time, usually three to six months. However, with this option, you can be sure that interest will still accrue and be added to your principal balance. By agreeing to forbearance, you will probably add more payments to the back end of your mortgage.
Full Loan Modification
If you qualify, you could even reduce your permanent mortgage payment through a loan modification with a lower interest rate, extended term, etc. Understand, however, that in order to qualify for a lower monthly payment modification, you must be able to meet the underwriting requirements and have a regular income that affords you to make that monthly obligation. Unemployed individuals and families with no regular income may not qualify for a full loan modification.
Following Citigroup's Footsteps
Lenders could follow the leadership of Citigroup Inc., who in March of 2009 announced that it was helping suffering homeowners who have lost their jobs. Citigroup determined to temporarily lower mortgage payments to around an average of $500 for qualified borrowers who have recently suffered a job loss and are two months or more behind on their mortgage payment. While qualified homeowners are paying the lower monthly payment, all interest and penalties will be waived. The mortgage payment reduction is only good for three months, but should give jobless homeowners a good head start in getting back on their feet.
Unemployment has hit millions of Americans. The residual effects of getting laid off and not having a job means additional stress of meeting mortgage obligations. If you have lost your job, be sure to contact your lender right away so they can begin working with you on a solution.
This article is intended for general information. Always seek sound financial and legal advice before making any financial decision.
