Mortgage Rate News

Right now, there is a growing buzz surrounding the decision that some make to go ahead and walk away. Indeed, in some circles, foreclosure is beginning to be viewed as a smart financial decision. Even José Canseco (the retired baseball player) decided to simply walk away from his California property in Encino, letting it fall into foreclosure.

But for many of us, foreclosure is not a very attractive option. You have to find a place to live, and your credit score takes a major hit. For most people, foreclosure is an option of last resort. The good news is that if you talk to most mortgage lenders about your concerns — and you do it early enough, forbearance is a possibility.

What is mortgage loan forbearance?

One of the best explanations of mortgage loan forbearance that I have seen is from Businessweek:

A forbearance is not the same as loan forgiveness. Ultimately the mortgage payments have to be reinstated, and anywhere from three to six months of missed payments have to be accounted for. The very lucky—and reasonably well-off—can pay off the amount accumulated during forbearance in one lump sum. But for those who still find themselves in short-term financial trouble, most lenders offer specialized payment plans in which the borrower agrees to add a portion of the missed payments to the mortgage until the account is current.

Forbearance is a way for you to save your home from foreclosure if you are going through a rough patch. But you have to talk to your lender early. People who avoid their mortgage lenders for months and months while the notices and missed payments pile up will find that they do not have many options. On the other hand, those that are up front with their mortgage lenders, and who make it clear that they want to find a way to make it work, are more likely to have success in warding off foreclosure.

Tags: foreclosure, mortgage lenders, home mortgage loan, mortgage loan forbearance,
borrowers, jose canseco