Trying to Get Lender to Modify Our Mortgage Again. – Kay

“Dear Steve,

My husband and I bought a home in 2006, applied for a payment modification in 08 or 09 it was approved. My husband income has dropped this year and we’re now having a hard time making payments. We’re 3 months behind on our payments, applied again for a modification and it was declined

My question is do we continue to wait it out and see if the lender wants to work out something to avoid foreclosure? Or struggle to pay the payment and start the process of a short sale? Are lenders more likely to forgive the unpaid balance the less we’re behind?


Dear Kay,

According to this question answered on the site today, Andy Faria said:

Should you fall behind on mtg payments? Maybe. I have found that it certainly does help with a short sale approval if you’re past due. I have also had short sales approved while the homeowner remains current. The difference I find is that many of the lenders will drag out the review process while you remain current, and they tend to move a bit quicker when past due. The other issue that comes up when current… the bank is more likely to ask you for something in return for allowing the short sale. They may not offer to waive the deficiency, they may ask for a promissory note, or ask for a cash contribution from you as a condition of approving the short sale. Of course if you fall behind on payments, you’re credit rating will be damaged, and if it goes on for long enough, you may eventually face foreclosure. To fall behind or not is up to you, and is a decision that only you can make.

It seems to me that the chances of getting a second affordable modification are less likely and that you should have a good Plan B already thought through if the lender does not agree. There is nothing that says any lender has to agree.

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The heart of this matter is really what the future may hold and I realize that nobody has a crystal ball but does your expect his income to go up or down from this point?

If you are behind in your mortgage payments, I’m curious if you have other debts stacking up as well. Maybe you can give me some additional information about your bigger picture and we can work this out to get you headed in the right direction.

Please post your responses and follow-up messages to me on this in the comments section below.


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Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
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