Modifiying your mortgage during financial hardship

If you are experiencing a financial hardship, such as a job loss or divorce, there are programs to help you modify your mortgage and avoid bankrupcy and/or foreclosure. President Barack Obama's financial stimulus package included incentives to banks to help people who are experiencing financial hardships to be able to stay in their homes.

If you are unable to pay your mortgage, be proactive and contact your bank about mortgage modification right away. It's easier for the bank to help you if you are not already behind in your payments. Explain the hardship and ask what you'll need to do to get help with your payment. Explain that you are trying to avoid foreclosure and bankrupcy.

Most likely, your bank will want you to put your request in writing. Find out to whom the letter should be addressed. Be sure to include all relevant information, such as your name (and cosigner, if there is one), address, account number and phone number. Explain your hardship and that you want to keep up on your obligations and stay in your house. Ask the appropriate person at the bank to contact you right away.

You will probably need to meet with someone at the bank after they've reviewed all your information. At that point, they may give you an answer or tell you will hear from them at another time. Sometimes, depending on your income, they will be able to restructure your loan, either with a lower interest rate or longer period of time to lower your payment. They may also give you a temporary solution while you try to get back on your feet; such as a few months with no interest and no late fees.