Robin Leonard

“Mortgage Workouts Even if you don’t qualify for any of the government loan modification programs or your lender doesn’t agree to participate, you may be able to arrange a “mortgage workout.” A workout is any agreement you make with the lender that changes how you pay the delinquency on your mortgage or otherwise keeps you out of foreclosure. Many lenders require this formal process even for short-term fixes. Here are some workout options your lender might agree to: • Spread repayment of missed payments over a few months. For example, if your monthly payment is $1,000 and you missed two payments ($2,000), the lender might let you pay $1,500 for four months. • Reduce or suspend your regular payments for a specified time, and then add a portion of your overdue amount to your regular payments later on. • Extend the length of your loan and add the missed payments at the end. • For a period of time, suspend the amount of your monthly payment that goes toward the principal and only require payment of interest, taxes, and insurance. • Let you sell the property for less than you owe the lender and waive the rest. This is called a “short sale.” It’s best to start the workout negotiations as early as possible. But before you contact the lender about a workout, you should prepare information about your situation, including: • a reasonable budget for the”
― Robin Leonard, Solve Your Money Troubles: Debt, Credit & Bankruptcy