The Common Law

Foreclosure Contact the Lender?

I have barely been able to make my monthly mortgage payment over the last year. My mortgage recently increased, and I couldn't make the last payment. My lender sent me a past-due notice. Is it a good idea to contact the lender and tell them about my situation?

Yes. Open and respond to mail or other notices from your lender if you are having difficulty making the mortgage payments. Don't ignore the late payment and any problems you may have making regular mortgage payments in the future. The further behind in payments you become, the more difficult it will be to reinstate the loan and the more likely it will be that the lender will initiate formal foreclosure proceedings. As last week's "Common Law" discussed, foreclosure is a serious problem – it can cause you to lose your home, owe the lender additional money (if there is a deficiency judgment), and will damage your credit score.

Rather than ignore the problem, it is generally better to contact the lender as soon as you realize you may have a problem making payments. Lenders will sometimes offer options to homeowners to help them through difficult financial periods. Lenders are in the business of lending and collecting money, not owning homes, which is why lenders generally prefer to continue to receive mortgage payments rather than initiate foreclosure proceedings.

There are numerous resources that can help you learn more about foreclosure prevention options. For example, the U.S. Department of Housing and Urban Development provides free or low-cost housing counseling. HUD housing counselors can help you organize your finances, assist in negotiations with your lender, understand foreclosure law and your options. Call 800/569-4287 to find a HUD-approved housing counselor or check out HUD's website on foreclosure issues (www.hud.gov/foreclosure/index.cfm).

Read next week's "Common Law" to learn why you should beware of "foreclosure rescuers" or "foreclosure prevention companies."

Please submit column suggestions, questions, and comments to thecommonlaw@austinchronicle.com. Submission of potential topics does not create an attorney-client relationship, and any information submitted is subject to being included in future columns.

Marrs, Ellis & Hodge LLP, www.jmehlaw.com.

The material in this column is for informational purposes only. It does not constitute, nor is it a substitute for, legal advice. For advice on your specific facts and circumstances, consult a licensed attorney. You may wish to contact the Lawyer Referral Service of Central Texas, a non-profit public service of the Austin Bar Association, at 512-472-8303 or www.austinlrs.com.

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