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SMART LIVING:

You've Got To Pay To Stay

How To Come Back from the Brink of Foreclosure

ROCKVILLE, Md.--Interest rates are at all-time lows, home sales are breaking records and the dream of home ownership is becoming a reality for more and more Americans.

But for some, that dream has turned into a nightmare. Almost 1 in 20 mortgages are delinquent.

"As interest rates drop and the housing market continues to soar, people are taking out bigger and bigger mortgages," said Mike Kidwell, vice president and co-founder of Myvesta, a financial health center. "Many people are stretching their finances to the limit by purchasing more house than they can truly afford. With so much of their income going towards mortgage payments, there's no safety net when a problem comes up."

Kidwell advises that anyone having trouble paying a mortgage, or thinks this might happen in the near future, should keep in touch with the lender. "The worst thing you can do is cut off all contact with your lender," he said. "Too many people panic and avoid telling the lender about their situation, then try to bargain at the last minute when their house is already foreclosed upon. By that time it's usually too late."

Kidwell offers these tips if you're having trouble making your mortgage payments:

  • Contact your lender immediately. Many lenders have programs available to help you keep your home;
  • Contact a mortgage broker about refinancing your loan; you may be able to lower your monthly payment with a new mortgage;
  • If you have Private Mortgage Insurance (PMI), contact the insurance holder--they may lend you the money to become current; and
  • Consider borrowing money from friends or family.
"A foreclosure sale is a painful and humiliating process," Kidwell said. "We encourage people to do everything they can to avoid it. That means recognizing the number one warning sign--always being late with your payment."
Myvesta offers a booklet, "What to Do When You Can't Pay the Mortgage." It can be downloaded free online from Myvesta.org, or for a printed copy of the publication send $5, payable to Myvesta; send to Can't Pay The Mortgage Publication, Myvesta, P.O. Box 8587, Gaithersburg, MD, 20898-8587. An audio recording of an actual foreclosure sale is available online at Myvesta.org.

Founded in 1994, Myvesta, a nonprofit organization formerly known as Debt Counselors of America, offers a residential treatment program, support groups, crisis resolution, online bill management, bankruptcy alternatives, creditor problem resolution, debt management and financial coaching.


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This story was published on August 7, 2002.
  
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