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What might happen if I pay less than my mortgage payment?

Hello,

I have a 1st and a 2nd with two different companies on my house, currently we are in a bind, and really don't think we can afford this house any longer, in the area I am in I can't sell, and probably couldn't even do a short sale as this is one of the highest foreclosure rates in the country and their are a ton of new houses being build and houses for sale.

So my question is - if I start making payments less than my amount due, can they still foreclose? or will they finally try and work with me? I am current right now but when I tried to get the company to work with me they said they couldn't do anything. We can't [url=http://www.mortgagefit.com/refinance.html]refinance[/url] due to us being over extended, late on CC's etc.

So I was thinking we can pay $1400 on the first - our regular payment is $1817.00

and $400 on the second - our regular payment is $550-600

Can someone tell me what will happen if I start making these payments?

Thanks

larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jaiparis,

It is true that unless you default on a loan, the lender does not ask for a foreclosure. But if you continue to pay lesser than your regular due payment, then it is quite likely that they will report it to the credit bureaus and may also go for the foreclosure proceeding.

It will be better if you talk to your lender and ask for some alternative payment plan suiting your condition.

And FYI, the lender is not always willing to go for foreclosure. Once they go for it, they have to bear all the related costs attached to foreclosure. So, generally they avoid it initially.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

Anonymous's picture
Anonymous | Joined: June 8, 2004 01:06 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for the response, although I did call them and they basically told me they couldn't do anything, I was current on my payments and they couldn't help me, so if I pay less than due do you think they will then finally try and work with me?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

jaiparis's picture
jaiparis | Joined: July 15, 2007 09:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Sorry forgot to login but that last response was from me. What should I do as mentioned they won't even talk to me unless I'm in default, etc?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

kenstampe's picture
kenstampe | Joined: January 22, 2007 02:45 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Unlike what was said earlier, if you pay less than you owe, you will become in default of your loan and ultimately be at risk of losing the home to foreclosure. Once you fall behind, your lender can refuse anything other than the full past-due payment, meaning you will fall even further behind.

The real question to me is what are you going to do housing-wise?

If you plan on staying in the home, then plan on paying the note. If that means there are credit cards or other bills that go unpaid then perhaps you should consider the best way to budget your money. Not paying even ONE of your current obligations will impact your credit. However, there are different ramifications for not paying your VISA bill one month and under-paying your mortgage going forward.

While it is unfortunately true that the lender will not work with you if your payments are on time, by making your payments past due you do the following:

1) severely damage your credit as this is probably your largest debt, it negatively impacts your credit the most.

2) creates late fees and penalties you ALREADY don't have the money to pay.

3) PERHAPS puts the lender in a position to work with your new proposed budget, but what happens if they say no? You are gambling your house here.

I know you are in a difficult situation so I don't envy your decision and the process to reach it.

good luck.

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

jaiparis's picture
jaiparis | Joined: July 15, 2007 09:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for your response, we got ourselves in this situation because we got into real estate before we should have, we have two rental properties, and although we don't want to lose this house, between making up the difference for our other rental property as it's not rented for the full amount and our main house our total mortgage payments are $2800, we are not paying on our credit cards and it is still tight making these payments, if this house did go into foreclosure I suppose we would move into our rental, if we did this our total mortgage payments would drop to $1550.00. Actually, that is really what I would like to do, to try and get a fresh start, and settle with the credit card companies, to finally get back on our feet, but I do love this house, and with the negative reporting already from the CC's I don't really want a foreclosure on our credit to. I'm just not sure I see any light at the end of the tunnel, keep paying for this house we really can't afford now? I was looking into trying to do a short sale, but with all the properties in my area that are in foreclosure, up for sale and new ones being built I highly doubt we would get anything close to what we owe.

So other than trying to keep making the payments I'm not sure I have any other options?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

carnahandavid's picture
carnahandavid | Joined: December 21, 2006 04:07 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Jiaparis, I also feel you are in a difficult position. Foreclosure will be really bad for you and result in a big drop in your credit score. You should try to keep up with the payments and hopefully find a buyer for the house.

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larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Kenstampe,

Even I feel that Jai is gambling with his house. He really needs to plan his budget and if required, he may consult with a financial advisor of his state who will help him to decide all his expenses. As he has some credit card debts, he can also seek advice from any credit counseling agencies. They may help him to consolidate his debts.

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Samantha's picture
Samantha | Joined: September 16, 2005 11:59 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jaiparis,

Welcome to the forum.

I am not aware of how much you need to pay for your cc debts, seems like it's a good amount of unpaid debt. Well, I understand you're having a tough time managing your mortgage payments and there's a chance that you may lose the home, I feel you should consult a debtconsolidation company and consolidate your credit card debts asap. This will help you keep aside some amount of money in order to pay off your loan payments. Why not have a talk with the lender and request him to provide you with an alternative payment plan.

Currently you are not behind on your payments isn't it? It's what you're anticipating that you won't be able to cover all your debts. I would ask you the same question that Ken spoke about � what exactly are you planning to do with your house. This will actually help you decide whether you pay off your mortgage and less of your cc debts or consolidate cc debts such that it becomes easier for you to pay down your mortgage debt.

Hope this helps...

God bless you.

Samantha

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

jaiparis's picture
jaiparis | Joined: July 15, 2007 09:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Thanks for the responses, I am a member of the debt CC community, I can't consolidated my CC's as the payment was the same as what I was trying to make. I currently owe over 70K on CC's most of this was from the real estate houses we fixed up. So on that end I'm putting funds away to try and settle, currently about 600, would like to put more, but as I said it's pretty tight right now. So my current plan is to talk to a real estate agent this week and see what he suggests. I am going to keep making payments and try and come up with some extra funds, and we'll see what the real estate agent says.

I'll keep everyone updated..

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sara's picture
sara | Joined: July 5, 2006 03:16 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

That's the spirit Jaiparis. I think you should go ahead and consult the agent.

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jaiparis's picture
jaiparis | Joined: July 15, 2007 09:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hello everyone, thought I would provide an update, spoke with the real estate agent and not much has changed, he said the short sale or foreclosure would affect our credit about the same, and as I mentioned our credit is already in the tank, and we wouldn't need to worry about buying a house as we have the rental we can move into. So here is what we are going to try, we are not making this months payment, we have the money in saving so if we need to next month we could catch back up, but what I'm thinking is that maybe they will work with us, I am going to talk to our lenders next month, if there is anyway to get our payments both the 1st and 2nd down to 1900 then in Nov we put the rental up for sale, if the rental doesn't sell, we will have to let that one go into foreclosure, but at 1900 and not paying for the rental we would still have about 1K in funds each month which give us some breathing room and will allow us to keep our house and get back on track, although we hope the rental will sell thus we can [url=http://www.mortgagefit.com/foreclosure/17ways-avoid.html]avoid foreclosure[/url]. So we will see at this point if it doesn't work out it's really not in our interest to keep this house and keep drowning in debt, I think it would be better to take the hit on our credit, get back on track, settle with the CC companies and be free in clear in two years. At least then I see some light at the end of this nightmare.

Well any thoughts?

Like | Dislike | Share | Posted: Fri, 02/05/2016 - 00:09 | Post subject:

Caron's picture
Caron | Joined: July 19, 2005 08:37 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jaiparis,

It's good that you have come to a decision. Whether you keep the house or not is really hard to decide especially if you have spent a lot of money on it. But it's quite true that you should keep drowning in debt just to keep a home which is going to cost you more and more. So, as far as I understand from your post, you're not making payments this month and if required, you would do that next month.

You're letting the house go into foreclosure if the rental property does not sell. But if the rental sells, then I guess you won't allow the lender to foreclosure. In that case, you will be paying off the entire mortgage with the sale proceeds I suppose. Ok, that seems pretty calculative..let's see what the lenders have to say.

Good luck and keep us informed.. :)

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jaiparis's picture
jaiparis | Joined: July 15, 2007 09:15 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

Yup I'll keep you updated, I'm really hopeful that the lenders of our primary will work with us to make this house more affordable. If so then we can put the rental on the market as the loans for that one are much more reasonable and we might have a chance at selling it. Will have more info next month once my lenders call me to ask why I haven't paid this month..

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miller_st's picture
miller_st | Joined: January 17, 2007 04:47 pm | Posts: 0 | Location: New Jersey | 00 Dollars($)

[quote:149fe709fb]I'm really hopeful that the lenders of our primary will work with us to make this house more affordable. [/quote:149fe709fb]

You can expect cooperation from your lender as he also is not too eager to take away a house through foreclosure if there are chances that payments can be continued by borrower if few adjustments are made.

Miller

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larry2's picture
larry2 | Joined: June 27, 2007 02:50 am | Posts: 0 | Location: New Jersey | 00 Dollars($)

Hi Jaiparis,

It is better if you inform your lender now that you were unable to make the payments for this month and negotiate with him that you'll continue the payments from the next month.

If you do not inform him now, there are chances that he may suddenly raise some problems for you. As you are already in a financial distress, it is better not to do anything that may end up in further troubles for you.

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