What to do when you can’t make your mortgage payment

Owning a home is the American Dream, but unfortunately, that dream can sometimes turn into a nightmare. Houses are being repossessed at record rates.

In fact, according to RealtyTrac, more than 223,000 properties entered foreclosure this past September. This is nearly double the foreclosure rate in September 2006.

Fortunately, there are steps you can take to prevent foreclosure. If your mortgage is more than 30 days delinquent, the most important thing to do is to take action. Contact a HUD-certified housing counselor to help you identify your options.

HUD-certified housing counselors are trained on the loss mitigation practices of mortgage lenders and will be able to help identify what options are best for you and your budget. They will also know if you are eligible to apply for grant money and programs designed to help homeowners pay delinquent debts and keep families in their homes.

Here are some additional alternatives to foreclosure offered by the HUD-certified counselors at Money Management International:

-A partial claim is when the mortgage insurance company on your loan lends you the money to bring your loan current. Partial claim notes assess no interest and are not due until the first mortgage is paid off or the property is no longer owned.

-A straight modification is an agreement that actually changes the terms of your loan. The modification could lower the interest rate and payments. The lender could also use the modification to add the missed payments to your current balance.

-A forbearance is a written agreement where you send a lump-sum amount to the lender. Each month thereafter you pay your regular payment plus a portion of the outstanding balance.

-A permanent hardship occurs when you can no longer afford to make the mortgage payments. Your mortgage company may agree to delay the foreclosure on your house for up to 120 days and give you time to sell the house.

-A deed in lieu of foreclosure is when you voluntarily deed the property back to the investor (or government) in exchange for a release from all your obligations under the mortgage. Although you lose your house, it is usually preferable to foreclosure because of the cost and emotional trauma of a foreclosure.

-A short sale, also known as a short payoff, works when property values have declined since the borrower took out the mortgage. It allows you to sell for less than the full amount you owe.

Finally, you may also contact your mortgage company to work out a repayment plan. Most lenders will work with you if you communicate your desire to be responsible and avoid foreclosure. Just remember to be realistic.

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Kim McGrigg is a spokeswoman for the communications manager for Consumer Credit Counseling Services (CCCS) Southwest, a division of Money Management International, and the author of an online advice column "Ask Susan." To view the column or more information on managing debt, visit www.moneymanagement.org. Call the Yuma CCCS branch office at 344-5508 for a counseling appointment.