It sounds like you have been caught in the same foreclosure spiral as many borrowers over the course of the past decade. What is unique and somewhat alarming about your situation is that your lender agreed to accept monthly payments you could not afford.
Lenders typically apply a debt-to-income ratio of 43% - 50% to determine the mortgage payment you can afford. Your debt-to-income ratio is the maximum amount of your monthly gross income you can spending on debt expenses such as your mortgage payment, property tax, homeowners insurance as well as other debts such as credit cards and car, personal and student loans.
If you pay too much of your income toward your mortgage payment and other debts it is not affordable or financially sustainable for your in the long run. This is why lenders should make sure your debt-to-income ratio is manageable when they modify your mortgage.
To address your situation, your first step should be to contact your lender and speak with a loan counselor. Ask the counselor about the specific loan modification program you have and determine how they calculate your monthly mortgage payment. In some cases, the lender may have used inaccurate or incomplete information about your other debt payments or monthly housing expenses to determine your payment.
Additionally, your modification program may have a trial period during which you attempt to make a reduced mortgage payment based on the program's formula. If you can explain why you cannot afford the trial payment, the lender may reduce the payment further.
Please note that if you have high monthly expenses for credit cards or other debt obligations, the lender may request that you pay down these debts or negotiate lower payments, if possible. Doing this can reduce your debt-to-income ratio and improve your ability to afford your mortgage payment.
Establishing a direct line of communication with your lender and learning about your loan modification program better positions your to achieve a solution that works for both you and your lender. The more information you provide to your lender about your financial situation, the more likely they are to work with you.
Your other option is to ask your lender if there is another loan modification or distressed refinance program that better meets your needs. Some modification programs enable you to reduce your principal loan balance in addition to your payment while multiple assistance program allow you to refinance an underwater mortgage. Reviewing the full range of options with your lender may help you find a more affordable solution than you current modification.
Review Best Refinance Assistance Programs
If contacting your lender does not answer your questions or resolve your situation, we recommend that you learn more about HUD's Making Home Affordable Program, which includes counseling and foreclosure prevention services to help to homeowners who are struggling to pay their mortgage. I have provided the website and phone number for the Making Home Affordable program below.
HUD Making Home Affordable Program
Making Home Affordable Program Phone Number: 888-995-4673
"Making Home Affordable." U.S. Department of the Treasury & U.S. Department of Housing and Urban Development, 2019. Web.