Your first step should be to work directly with your current lender to try to modify your loan as your lender is the only party that has the ability to change the terms of your mortgage.
There are also multiple refinance and principal reduction programs designed to help borrowers who are underwater on their mortgage, which means your outstanding loan balance is more than the value of your home.
I have summarized some of the more popular distressed refinance programs below. You can review more comprehensive information about each program by clicking the title.
High LTV Refinance Option. The program does not use a maximum LTV ratio, minimum credit score or maximum debt-to-income ratio for most borrowers which enables more distressed borrowers to refinance their mortgage. To be eligible for the High LTV Refinance Program, your mortgage must be owned Fannie Mae. Similar to Freddie Mac, you do not apply for a mortgage directly from Fannie Mae but your mortgage may be sold to them and you make your loan payment to your original lender. So even though you may make your mortgage payment to a different lender, your loan may be owned or secured by Fannie Mae.
Enhanced Relief Refinance Program. The program does not apply a maximum loan-to-value (LTV) ratio which makes it applicable for borrowers who are underwater on their mortgage. The program also uses more flexible qualification requirements. To be eligible for the Enhanced Relief Refinance Program, your mortgage must be owned or secured by Freddie Mac. Although Freddie Mac is not a lender, in many cases your mortgage is sold to them and you continue to make your payment to your original lender.
FHFA Principal Reduction Modification Program. The program is designed to help eligible, delinquent borrowers become current on their mortgage, reduce their mortgage payments and avoid foreclosure. You should have already been notified if you are eligible for the FHFA Principal Reduction Modification Program but we include on this list for informational purposes.
Other Distressed Refinance Programs. Review a number of other refinance programs for borrowers who are behind on their mortgage. These programs may enable you to lower your mortgage payment or principal loan balance so that your mortgage is more affordable and sustainable financially.
Making Home Affordable Program. HUD offers several programs, counseling and help to borrowers who are struggling to pay their mortgage. We recommend that you contact HUD directly to learn more about the Making Home Affordable Program offerings.
You and your mortgage must meet certain qualification and eligibility requirements to participate in any of the programs outlined above. Your lender's cooperation is also helpful so I recommend that you contact your lender to determine if your mortgage is eligible for any of these programs. Your lender may also offer refinance, principal reduction or loan modification programs that help you afford your mortgage and stay in your home.
You can also contact your local HUD-approved housing department or community housing organization to learn more about the homeowner assistance programs they potentially offer. These organizations may provide anti-foreclosure programs or offer other local programs for distressed borrowers.
To find your local housing commission select your state on the HUD State Resources Website and and click "Learn About Home Ownership" to be directed to information about programs available to you.
Finally, if you work with a third party, be aware of individuals or companies that promise to modify your mortgage or help you avoid foreclosure for an upfront fee as these individuals and companies are typically scams.
If someone is offering you a solution that seems to good to be true, they are probably attempting to take advantage of your misfortune. You should never be required to pay money upfront to learn more about foreclosure prevention or loan modification programs.
Additionally, if you believe your lender or another party is not acting in good faith, you can contact the Consumer Financial Protection Bureau (CFPB), your state attorney general or a real estate lawyer to review your situation.
“What are mortgage loan modification scams?” CFPB. Consumer Financial Protection Bureau, September 16 2016. Web.