Sometimes, through no fault of their own, financial disaster strikes a Tennessee homeowner. For example, they may have been the victim of a company-wide lay-off leaving them without a source of income, or they may have suffered a severe illness that left them with a mountain of medical debt. No matter what the reason is, however, there are times when a person in Tennessee may find that they cannot meet their monthly mortgage payments.
People in such a situation may despair that their situation is hopeless and will ultimately lead to foreclosure. However, this may not be the case. A mortgage is a loan, and like any other loan it may be possible in certain circumstances to negotiate a loan workout resulting in a payment plan that the homeowner can afford and that the lender finds acceptable.
There are a number of ways a loan could be worked out. One way is to agree to a lower annual percentage rate (APR) or agree to extend the terms of the mortgage. This could reduce the amount the homeowner owes each month, while still allowing the lender to collect on the loan. Another way is to agree to a forbearance. This relieves the homeowner of their duty to pay their mortgage for a certain period of time, giving them time to catch up financially so that they can ultimately continue making mortgage payments to the lender.
In the end, homeowners who are not able to meet their monthly mortgage obligations should contact their lender as soon as possible. Lenders may be more willing to agree to a loan workout if the workout is negotiated before payments are missed. However, sometimes lenders will agree to a loan workout even if the homeowner is currently in default. Ultimately, it is better to try to negotiate a loan workout than to do nothing at all. After all, a loan workout can be a way for both the homeowner and the lender to continue to reap the benefits of the mortgage. Of course, when it comes to residential real estate issues, like a loan workout, it is important for homeowners to make sure they have all the information they need to make sound decisions moving forward.
Source: thebalance.com, “How Debt Workout Programs Work,” Justin Pritchard, Feb. 14, 2017