Struggling with your FHA mortgage?

If you are struggling to pay your FHA mortgage you no longer have to be late with your payments to get help. In January the Federal Housing Administration announced that it will assist borrowers before they become delinquent. All you need do is prove your problems were caused by a reduction of income from a job loss, fewer paid hours, slashed wages or a decline in self-employed business earnings. You may also qualify because of a change in household circumstances, such as a death or disability. "The FHA has always required lenders to establish early contact with delinquent borrowers to discuss the reason for missing a payment and to evaluate reinstatement options," FHA Commissioner David Stevens said in a prepared statement. "Now servicers will have additional options for those borrowers who seek help before they go delinquent, which increases the likelihood that the borrower will be able to retain their home." This is a welcome start from the FHA. We can only hope Bank of America will see the light and start working with homeowners who can afford to keep their home or be reasonable with Realtors working on a short sale. Bank of America is just one of the many "too big to fail banks" that has made incredible profits this year while making life hard for homeowners who aren't benefiting from the big bank bailout and all the money that's moved from Main Street to Wall Street. The list of hard to work with banks is a little long and the list of homeowners who have received successful loan modifications is much too short. The workouts available include forbearance, in which lenders agree to postpone or reduce payments for a specified period. This does not actually forgive the payments, they are just added to balance later in the mortgage term. Some lenders are more reasonable while some add on all the interest and penalties they can, just like the big banks do with credit cards. In more severe cases, a real hardship that has been resolved, borrowers may qualify for permanent payment reductions. This may be done by increasing the length of the loan, reducing the interest rate or even forgiving principal, or a combination of any of the three. Principle reduction is rare. Interest rate reduction is more common and increasing the length of the loan, while lowering monthly payments, is even more profitable for the banks. They're earning interest over 40 years instead of 30 and almost all your mortgage payment goes to interest in the first half of the loan. Remember, the big banks are getting money from our Federal Reserve right nowfor 0%. Does that help explain their record profits and bonuses paid in the last 5 quarters? If you're struggling with your mortgage or your credit card bills from a big bank, well, good luck. There's hope. Talk to your lender and talk to a professional. Homeowners in distress should talk to their Realtor, their Attorney and their CPA. If they can't afford an attorney they won't be provided a public defender but they could consider Pre-Paid Legal. There's nothing like a good Realtor or a good CPA to help you make the best of it and you want all the help you can get, some real pros on your side.