Help for borrowers

By Times staff writer

© St. Petersburg Times,
published June 13, 2001

If you fall behind on your mortgage -- but have a good chance of catching up -- your lender might agree to one of these options:

FORBEARANCE: A formal repayment plan with the borrower to reinstate the loan, either by suspending or reducing payments for up to 24 months. But in most cases, you will be asked to begin making your regular monthly payments plus an additional amount each month until you make up what you owe.

MODIFICATION: A permanent change in one or more of the loan terms to get the payment down to an amount you can afford. The lender may be able to lower the interest rates, extend the time to repay or re-amortize the balance.

ADVANCES: If you are less than 12 months behind on a government-insured loan, the lender can reinstate your loan by advancing funds to the investor on your behalf. In return, you must sign a note promising to pay back the allowance, but without interest.

VA REFUNDING: The Department of Veterans Affairs has the authority to buy loans in default from investors and take over the servicing. But it is an option on the government's part, and not every borrower qualifies.

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