Mortgage Repayment Plan to Avoid Foreclosure

Reader Question: I have gotten behind on my mortgage but avoided foreclosure. To do this my mortgage company took the thousands of dollars in penalties and fees and thus increased my payment. Is this normal? Is there a name for this practice?

First of all, congratulations for hanging in there. It sounds like you realize the importance of avoiding foreclosure if at all possible. I hope it works out for you.

Mortgage companies have many programs designed to help borrowers get back on track with mortgage payments. Collectively, these are known as mortgage "workout" options, because they help you work your way out of a possible foreclosure situation.

Reinstatement, repayment, forbearance and loan modification are all examples of loan workout options for homeowners who fall behind on their payments.

Your situation sounds like a typical repayment plan. Through this process, the homeowner / borrower will make the regular mortgage payments plus a little extra to cover back payments and fees. From what you have described, it sounds like your lender has created a repayment plan to help you get caught up over time.

You are not alone in the fact that you haven't heard of this. Many of the folks who were foreclosed on in recent months had no idea that these workout options existed.