Dear Liz: I have tried to work with my bank to modify my mortgage loan for the last six months. I send it every piece of paperwork it requests, but nothing is done. I bought my home for $280,000 and it’s now worth $110,000. My payments are very high and I’m getting depressed.
Answer: Contact a housing counselor approved by the U.S. Department of Housing and Urban Development. You can find links at www.hud.gov. This free counselor can review your situation and help you deal with your bank.
You may need to face the possibility that a loan modification may not help. Sometimes to create an affordable payment, lenders would have to reduce the amount you owe, which few are willing to do. Even if you do get a payment you can afford, you probably will owe more than your house is worth for many, many years to come.
To help you sort through these issues, read the Nolo book “The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket” by attorney Stephen Elias.