My parents are in jeopardy!

[MrCleveland]

Not the show "Jeopardy", but financial jeopardy!

My parents had the worst year ever! They can't pay the mortgage which is over $8000, they think the house will be foreclosed on them, and despite my dad getting a job...they can't make ends meet.

My mom's VERY depressed about this because she can't turn to anyone.

[Tweety]

Have they tried talking to someone at the bank about some type of temporary modification to the Mortgage Note terms?

Perhaps the bank might agree to a reduced payment for a period of time, maybe 6 to 12 months? They might lower the rate or extend the amortization term, both of which would reduce the monthly payment. Then, after that period of time is over, the loan would revert to the original terms. Or maybe they modify to an interest-only payment for a while...

This would probably have a better chance of working if the mortgage is held at a community bank vs. someone like Chase, Citibank or a nation-wide Mortgage company. Local bankers from a locally-owned bank would be far more likely to work with them through this period.

And, I hate to say it, but some kind of bankruptcy might be part of the solution as well...but they would need to speak with an attorney first... I wouldn't advise going the Bnkrcy route until their attorney says that it's the right time. Don't do it at the first sign of a collection letter. Banks send collection letters out automatically when loans become a certain number of days past due. Even if the letter includes a drop-dead date after which "other actions" might be taken, that doesn't mean that the lender intends to foreclose.

Whether a lender of any size would be willing to work with a financially distressed borrower might also depend on whether the house is upside down or not (by that I mean, is the balance of the mortgage note greater than the current value of the house? A LOT of people are upside down on their mortgages right now because of the way the real estate market has tanked).

It will help if your folks go to the lender first, rather than waiting for the lender to contact them. And, if they have a good history with the lender, that might help their case as well.

I hope that their mortgage is with a local bank where there's someone there that your folks can work with. If not, they should seek legal advice as to what they can do to hold on to the house. Laws vary by state.

Hope everything works out for them.. Good luck!