Written by Monica Sandler

Friday, 31 October 2008 12:52

October 31, 2008

As part of the bailout strategy, the Treasury and FDIC are finalizing a plan to help restructure loans for more than three million homeowners. If you are underwater on your home loan, there may be help but youll need to work with your bank. Before you let your mortgage slip into default, check with the lender to find out if restructuring your loan is possible.

Dont simply accept that you will lose your home, call your creditor and negotiate, says Sean Levin, senior strategist at Ameri-Financial.com. Banks are moving to keep loans on their books, and you can get a deal too. Ask them to stretch the loan term, lower interest, refinance, offer to put up some collateral, but dont just give up and leave. Keeping your existing loan preserves your credit rating and saves the lender money, so it is in everyones best interest to restructure your debt. Recently, Bank of America decided to spend $8.4 billion restructuring Countrywide's mortgage portfolio. Some lenders allow forbearance, where you have time to make up overdue payments. Others might freeze an adjustable rate loan. The key is to notify your lender as soon as money troubles begin, so you can avoid foreclosure.

According to Hope Now a consortium of lenders, mortgage-security investors and real estate counselors created by the Bush administration 85,793 homes were lost to foreclosure in September. However, the organization helped 212,000 borrowers keep their homes during the same time period.