What Is a Hardship Program for Home Loans?

Mortgage lenders do not want to foreclose or reclaim your property because of delinquency. So, lenders offer a variety of hardship programs to help borrowers manage their monthly mortgage payments.

Loan Modifications

Loan modifications allow owners to renegotiate the terms of their loan agreements and keep their homes. Modifications are available to some borrowers who don't qualify for a mortgage refinance. Typical modifications include a reduced interest rate and a lower monthly payment.

Short Sales

Selling a home quickly lets borrowers pay off the mortgage company and avoid foreclosure. A decrease in a home's value can slow the selling process. To accommodate a borrower, a mortgage lender may agree to a short sale and take less than the balance owed on the property.

Forbearance

Hardship may be temporary. For instance, a borrower may foresee a change in his financial situation. Rather than sell or risk foreclosure, homeowners can request a mortgage forbearance and skip their mortgage payments without penalty for a specified amount of time.

References

• Interest: The Real Rules of Refinancing
• Investopedia: Mortgage Forbearance