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Columns: The Debt Adviser
Steve Bucci   Expert: Steve Bucci
The Debt Adviser
Marine sounds off on inflexible mortgage requirements
The Debt Adviser

Pay mortgage payments in full
 

Dear Debt Adviser,
I left active duty in the Marine Corps about seven months ago and got behind on my mortgage payments. I found a new job and am able to make the payments and some extra, but the mortgage company will not accept partial payment. They sent me an agreement stating I had to pay $1,400 by Oct. 18 and then $1,900 for four more months until my regular mortgage of $901 is caught up. They also stated all of those payments have to be in full; even if the total of partial payments are paid before the due date, they will not accept them. Can they do that? I do not understand why the money has to be paid in one lump sum as long as they get it before it is due.
-- Jeremy

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Dear Jeremy,
I hear your frustration at the mortgage company's rigid requirements for catching up on your mortgage loan. Unfortunately, you are not the only one, by a long shot, who is trying to catch up with missed mortgage payments. But I'm happy to say that there are some new innovative solutions that are available.

One such program is called PHASES, short for Preserving Homeownership and Savings Education Strategy. Currently, this program can give borrowers in California, Florida, Illinois, Michigan, Nevada, New York and Ohio, who meet certain criteria, a grant to catch up on their mortgages.

The program is administered by Money Management International, the largest HUD-certified national nonprofit credit counseling agency. The program combines an online education program with counseling and the opportunity for individuals to receive a grant for up to $5,000 to bring past-due mortgage payments current. They may also be able to have other, nonmortgage debts, such as vehicle loans, brought current (as car repossession can put new pressure on a mortgage and lead to renewed problems).

This kind of innovative response to the mortgage crisis facing many families is refreshing. The number of states involved has grown, so if yours is not on the current list, I'd check to see if it has been added. You can get more information about this program at (888) 589-6959 or on the Money Management International Web site.

For those of you who live in the other states; I suggest you check for what programs may be available in your area by contacting a HUD-certified counseling agency. You can find a list of approved agencies on the HUD Web site.

It sounds to me like you have the money that is necessary to meet the agreement to catch up on your loan; you would just like some flexibility in making the payments. What you have experienced so far is a variation on business as usual: Often inflexible approaches offered by mortgage lenders who are following bureaucratic process and procedures laid down by investors and regulators that need to be updated.

Let me caution you to be sure to make each payment exactly as scheduled and in the full amount. Mortgages are very different animals from other bills. Once you reach a certain point in delinquency, usually between 60 days and 90 days, the rules become very inflexible. A mistake at this time can lead to a fast train ride to foreclosure with no stops on the way.

If you rely on the discipline you learned in the Marine Corps and stay with it, you'll get caught up with your mortgage before you know it.

Bankrate.com's corrections policy -- Posted: Oct. 12, 2007
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