Martine Sincoskie is like many Americans today. She has been out of work for a year and is seven months behind on her mortgage.
"I'm getting letters saying they're going to reposses if we don't get them their money soon," she said.
That's just part of the story. As a single mom, Martine is now selling furniture, pawning jewelry, and holding yard sales just to feed her children.
"It's scary. You're not sure what's going to happen or what's going to be turned off. It's just hard," Sincoskie added.
Realtor, Greg Garrett, is trying to work a quick sale to get her out of this with a question that's now becoming routine.
Click the player to see the report from CBN News Reporter Carolyn Castleberry.
"Never before have had I added a line to the checklist. Are they behind in their mortgage payments?" Garrett said.
Upside Down Home Loans
Besides being out of work, many Americans are now upside down in their homes. Their houses aren't worth what they paid for them.
But there are options to simply not paying your mortgage. It begins with a phone call and that's the hardest part, admitting there's a problem. And timing is everything.
"They call me when it's too late," Kirk Levy, real estate attorney said. "They call the day before the foreclosure or after they've already lost their home to foreclosure."
Levy works the problem from another angle and tries to get this message across.
"The lenders do not want the property back," he added. "The lenders want to do everything they can to keep you in the home and keep you current. In fact, mortgage companies have an entire division to deal with people behind on their payments." However, these companies are also overwhelmed.
Garrett said part of this crisis is about the banks not being staffed and available to help.
"One mortgage company told us they're sending out 10,000 distress letters per month!" he said.
Which is why Kirk says make sure everything is in writing. And before you do anything, answer this question.
"Well, the focus has been how do I keep my home, but the question you have to ask is should you keep your home? Not everybody should stay in their home if it's going to be a financial noose around their neck for years to come," he said.
Should You Keep Your Home?
Option one: a short sale.
This is where the lender agrees to take less for the property, releasing their lien and allowing you to sell it. But like every financial transaction, you have to read the fine print.
Levy explains that this type of sale releases the lien against the property, but doesn't necessarily release the individuals from the obligation to pay the debt. For example, if someone owes $300,000 and the bank says we'll take $200,000 to release the lien, so that your buyers can buy the property, you still may owe the lender the $100,000 difference.
And lenders may not tell you that which is why you need to negotiate a "release" from the remaining debt. The company may not let you out of all of it, but you can negotiate it down.
Option two: deeding the home back to the lender.
This is called a deed in lieu of foreclosure.
"At least it shows that you are cooperative. You are not paying your loan back, but you've saved the lender thousands of dollars in conducting a foreclosure sale by deeding the property back to the lender," Levy said.
This still goes on your credit, but you can make the argument that you were willing to work with your lender on this problem.
Option three: a loan modification.
But again - beware.
"I can't get into my car without listening to loan modification ads on the radio right now and unfortunately there are more bad companies than good companies that take upfront money, that don't produce results for homeowners who are in trouble," Levy said.
A loan modification begins with a call to the lender, which is something you can do yourself to reduce the rate you're paying or to extend you time to pay it back.
Levy goes on to say that bankruptcy and foreclosure should be your last options. Bankruptcy may keep you in your home, but it will stay on your credit for 7 years. Foreclosure sends another damaging message.
Levy warns that all of these things damage your credit.
"But a foreclosure shows that you weren't cooperating with the lender and they had to go through the judicial process to take the property back."
As for Martine, her realtor has also set up help from local churches and given from his own pocket. While the yard sales must continue for this season, the hope of her home selling keeps her going for one more day.
*Originally published April 27, 2009