B.G.,



Last year my daughter purchased a home for $197,000. Her husband is a carpenter and he gets paid a two-week salary each month and bonuses. New construction in their city has reached an all-time low. Because of this decline in new construction, my son-in-law is currently receiving no bonuses. My daughter's family is really having a problem making their monthly mortgage payments. They have considered selling their home and moving into something more affordable, however the economy has so affected the market, that their home is now worth less than they owe. What do you recommend?

I feel your pain! This is not an uncommon occurrence in our present-day economic climate. We will all be looking at creative ways to cut spending and earn extra money as our economy progresses through these difficult times.

My first recommendation is always to use any savings you may have to cover your struggle period. This is so important, and the reason I shout from the rooftops to couples, ?Save for a rainy day!?. If that is not an option, and the savings are depleted, we still may have other choices available to avoid foreclosure.

The first step is for your daughter to call her lender. Lenders don't want to see customers foreclose, they do not want them to fail to make payments and lose their home. In most cases, your bank or lender will work with you to get you back on the right path.

One option is called ?forbearance?, where borrowers temporarily make reduced payments or no payment at all. In order for your lender to qualify you for this type of program you will usually have show that you are experiencing a temporary loss in income and that a change in the financial situation is likely in the future. Interest may still accumulate, so you may have to make larger payments in the future of the loan.

Another option is to request for modification of the terms of the loan so the payments are more affordable. You may be able to extend the term of the loan so monthly payments are lower.

When you make these request to your lender, I recommend showing that you are making a good-faith effort to pay your mortgage. You need to demonstrate that you have reduced other expenses. Most lenders are far more likely to negotiate if you are working with a plan and share that with them. If your circumstances are more long term, however, then it will be harder to persuade the lender to change the terms of the loan.

The key is to make contact with your lender, do not avoid them. They are in the business of earning money on the interest of the loan for which they approved you. They are not in the real estate business, and most lenders will try to avoid foreclosing as much as possible.

If you are not on a plan to reduce your expenses and pay off your debts as soon as possible, I encourage you to get on the plan of the 5 Day Financial Cure. It has helped many people in the same circumstances of your family, to recover from the chains of debt and build real wealth for their families and their future.

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