What options are available to homeowners falling behind on their payments?

If you want to stay in your house:•    HEMAP. Pennsylvania’s signature program provides bridge loans to borrowers, typically over two years, to help them make their mortgage payments and keep their homes during periods of unemployment or underemployment. The majority of HEMAP loans are repaid, and those repayments go into a fund for the next round of such loans. Until recently, the program size was limited to those funds, while the number of newly distressed homeowners skyrocketed. But  the recently-passed Dodd-Frank financial reform bill included a longstanding proposal by Fattah, now chair of the Congressional Urban Caucus and Pennsylvania’s senior appropriator on the House Appropriations Committee, to nationalize HEMAP, including an appropriation of $11 billion for all 50 states including and $105 million to help Pennsylvania homeowners.  Fattah aide Cindy Bass points out that HEMAP doesn’t tend to cost taxpayers money, given repayment rates.

•    HAMP. A relatively new federal program, HAMP provides incentives for lenders to agree to temporary loan modifications.  It has received mixed reviews, with some homeowners reporting having their homes foreclosed upon anyway without notice. But it’s an option that works for some.If you’re willing to sell, but at a lower price: Some lenders will agree to a “short sale,” whereupon a house sells for less than the mortgage value. But the remainder becomes an unsecured personal loan, and housing counselors advise owners to take that seriously.So far, Newsworks has heard no reports of “strategic defaults,” where owners simply mail keys back to the bank and walk away. Have you?