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I recently had to take a pay cut and have fallen behind on my mortgage. Now it’s adjusting to an even higher rate next month. I’m afraid foreclosure is next. I don’t want to lose the house we love and have to move my wife and three kids to a two-bedroom apartment—or live with my in-laws. What can I do?
First, relax. Most everything we deal with in life is negotiable to some degree. Saving your home is no exception. I am going to ask you to do one of the hardest things you have ever done in a situation like this: you need to take the emotion out of the situation. You have to approach this the same way the banking institutions will: as business. The bank is trying to mitigate (make less severe) their loss. They do so by looking at the situation and determining which outcome has both the best chance of working, at the same time giving them the best result (the least loss). If you are very behind in payments when you enter loss mitigation, the foreclosure process will continue, however the bank will usually postpone a sale date until it has completed the review of your case.
 Remember, the banks are not legally bound to work with you in these matters and will not waive any of their rights or legal remedies. However, the bank does not want your house—they have too many at this point—and want to find a solution. But be proactive and contact them first. Before you call, however, increase your odds of getting the bank to work with you by developing an intimate knowledge of your income, assets and expenses.
Figure out what you CAN pay based on how much you make. The easiest way to determine what you are making is to look at your pay stub. Determine the AVERAGE amount of your take-home pay. If you paid additional income tax this last year, subtract out the difference so that you won’t be short this year. For example, if you paid an additional $1,200 last year in income tax, be sure to deduct $100 ($1,200 annually = $100 monthly) off your income to account for this. This final number will be your monthly income.
Next, add up your NECESSARY monthly living expenses and the value of your assets. Keep in mind that during the process, the bank may want to see proof of the numbers you give them. Most families’ necessary expenses are the following: mortgage, taxes, insurance, installment loans (autos, boats, etc.), credit card payments, food, utilities, transportation, child care/tuition, medical (not covered by insurance), cell phone/cable/satellite, association fees or dues and dry cleaning/uniform expenses.
Get credit card help BEFORE mortgage help. If you are currently spending more than you make, you need to see what you can cut back on. If you are paying more than $1,000 in credit card payments, then address that through a non-profit debt consolidation program like moneymanagement.org. Get in a plan prior to contacting the bank if possible, as it will increase your amount available for the house payment and demonstrate the urgency of your situation. Keep in mind, credit counseling will affect your credit, but better to correct the problem earlier than face a greater problem later. Credit adjustment is not a quick solution, so don’t get discouraged. This process is taking, on average, 60 or more days to complete. Once all the expenses have been minimized, you will see what you have left to go to the mortgage. Every situation is different and just because your current income may be a little short does not necessarily mean the bank won’t work with you.
The bank will want to know your current asset situation, or basically, how much everything you own is worth. To find the true value of your home, go to sites such as www.redfin.com or www.ziprealty.com. To see the value of your cars, use www.kbb.com.
If you currently owe on your home more than it is worth, the bank will take this into consideration, especially if you can demonstrate the ability and willingness to make payments. Each mortgage crisis is different, but your chances of getting your home loan modified to meet your needs are greatly increased by having a solid knowledge of your situation and being able to support this knowledge through documentation. —Darren Kenney, CPA
My 5-year-old son keeps asking me, “Mommy, why did Grandpa die?” What should I say? Is he too young to understand the concept of death?
Your child is entering the age range where most children are beginning to realize that death is final and that all living things eventually die. Keep in mind that children often have a naturally delayed grief response. This is normal. Let your son initiate the pace of the discussion and gage his understanding of death. Try not to ask too many questions. Your conversation with your son should be calm and reassuring. It may help to express your grief to model and encourage your son to share his sadness.
 Share a brief and simple explanation with your son to generally explain his grandfather’s passing. Long lectures or complicated responses may be too difficult or boring for the child. Try to avoid euphemisms such as “resting in peace,” “went to sleep” or “has gone away” because it may confuse your son. Since young kids often take what you say literally, your son may worry about going to bed at night or will worry if you leave to do errands and you will not come back. Instead, share reasons of his passing in simple terms such as “Grandpa was very old and his body couldn’t work anymore,” or “Grandpa died. He lived a long, happy life and we will always remember him.”
Explaining to your son that death is "a part of life" may help him understand. If you are religious or spiritual, share your beliefs; for example, a belief in afterlife or heaven could also help your child feel better.
Share a few fun memories you had with your son’s grandpa and ask him to do the same. Remind your son that his memories of his grandfather will live on. Your child will have greater understanding, warmth and love if you touch his head ever so gently as you say, “Grandpa’s memories are alive in your head/heart.”
—Rodney Mills, LMFT
My husband and I have decided to get a divorce. We have young children (ages 6 and 9) and we have yet to tell them about this decision. How should we approach this? How should we expect them to respond?
It’s never easy for anyone considering divorce. In approaching your children, if there has been a lot of conflict, your children may have already picked up on it. All children have amazing antennas for your family’s emotional barometer, no matter what age. Tell your children when you are sure, that at the very least you are going to separate. It isn’t great for kids to have their parents keep changing their minds.
It’s best to tell them when you are all together. Avoid blame and keep it simple. Don’t make any promises you won’t be able to keep.
 For example, your conversation could go something like this:
“Daddy and Mommy have not been getting along very well for awhile so we have decided to live in two separate houses. It makes us very sad and it will probably make you sad, or mad, too. We want you to know that it has nothing to do with either of you!!! It is not your fault in any way. Even if we don’t get along with each other, we will always love you. Nothing ever changes how much parents love their children.”
Pause for their reaction and questions. Then you can tell them the specifics (if you can). Tell them you will always want to hear their questions and feelings and then try to listen, even if you don’t have an answer.
Each child has a different way of handling emotions. One might start to cry immediately. Another might act indifferent at first. As the days go on, the road will be rocky. You might also want to consider seeking help from a professional. —Grace Katzenstein
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