Is it better to stop paying or pay whatever you can?

[calinitemare]

Hi everyone,

First of all, I would like to thank everyone on this forum. I learned a lot from reading everyone's posts (I spent hours reading everything).

I was recently rejected for a loan modification with Indymac. They said it was because I'm still current. I'm struggling every month and probably won't be able to make next month's mortgage. But they don't care. My husband lost his job and my house is now worth $150k less than what I owe. So my question is: Is it better to stop paying the mortgage altogether or pay whatever I can? How does making a partial payment affect my credit?

[LHarveyMadman]

Partial payments are not going to preserve your credit. It's possible that the partial payment won't be credited immediately to your account, but rather be held in "suspense" until you pay the equivalent of a full month's payment. You're still going to be reported as late to the credit bureaus.

If you find that you are having to forgo other necessities - prescription drugs, insurance premiums, etc. - in order to make your mortgage payments, then you might want to consider stopping your mortgage payments. I can't tell you whether that is the right thing for you to do. It is a personal decision.

[calinitemare]

Thanks LHarvey! I guess if they were to hold the payment until I fully pay the amount, then I might as well keep the money for myself to pay for other crucial necessities. I will definitely keep this in consideration.

Also, has anyone heard/had the experience of the Lender being more lenient to people who made partial payments. I guess to show that we are trying to make payments and not just stopping payments all together? What is the thought process of the Lender?

Thanks everyone!

[calinitemare]

More lenient meaning if they are willing to consider a loan modification if they see that you are trying (making partial payment rather than not making one at all). I guess bottom line is that we want their attention for a loan modification and want to find out what is the best way to do that.

[LHarveyMadman]

Originally Posted by calinitemare

What is the thought process of the Lender?

That sounds like an oxymoron....

Hopefully some other IndyMac customers will be able to answer your question. My gut feeling is that a partial payment might not earn you any brownie points, since you're still heading towards default. That's just my opinion, based on no personal experience.

One thing you might consider is sending a letter or email message to IndyMac, restating your current situation and letting them know in advance that you will be forced to stop making payments. In this letter, you might want to include some information that explain how you tried hard, through lifestyle changes and other cost-cutting measures, to maintain payments on your home. That would demonstrate that you made good-faith efforts to stay on top of your debt.