Steps
To Take When You May Be Unable To Pay Your Mortgage
Contact Your MortgageLender NOW!
Talk To A Housing Counseling Agency
Prioritize Your Debts
Explore Mortgage Loan Workout Solutions
Are You Eligible for Disaster Relief/Military Options?
Beware of Predatory Lending Schemes
Frequently Asked Questions
Contact Your Lender As Soon As You Have A Problem
Many people avoid calling their lenders when they
have money troubles. Most of us are embarrassed to discuss our
money problems with others
or believe that if lenders know we are in trouble, they will
rush to collection or foreclosure. But if you seriously need mortgage
help or mortgage refinancing assistance, why would you not call
your lender?
The bottom line is Lenders want to help borrowers
keep their homes. Foreclosure is expensive for lenders, mortgage
insurers and investors.
HUD/FHA, as well as private
mortgage insurance companies and investors like Freddie Mac and
Fannie Mae, require lenders to work aggressively with borrowers
who are facing
money problems. The bottom "bottom" line is a desire to help with
your mortgage.
Mortgage Lenders have workout options to help
you keep your home. However, these options work best when your
loan is only one or two payments behind.
The farther behind you are on your payments, the fewer options
are available. Don't wait to get 3 or more payments behind, call
your lender when you feel that things are heading that way. Mortgage
refinancing options can only be realistic only if you have made
a concerted effort to contact your mortgage lender before it's
too late.
Do not assume that your mortgage problems will
quickly correct themselves. Don't lose valuable time by being
overly optimistic about mortgage companies or lenders.. Contact
your mortgage lender to discuss your circumstances as soon as
you realize that
you are unable to make your payments. While there is no guarantee
that any
particular relief will be given, most mortgagelenders are willing
to explore every possible option to help in regards to mortgage
relief, mortgage help or mortgage refinancing.
Don't know who your mortgage lender is?
Check the following sources for lender contact:
Your monthly mortgage billing statement
Your payment coupon book
Web links or customer service numbers found under "help for homeowners" lenders
Information To Have Ready When You Call:
To help you, lenders typically need:
Your loan account number
A brief explanation of your circumstances
Recent income documents (such as Pay stubs; Benefit Statements from Social
Security, Disability, Unemployment, Retirement, or Public Assistance. If you
are Self-employed, have your tax returns or a Year-to-date Profit and Loss
Statement available for reference)
List of household expenses
Expect to have more than one phone conversation with your lender.
Typically, your lender will mail you a "loan workout" package.
This package contains information, forms and instructions. If
you want to be considered for assistance, you must complete the forms
and return
them to your lender quickly. The completed package will be reviewed
before the lender talks about a solution with you.
CALL TODAY! The sooner you call; the sooner mortgage help
is available.
Do Not Ignore Mail From Your Lender
If you do not contact your lender, your lender will try to contact
you by mail and phone soon after you stop making payments. It is very
important that you respond to the mail and the phone calls offering help. If your lender does not hear from you they will be required to start
legal action leading to foreclosure. This will substantially increase
the cost of bringing your loan current.
Information For Families With FHA Loans
The Federal Housing Administration (FHA) provides a wide range
of relief options for borrowers. There are many alternatives
and ways to get help. These may include mortgage modifications,
mortgage refinancing, special forebearances,
and other actions you can take to avoid foreclosure.
Talk To A Housing Counseling Agency
If you don't feel comfortable talking with your lender, you should
immediately contact a HUD-approved housing counseling agency and arrange
an appointment with a counselor. A counselor will help you assess your
financial situation, determine what options are available to you, and
help you negotiate with your lender. A counselor will be familiar with
the various workout arrangements that lenders will consider and will
know what course of action makes the most sense for you and your family,
based on your circumstances. In addition, the counselor can call the
lender with you or on your behalf to discuss a workout plan. By meeting
with a counselor before your mortgage payments are too far behind, you
can protect yourself from future credit problems.
A good counselor will help you establish a monthly budget plan to ensure
that you can meet all of your monthly expenses, including your mortgage
payment. Your personal financial plan will clearly show how much money
you have available to make the mortgage payment. This analysis will help
you and your lender determine whether a reduced or delayed payment schedule
could help you. Also, a counselor will have information on services,
resources, and programs available in your local area that may provide
you with additional financial, legal, medical or other assistance that
you may need.
To find out more about HUD-approved housing
counseling agencies and their services, please call (800) 569-4287
on weekdays between 9:00 a.m.
and 5:00 p.m. ET (6:00 a.m. to 2:00 p.m. PT). You can also get an automated
referral to the three housing counseling agencies located closest to
you by calling (800) 569-4287, or see our list of these HUD-approved
agencies by state.
Prioritize Your Debts
For the unemployed, getting by will require a new, tightened budget.
Prioritize your bills and pay those most necessary for your family: food,
utilities and shelter.
Failing to pay any of your debts can seriously affect your credit rating.
However, if you stop making your mortgage payments you could lose your
house. Whenever possible, any income available after paying for food
and utilities should be used to pay your monthly mortgage payments. If
your employment income has been stopped or reduced, first consider eliminating
or reducing your other expenses (such as dining out, entertainment, cable,
or even telephone services). If that does not provide enough income,
consider using other financial resources like stocks, savings accounts,
or personal property that may have value like a boat or a second car.
Take any responsible action that will save cash.
In addition to speaking with your lender, you may want to contact a
nonprofit consumer credit counseling agency that specializes in providing
help in restructuring credit payments. Credit counselors can often reduce
your monthly bills by negotiating reduced payments or long-term payment
plans with your creditors. The majority of credit counseling agencies
are reputable and provide their services free of charge or for a small
monthly administrative fee tied to a repayment plan. Beware of credit
counseling agencies that offer counseling for a large upfront fee or
donation.
For consumer debt advice contact the National Foundation for Credit
Counseling
Use the Internet to find a HUD-approved housing counseling agency
or dial (800) 569-4287 or TDD: (800) 877-8339. These agencies can provide financial
counseling or refer you to a local credit counseling agency.
When you call a consumer credit counseling agency, you will be asked
to provide current information about your income and expenses. Make sure
you ask if the agency has a charge before you sign any documents!
Preserve Your Good Credit
Do not underestimate the importance of preserving your good credit.
Your future ability to purchase certain items, rent or buy a home, and
complete other transactions often requires a credit check. Consumer credit
agencies and your lender can help you explore solutions to keep your
credit from getting blemished.
Maintaining good credit is even important for job hunters. When you
apply for a job, the employer probably will check your credit report
to determine:
Whether you have been sued
Have filed for bankruptcy
or have trouble paying your bills
Explore Loan Workout Solutions
First and foremost, if you can keep your mortgage current, do so.
However, if you find that you are unable to make your mortgage
payments, you may qualify for a loan workout option. Check with your
lender to find out which of these options may be available.
If Your Problem Is Temporary - Call Your Lender
Reinstatement: Your lender is always willing to discuss accepting the
total amount owed to them in a lump sum by a specific date. They will
often combine this option with a Forbearance.
Forbearance: Your lender may allow you to reduce or suspend payments for a
short period of time after which another option must be agreed upon to bring
your loan current. A forbearance option is often combined with a Reinstatement
when you know you will have enough money to bring the account current at
a specific time in the future. The money might come from a hiring bonus,
investment, insurance settlement, or a tax refund.
Repayment Plan: You may be able to get an agreement to resume making your regular
monthly payments, in addition to a portion of the past due payments each
month until you are caught up.
If it appears that your situation is long-term or will permanently affect
your ability to bring your account current:
Mortgage Modification: If you can make the payments on your loan, but
you do not have enough money to bring your account current or you cannot
afford the total amount of your current payment, your lender may be able
to change one or more terms of your original loan to make the payments
more affordable. Your loan could be permanently changed in one or more
of the following ways:
Adding the missed payments to the existing loan balance.
Changing the interest rate, including making an adjustable rate into a fixed
rate.
Extending the number of years you have to repay.
Claim Advance: If your mortgage is insured, you may qualify for an interest-free
loan from your mortgage guarantor to bring your account current. The repayment
of this loan may be delayed for several years.
If Keeping Your Home Is Not An Option -- Call Your Lender
Sale: If you can no longer afford your home, your lender will usually
agree to give you a specific amount of time to find a purchaser and pay
off the total amount owed. You will be expected to obtain the services
of a real estate professional who can aggressively market the property.
Pre-Foreclosure Sale or Short Payoff: If the property's sales value is not
enough to pay the loan in full, your lender may be able to accept less than
the full amount owed. This option can also include a period of time to allow
your real estate agent to market the property and find a qualified buyer.
Monetary help may also be available to pay other lien holders and/or help
toward paying a few moving costs.
Assumption: A qualified buyer may be allowed to assume your mortgage, even
if your original loan documents state that it is non-assumable.
Deed-in-lieu: Your lender may agree to allow
you to voluntarily "give
back" your property and forgive the debt. Although this option sounds
like the easiest way out for you, generally, you must attempt to sell the home
for its fair market value for at least 90 days before the lender will consider
this option. Also, this option may not be available if you have other liens
such as judgments of other creditors, second mortgages, and IRS or State Tax
liens. Click here for other mortgage resources
