What to do if you can’t pay your mortgage


We asked two housing and personal finance experts what to do if you’re worried about making your mortgage payments in the coming months or are already behind on your payments: Lee Anne Adams, Senior Vice President national initiatives at NeighborWorks Americaand Michael Sullivan, personal financial consultant at take over america. Both responded via email and their responses have been edited.

Now that many forbearance programs are ending, does that mean homeowners can’t get help if they’re having trouble making their mortgage payments?

Adam: Not at all. Owners can still benefit from loss mitigation and additional resources after their forbearance ends. Homeowners should seek help through their loan officer or a housing counselor who can help them identify before and after forbearance options.

Sullivan: Although Cares Act programs are mostly historic, owners can still find sources of assistance. Freddie Mac and Fannie Mae are still actively offering forbearance assistance, and the Department of Housing and Urban Development, Federal Housing Administration, Department of Agriculture, and nearly all mortgage services will consider forbearance requests. at any time if the owner has a compelling reason.

In addition, the federal government created the Homeowners Assistance Fund, which is operational in more than 20 states. And many states have their own homeowner assistance programs. The best source of assistance in identifying and sorting through programs and options is the Housing Stability Counseling Program, which is a federally funded program designed to provide counseling to households facing instability, such as housing stability. eviction, default, seizure, loss of income or homelessness.

Many HUD-certified housing counseling agencies (including Take Charge America) participate in the program, and they can help homeowners understand federal and state programs that may offer assistance for their particular situation, including mortgage delinquency. and default of payment. You can search on the HUD site Where The NeighborWorks Network for an advisor.

Should you wait until you’ve missed a payment before taking action if you know you’ll have trouble paying your mortgage?

Adam: NeighborWorks America recommends that consumers protect their homes and families by being proactive about all stages of the home ownership process. Homeowners should never wait until they miss a payment to contact their loan servicer and discuss loss mitigation options. There are loss mitigation options that require homeowners to be at least 60-90 days behind before they can access financial resources, but that shouldn’t deter consumers from connecting with their loan officer and a housing counselor to discuss the options available before and after completion. Payments.

Sullivan: Homeowners should act as soon as they realize they may not be able to make a future mortgage payment. Not only are there more options before a mortgage becomes delinquent or defaults, but many of the options also take time to implement. A good example is the decision to sell an unaffordable house. The delay between the decision to sell and the closing can certainly take weeks, and rushing the process can be very expensive. Additionally, even a late mortgage payment can hurt a consumer’s credit rating and eliminate or worsen the terms of some refinance options.

Are there organizations other than your lender that can help homeowners? Can a housing counselor help you?

Adam: Housing counselors are a key resource for informing landlords of the various options available, which may include financial resources. A housing counselor can help assess a landlord’s situation and create the right plan. NeighborWorks America launched the Housing Stability Counseling Program to help non-profit organizations and agencies that provide direct counseling services to individuals and families facing housing instability.

Sullivan: A very temporary situation like a one-time late payment may require nothing more than a call to the lender. With a more serious situation, it’s often best to start with a HUD-certified housing counselor. Some assistance programs are beyond the expertise of the lender. And the lender will likely consider the lender’s needs first rather than the owner’s.

What are the options to solve the problem? How do they work?

Adam: A homeowner should consult with their loan officer or housing counselor to identify the best option for their situation. Loss mitigation strategies are unique for each owner and depend on several variables. For example:

⋅Refinancing can allow you to lower your monthly mortgage payment, change the interest rate, or access home equity. However, if payments have been missed, refinancing may not be an option.

⋅A forbearance is temporary and may allow homeowners to suspend or reduce their monthly mortgage payment. In most cases, the balance of the discount or suspended payment amount will need to be repaid later.

⋅Loss Mitigation refers to the actions taken by the loan servicer to work with the homeowner to mitigate the loss of the home. A housing consultant can help homeowners determine which strategy is best for their situation.

⋅ If the home has equity, selling it to pay off the existing loan and avoid foreclosure may be an option. However, if there have been any missed payments, it could affect the owner’s credit rating and ability to secure a home after the sale.

Sullivan: The best option depends on the circumstances. If a budget analysis clearly shows the homeowner cannot afford the current mortgage payment, an advisor will likely focus on refinancing and selling options. If the issue is affordability but less severe, refinancing and loan mitigation will likely be combined with budget advice. If the problem involves temporary illness or job loss, forbearance is the most likely option, perhaps combined with financial assistance from a source known to the advisor.

In 2020 and 2021, refinancing was an obvious solution for many homeowners who could secure a lower interest rate and longer term. In 2022, interest rates are up and refinancing is less attractive, but house prices are still quite high, so selling is a more obvious option. Likewise, the expiration of the Cares Act programs has made forbearance a less attractive option, as it is neither required nor supported. Mitigation is often difficult, as it requires lender agreement at a time when the viability of a loan may be in doubt.

Is it necessary to hire a lawyer to get mortgage help? What if someone can’t afford a lawyer?

Adam: It is not necessary to hire a lawyer, but many communities across the country have legal aid agencies that can provide low-cost or no-cost services to help homeowners identify their disaster mitigation solutions. losses. Housing counselors often refer clients to legal aid agencies.

Any other advice on what to do?

Adam: Far too many consumers wait for something to happen instead of taking the appropriate action to help themselves. Do not wait to act. One of the lessons learned from the 2008 housing crisis is that people were often scared or simply did not ask for help at all until it’s too late. If the homeowner is at risk, they should immediately contact their loan manager to identify loss mitigation strategies. Foreclosure laws require prompt responses to any notification. The sooner owners seek help, the better their chances of finding the right loss mitigation strategy for their unique needs.

Consumers facing housing instability due to the pandemic should know that a housing counselor can work with them to understand their options, connect them with resources – including emergency financial assistance – and possibly prevent an eviction or seizure.

Sullivan: Very few consumers are prepared to deal with the complexities of changing the terms of a mortgage or obtaining financial assistance to meet the terms of a mortgage. It is almost always best to act quickly, but first consult with a fully qualified and experienced person, such as a housing consultant. It is essential to consider the long-term effect of any action. For example, rents have increased dramatically over the past few months, so the cost of renting might not be more affordable than the cost of a mortgage.


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