First, remember that financial problems
can happen to anyone. A job loss, divorce, or medical problem can cause even the most financially secure people to struggle with financial commitments. Having money trouble doesn’t make you bad, and it’s OK to ask for help.
Prioritize your bills and pay your mortgage first. If things have gotten to the point of missing a mortgage payment, you have to prioritize your debts and make every attempt to pay your mortgage and stay in your home. You may have to miss some credit card payments to make the mortgage payment.
Talk to your lender. Many people avoid talking to their lender when they are having difficulties. You should stay in contact with your lender and make sure they understand your situation. Many have programs or options that can help. They often will work with you if you keep them informed. Don’t ignore their mail and phone calls.
Know your options. Make sure you explore and consider all options, including refinance, modifications, and forbearance agreements. Beware of predatory lenders or “quick fixes”.
Seek assistance from reputable services. Contact a local HUD approved counseling agency. They can help you understand your options and the resources available.
If you fail to make payments on your loan, or default on the payment, the lender has a legal right to take possession of the property and resell it for the amount due on the note. This process is called foreclosure.
A borrower is considered seriously delinquent after two missed payments – this is as little as two months! If ninety days passes without a payment, the foreclosure process will begin. Your lender might begin foreclosure proceedings following a first missed payment.
It is your responsibility to contact your lender as soon as you know you will miss a payment to find out what options you may have and what consequences there are for missing a payment.
When you contact your lender Be ready with the account number for your mortgage. Make a note of who you talked with and the date and time of the conversation. Give specific information regarding your current financial situation and provide them with a remedy. The remedy might be: a partial payment or an interest in a forbearance agreement (a payment plan based on your financial situation) or request to speak with someone about a loan modification. Let your lender know that you will follow the telephone conversation up with a letter stating exactly what was discussed and confirmed in the phone call.
Options like a forbearance agreement or a deed in lieu is preferable to going through a foreclosure. Once your property is foreclosed on, it will be difficult for you to obtain credit to open another loan for a different house, even if your credit is in good shape. For more information on this topic, see publication 946, The Homebuyer’s Guide, available for purchase at your local Extension office.
