For most families,
a home is not only a significant financial investment but also a source of pride.
The loss of a home, due to unexpected events such as unemployment, can be financially
and personally devastating. If
you have been laid off or are facing unemployment, you can keep your home - -
if you know the right steps to take. The Department of Housing and Urban Development/Federal
Housing Administration, the Department of Veterans Affairs, the Department of
Labor and the mortgage industry have worked together to produce important basic
information - - and key links to local groups and organizations - - that can help
you get through difficult times without losing your home. Facing
Money Problems?
Financial problems
are most often associated with the following life changes:
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Loss of
job
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Cuts
in work hours or overtime
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Retirement
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Illness, injury, or death of a family member
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Divorce or separation | | | | |
If your family is facing any of these changes and cannot pay your bills, now is
the time to look closely at what you owe and what you earn, eliminating unnecessary
spending and reaching out for help if you still can't meet your financial obligations.
Taking action now can help you protect your family from the loss of your home.
This page was created to help you find advice, information, and web links that
will help you keep your home. Steps
To Take When You May Be Unable To Pay Your Mortgage
This
website is brought to you through the collaborative efforts of HUD/FHA, the Department
of Veterans Affairs, Department of Labor, Fannie Mae, Freddie Mac , and members
of the mortgage industry. Bookmark
this site. 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.
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. 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. Do
not assume that your problems will quickly correct themselves. Don't lose valuable
time by being overly optimistic. 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 lenders
are willing to explore every possible option.
Finding
Your Lender Check
the following sources for lender contact:
Information
To Have Ready When You Call: To
help you, lenders typically need:
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Your
loan account number
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A brief explanation of your circumstances
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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)
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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 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, special forebearances, and other actions you can take
to avoid foreclosure. HUD's
National Servicing Center works
closely with customers who have FHA insured loans. Do you feel your lender is
not responding to your questions? Do you need assistance contacting your lender?
The NSC is ready to help!
Return to " Steps To Take"
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 work-out 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 work-out 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 1
(800) 569-4287
on weekdays between 9:00 am and 5:00 pm Eastern Standard Time. You can also get
an automated referral to the three housing counseling agencies located closest
to you by calling 1
(800) 569-4287.
To look at the list of these HUD-approved agencies by state on the HUD web site,
click here. Many
of these local housing counseling agencies are affiliates of national and regional
housing counseling intermediaries. The websites for the HUD-approved National
and Regional Housing Counseling Intermediaries describe the full range of
assistance offered, as well as maps showing location of their affiliates.
Return to " Steps To Take"
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.
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:
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whether you
have been sued
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have
filed for bankruptcy
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or
have trouble paying your bills | | |
Return to " Steps To Take"
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
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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.
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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.
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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:
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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: |
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Adding
the missed payments to the existing loan balance.
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Changing the interest rate, including making an adjustable rate into a fixed rate.
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Extending the
number of years you have to repay.
| | |
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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
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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.
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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.
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Assumption:
A qualified buyer may be allowed to assume your mortgage, even if your original
loan documents state that it is non-assumable.
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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. | | | |
Resources
for finding a real estate agent and selling your home If
you need to sell your home, there will be many questions you have to answer. You
will need to find how much your house is actually worth, and you will have to
find a real estate agent you are comfortable with. The following resources will
help:
Return to " Steps To Take"
Special
Disaster Relief Options - Call Your Lender If
your property has been damaged by a natural disaster or if you have been called
up for active military duty or affected by a national tragedy, such as the terrorist
acts of September 11, 2001, there may be additional assistance available.
For additional
information you may wish to view these links:
Return to "Steps To Take"
Beware
Of Predatory Lending Schemes
Most
mortgage lenders are reputable and provide a valuable service by allowing families
to own a home without saving the thousands or hundreds of thousands of dollars
necessary to buy it outright. However, a few, unscrupulous lenders, especially
those who make high risk second mortgages, engage in predatory lending practices
that can increase the likelihood that a borrower will lose his or her home to
foreclosure. These abusive practices include making a mortgage loan to an individual
who does not have the income to repay it, charging excessive interest, points
and fees or repeatedly refinancing a loan without providing any real value to
the borrower. Borrowers
facing unemployment and/or foreclosure are frequent targets of predatory lenders
because they are desperate to find any "solution" to their default. Homeowners
frequently receive refinance offers in the mail telling them that they have been
"pre-approved" for credit based on the equity in their home. When you are wondering
how you are going to pay your mortgage and other bills, it may appear very attractive
to borrow against your house. But consider this, if you cannot make your current
payments, increasing your debt, even if you get some temporary cash, will make
it harder to keep your home.
Beware
of Scams:
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Equity
skimming: a buyer offers to repay the mortgage or sell the property if you sign
over the deed and move out.
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Phony
counseling agencies: offer counseling for a fee when it is often given at no charge.
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Do
not sign anything you do not understand. It is your right and duty to ask questions.
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Information is your best defense against becoming a victim of predatory lending
especially for a desperate homeowner! | | | |
Where
to Report Suspected Predatory Lending – homeowners can either visit the Stop
Mortgage Fraud web site or call 1(800) 348-3931 to get information on what
steps to take to file a complaint. Homeowners calling the 800 number will receive
a brochure that contains information also found on the Web site. For
more information about Predatory Lending go to:
If
you are interested in getting consumer brochures in different languages:
click
here
Return to " Steps To Take" Frequently
Asked Questions (FAQ)
- How do I know
who my lender is and how to contact them?
- Look
at your monthly mortgage coupons or billing statements for the name of your lender
and contact information.
- I
do not remember what type of mortgage loan I have, how can I find this information?
- Look
on the original mortgage documents or call your mortgage lender.
- Do
I need to keep living in my house to qualify for assistance?
- Typically, yes,
but call your lender to discuss your specific circumstances and get advice on
options that may be available.
- What
type of information should I have ready to discuss with a lender?
- Typical
information requested by lenders in a workout package include:
- Brief explanation
of circumstances
- Recent
income documents
- List
of household expenses
- My
employer has already announced layoffs within the coming months, what can I do
now?
- Through
this website you have taken the first step toward educating yourself about available
options. Determine if the layoffs will cause a financial hardship that will make
it hard for your family to make your mortgage payments. If so, consider other
resources that you have available to pay your mortgage. Review your spending habits
and see where you can reduce spending. If you have a lot of consumer debt, consider
contacting a nonprofit, consumer credit counseling agency. Take advantage of any
employer offered resources. If you still believe that you will have trouble making
your mortgage payments, contact your lender right away.
- Will
there be any out-of-pocket expenses I will be responsible for if I am approved
for a workout option?
- Some
workout options do include expenses that the borrower is expected to pay, for
example, recording fees for a loan modification. Because, every situation is different
you should contact your lender for more information. However, if a lender has
no contact with a borrower and has to start foreclosure, the legal fees that the
borrower will be expected to pay can be very expensive. To avoid unnecessary legal
fees, call your lender as soon as you realize you are in trouble.
Return to "Steps To Take"
Other
Resources Additional
valuable information to help you is provided on the following websites. Although
all borrowers' situations are different, these resources have been prioritized
to address some common concerns. Mortgage
Lenders
Housing
Counseling
Employment
Information and Assistance
Federal
Government Resources
Other
Resources
This
site will continue to evolve and expand. So, bookmark this site and come back
often! This
website is brought to you through the collaborative efforts of HUD/FHA, the Department
of Veterans Affairs, Department of Labor, Fannie Mae, Freddie Mac, and members
of the mortgage industry. -
Steps To Take
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