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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!
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Your monthly mortgage billing statement |
Your
payment coupon book | |
Web
links or customer service numbers found under "help
for homeowners" lenders | |
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.
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.
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!
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.
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.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. |
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 | |
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.
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. | |
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. | |
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. |
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. | |
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:
International
Real Estate Digest |
National
Association of Hispanic Real Estate Professionals | |
National
Association of Realtors | |
National
Association of Real Estate Brokers, Inc. | |
The
Homestore | |
Selling
a Home | |
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:
Victims
of a declared Natural
Disaster area |
Called
back to Active Military Duty: Questions
& Answers for Reservists, Guardsmen and Other Military Personnel regarding
The Servicemember's Civil Relief Act. | HUD has a toll-free number for servicemen and women with questions concerning their mortgage. For more information, go to The FHA Resource Center. |
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.
Equity
skimming: a buyer offers to repay the mortgage or sell the property if you sign
over the deed and move out. |
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 (800) 348-3931 to get information on what steps to take to file a complaint. Homeowners who call will receive a brochure that contains information also found on the Web site.
HUD's
Predatory Lending Web Site |
Freddie
MAC's Predatory Lending Web Site | |
Freddie
Mac's "Don't Borrow Trouble" Web Site | |
The
National Consumer Law Center has consumer
brochures in different
languages.
Go directly to the loss mitigation department of the "help for homeowners" lenders that are ready to help you. |
HUD-approved
local housing counseling agencies |
HUD-approved
national and regional housing counseling intermediaries | |
Consumer
credit counseling | |
Credit
education curriculum | |
Avoid
Foreclosure |
FHA's
National Servicing Center | |
FHA
mortgage terminology | |
Veterans
home loan program | |
Referrals
to other federal government Websites | |
HOPE
NOW Alliance |
Legal
assistance for homeowners and renters | |
Researching
what your home is worth | |
Homebuyer
education glossary | |
A
glossary of credit terms | |
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.
Content current as of 12 June 2008 | Back to top |
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