Hard times happen, and it can be difficult to ask for help when you run into financial trouble. Life situations like unexpected medical expenses, a divorce, or losing a job may be one of any reasons you might be struggling to keep up with bills – including your mortgage.
Talk To A Housing Counselor
A HUD certified Housing Counselor can play an important role if you have fallen behind on your mortgage payments and may be facing foreclosure. A Housing Counselor will help you assess your financial situation and offer specific suggestions on what you should do, free of charge.
A Housing Counselor can:
- Review your financial situation and help you plan a budget and spending plan;
- Help you to contact your lender or loan servicer;
- Identify what workout options are available and the option that is best for you;
- Explain the terms of any refinancing or other options to you.
Know Your Options
Options to Stay In Your Home
If you are having trouble making your mortgage payments, there may be options available based on your financial situation and the type of mortgage insurance you have.
Maine HOPE
If you are a MaineHousing borrower and cannot make payments because you have lost your job, you may qualify for Maine HOPE, the HomeOwnership Protection for unEmployment plan. This program may be available to assist you by making four of your MaineHousing mortgage payments, including taxes and homeowners insurance. The amount paid becomes a junior mortgage lien, with no interest. The lien is repaid when you pay off your MaineHousing mortgage or stop using the home as your primary residence. This option is available for MaineHousing borrowers only.
MaineHousing Home Affordable Modification Program (HAMP)
If you are a MaineHousing borrower and are currently delinquent on your mortgage loan payment or at risk of foreclosure, you may be eligible for MaineHousing's Home Affordable Modification Program (HAMP). This program reduces the outstanding loan balance of your existing mortgage loan thereby lowering your monthly mortgage payments to an affordable payment. The amount of the loan reduction becomes a junior mortgage lien, with no interest and no monthly payments due. The lien is repaid when you pay off your MaineHousing First Home loan mortgage or stop using your home as a primary residence. This option is available for MaineHousing borrowers only.
Payment Plan
If you are behind on your regular monthly mortgage payment and think you’ll soon be able to make regular monthly payments again, you may be eligible for a payment plan. Your loan servicer or lender can discuss what plans may be available based on the number of months that you are behind on your mortgage.
Special Forbearance
A special forbearance is a written agreement to lower or stop your payment for a period of time. It works best if you expect a bonus, settlement, or tax refund that you will use to bring your loan up to date in one lump sum. This option is subject to investor and mortgage insurer guidelines.
Loan Modification
A loan modification is a written agreement that adjusts your loan by adding the past due amount to your loan balance and adjusting the rest of the payments to reflect the new loan amount. This option is used for loans more than three payments past due, and requires the value of your house to be greater than the loan amount.
Options to Gracefully Exit Your Home
If you think your financial trouble may be long term or permanent and believe you will not be able to keep your home, you still have options. You may be able to get out from under your mortgage debt without foreclosure and avoid unnecessary damage to your credit.
Pre-Foreclosure Sale/Short Sale
A lender approved, pre-foreclosure sale or short sale allows you to sell your home before foreclosure is completed. When your home is sold, you will be expected to pay all or most of your loan amount. In some cases, the amount you get from the sale may be less than the amount that you owe.
Deed-in-Lieu
If you don’t think you can sell your home, a Deed-in-Lieu of foreclosure allows you to transfer your property to the mortgage holder rather than go through the public process of foreclosure. To qualify for a Deed-in-Lieu, you must have tried to sell your property for at least 90 days. Also, you cannot have any other liens on your property, such as another loan, IRS or state tax liens, or the judgments of other creditors.
Talk To Your Lender
If you’re having difficulty making your mortgage payment, it’s important talk to your loan servicer or lender to work out a payment plan as soon as possible. While it’s best to call before you miss a payment, it’s important to call if you’re one or two months behind, too.
If you are not yet late on your payments, your loan servicer or lender may be able to assist you if you’re worried that you will not be able to make your payment.
Important: If you fall behind and do not work out a payment plan, your loan servicer or lender will start the foreclosure process and you may lose your home. The longer you wait to talk to your loan servicer or lender, the fewer choices you may have. Once a workout solution is fully in place and your lender is receiving the agreed-upon payments, it’s unlikely the lender will begin the foreclosure process. However, most loan servicers or lenders will not stop the foreclosure process once it has begun.
The most important thing to do is to make a call for help. DO NOT MOVE OUT of your home without first talking to your loan servicer/lender.
Please ask for help from your loan servicer or lender. Protect your home by knowing what payment options are available to you. While it’s best to call before you miss a payment, it’s important to call if you’re one or two months behind, too.
Before you call:
- Open and read all mail from your lender or loan servicer. The phone number to call to reach your lender or loan servicer will be printed on your mortgage statement or on a letter from your lender.
- Have your loan number available so your lender or loan servicer can look up your account. Your loan number also will be on your mortgage statement.
- Be prepared to answer questions about why you have missed (or expect to miss) mortgage payments. You may be asked to provide this information in the form of a letter (often called a “hardship letter”). If you need assistance in writing a hardship letter, contact a housing counselor.
- Be prepared with information on your monthly household income and expenses by completing a budget worksheet. Download a sample budget worksheet here
. Your loan servicer may do a financial assessment to find out what workout options are available to you. You may be asked to send documentation like pay stubs or income tax forms. - Be prepared with information on your savings. If you do not have money saved, be prepared to explain to your lender or loan servicer how and when you will be able to contribute money toward your loan workout.
When you call:
- Tell the loan servicing representative about your situation and that you want to work with them to bring (or keep) your mortgage current. Answer all the lender’s questions honestly, and be prepared to fax or mail any financial documentation they request as soon as possible.
- Ask what workout options are available to you. Get any proposed workout plan sent to you in writing before you agree to it. Make sure you can really afford a workout plan before you agree to it.
- If you are already late on your payments (or if the loan servicer cannot help), ask to speak with someone in the “loss mitigation” department. This is the department that can talk to you about possible workout options. Get a phone number for the person you talk with in the loss mitigation department, so you can call that person back directly.
- Write down the date and time of the call, who you talked to, and what the loan servicing representative told you.
- If you have questions or want a second opinion, contact a HUD-approved housing counselor for free advice.
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Avoid Scams
Beware of foreclosure rescue scams! While not all companies that approach you to help you save your home are trying to take advantage of you, you need to be cautious if someone offers help that sounds too good to be true.
Foreclosure scam artists take advantage of people who are facing foreclosure. After reading the lender published foreclosure notice, scam artists may contact the homeowner in person, by mail, over the telephone, or by e-mail. They may advertise their services on web sites or publications. They often refer to themselves with titles that sound official, such as “foreclosure consultant” or “mortgage consultant,” and market themselves as a “foreclosure service” or “foreclosure rescue agency.”
Do not sign anything until you have contacted a HUD-approved housing counselor or your loan servicer or lender and have asked them about the offer before making a commitment. A reputable counselor will not:
- Promise to save your credit or stop the foreclosure process.
- Request a fee in exchange for housing counseling services or modification of a delinquent loan.
- Tell you they can “save” your home if you sign or transfer over the deed to their house.
- Tell you to make your mortgage payments to someone other than your lender.