If You’re Behind on Mortgage Payments and You Need Help

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People fall behind on their mortgages for reasons beyond their control. What is in your control, though, is how you react and what you’re doing about the situation. There are steps you can take and resources that can help you get back on track financially. This article will cover what help is available for homeowners who are falling behind on their mortgage payments.

People fall behind on their mortgages for reasons beyond their control. Perhaps you have fallen behind because you lost your job or you have been adversely affected by the coronavirus pandemic. What is in your control, though, is how you react and what you’re doing about the situation. Although it may be tempting, ignoring your growing mortgage loan debt will make things worse.

If you’re behind on your mortgage payments, know that you’re not alone. A new report from the Consumer Financial Protection Bureau found that as of March 2021, 2.2 million American homeowners were more than three months behind on their mortgage payments. There are steps you can take and resources that can help you get back on track financially. This article will cover what help is available for homeowners who are falling behind on their mortgage payments.

Help for Homeowners Who Fall Behind on Their Mortgage Payments

Ignoring missed mortgage payments will make things worse and can lead to foreclosure. Foreclosure can be a painful and stressful legal process for homeowners. Ultimately it means that the lender can take away the home, kick out the homeowner, and try to recoup as much of the loan as possible, with penalties and fees attached. Foreclosure will drastically affect your financial health including your credit score, your ability to get a new loan or a credit card moving forward, and your housing situation. The sooner you take action once you’ve fallen behind on your mortgage payments, the better.

If you’ve fallen behind on your mortgage payments and are going through financial hardship, that’s ok. This can happen to anybody and the challenges that you’re facing are likely out of your control.There’s no reason to be embarrassed or ashamed about falling behind on your mortgage payments. You’d be surprised to find out how many people have experienced this particular challenge and that a lot of people who have fallen behind on their mortgages have good jobs and are financially well-off.

If you start to fall behind on making your mortgage payments, one of the first things you should do is contact your mortgage servicer. Their contact information, including their telephone number, is on your mortgage statement. Mortgage loans are often sold or transferred to other financial institutions, so don’t be surprised if your mortgage has changed hands several times since you first got your home loan. Tell your mortgage servicer that you’re having trouble paying your monthly mortgage and want to discuss what options you have available during this challenging time.

Catching Up on Missed Payments

There are different things homeowners who have fallen behind on their mortgage payments can do to catch up, including:

• Housing Counseling: Getting guidance and assistance from a housing counselor who deals with these types of situations can be very helpful. Talking to a HUD-approved counselor is your best first step. They can help you get a better idea of what you’re facing and what the best options might be in your unique situation.
• Refinancing: If your credit is still good, you can refinance your home loan with another mortgage company. This is why it’s important to address the issue early on before missed payments affect your credit score. Keep in mind there will also be closing costs if you choose this route.
• Loan Modification: This is when you change, or modify, the original terms on your home loan to reduce your monthly mortgage payments. You might be able to achieve a loan modification with a lower credit score than you would refinancing.
• Forbearance: This essentially means that you’ll pause payments on your loan for a set period of time. It’s a temporary fix but could be a good option if you anticipate that your financial hardship will be resolved in the short term. Government-sponsored loan servicers like Freddie Mac or Fannie Mae have specific forbearance criteria.
• Repayment Plan: This spreads the past-due amount of your monthly mortgage payments across several months. Once your repayment plan has been completed successfully, you can ask the lender for a reinstatement. The risk of foreclosure is stopped by reinstatement, as long as you stay current on your regular mortgage payments moving forward.
• Sale of the Home: An ordinary sale of the home or a short sale may be something to consider if you have fallen behind on your loan payments and don’t want to remain in the home and/or cannot afford to remain in your residence.
• Bankruptcy: This is often a last resort. Bankruptcy can provide a fresh start but there are restrictions. Depending on your financial situation, bankruptcy can help you catch up on your missed mortgage payments over a period of time.

What Happens if My Payment Is Late?

If you’ve had late payments or missed payments, you’ll probably start to get some phone calls and collection letters from your mortgage lender or servicer. You can expect them to tack on late fees and penalties, in addition to the interest rate already added to your normal monthly payments. These are all short-term consequences of falling behind on your mortgage payments. While these consequences are frustrating and you may feel tempted to ignore them, don’t. Keeping your head out of the sand and being proactive is going to be better for you in the long run.

The most serious potential long-term consequence of late or missed mortgage payments is foreclosure. Foreclosure is a legal process that allows mortgage lenders to recoup some or all of the outstanding loan balance—the past-due amount, plus late fees and costs—by taking the home and selling it to the highest bidder at an auction or sheriff’s sale. Foreclosure can be really scary and serious, but it can be avoided by those actions outlined below that are appropriate for your situation.