What to do if you can’t make your mortgage payments

Rick Sheppard
Published on May 15, 2020

What to do if you can’t make your mortgage payments

It seems like only yesterday that the word “foreclosure” dominated the headlines as millions of Americans struggled to make their mortgage payments and many lost their homes during the Great Recession of 2008.

Now, that dreaded “F” word is reappearing in media accounts of the COVID-19 pandemic’s effect on the economy and the job market.  Yes, they’re speculating.  Nobody really knows what will happen or how long this will last.  But it’s likely that the U.S. economy will take years, not months, to return to the levels we saw just prior to March of 2020.

And for many, all it takes is the prospect of missing one mortgage payment, however, to bring back all those dreadful memories from years ago.

There is some good news, though.  Here are some suggestions to help you deal with the prospect of being unable to make your mortgage payments.

You’re safe… for now

The federal government and many state governments have ordered foreclosures and evictions to cease, for the time being, in response to the coronavirus pandemic that has idled millions of workers.  And sheriff or trustee sales that had been scheduled have been pushed back, as well.

This is especially good news for the many tens of thousands of Americans who have lost their jobs over the past two months and yet have mortgage payments to make.

But what happens next month?  A lot depends on your current financial picture.  If you’re a saver, you have far more options than those Americans who live paycheck-to-paycheck.

That first call

It’s a scary one – calling your mortgage company to tell them you can’t make your payment.  But do it… and simply ask what options they can offer you.  Be sure to take good notes.

Many mortgage companies and banks are offering deferral, or forebearance, programs during the COVID-19 crisis.

Keep in mind that a deferral isn’t forgiveness and you’ll be expected to make up the missed payments at a later date (unless you can convince them to tack the missed payments onto the end of the loan).

Also, the interest on the loan will most likely continue to accrue.

You will most likely need to offer proof of your hardship and many lenders require pay stubs and bank statements (to show a declining income) and a profit and loss statement from the self-employed.  You’ll have some work to do, to be sure.

What if my lender won’t work with me?

Your lender will very likely listen to you as the COVID-19 crisis continues.  But if you  have a conventional loan and the lender refuses to work with you, call a HUD-approved housing counsellor at (800)569-4287 for guidance.

Borrowers with FHA-backed loans will find help dealing with their lender by calling the National Servicing Center at (877)622-8525.  You will be asked to provide the names of all people listed on the mortgage and the full address of the property.  If you have your loan statement handy, jot down the 13-digit FHA case number.  This may get you faster service.

VA borrowers can find help on the U.S. Department of Veterans Affairs website.

Additional solutions

If your lender won’t work with you, or you prefer not to pursue the previously mentioned solutions, consider the following ways of dealing with burdensome mortgage payments:

  • Sell the home (possibly as a short sale, if you have no equity)
  • Apply to refinance your mortgage

Avoid foreclosure prevention scams

During the Great Recession, foreclosure prevention scams became a cottage industry.  Many of these scam companies chose names and phone numbers that were quite similar to those of government programs.  They charged high up-front fees while promising to pay off the borrower’s delinquent mortgage.  Be aware, these types of scams may well pop up again.  Be sure you know who you are communicating with – be it online or by telephone.

Finally, if you have any questions or suspicions about offers you receive, call your attorney, a HUD housing counselor (800-569-4287) or reach out to us and we’ll point you in the right direction.

The author, Rick Sheppard, is a licensed real estate broker with RE/MAX Achievers, Inc in Pennsylvania and a 32+ year veteran of the real estate trenches.  He knows a lot because he’s seen a lot.  If you have any questions about this or any real estate related topic, feel free to contact Rick at [email protected] and he’ll do his best to answer your questions.

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