What can I do if I can't pay my mortgage?
Hardships create difficult situations and require difficult decisions.
If you’re experiencing a hardship, you might be wondering what bills to pay and if you can still afford your home. If you’re having trouble paying your mortgage, your mortgage servicer may provide mortgage assistance options to help you avoid foreclosure. Mortgage assistance options can help to keep you in your home with an affordable payment or help you with a graceful exit from your home.
This page provides you with practical guidance on what to expect, and what choices you may have when you’re having trouble paying your mortgage.
Mortgage servicer, investor, guarantor, and insurer
Mortgage servicer
Your mortgage servicer manages your mortgage account. The servicer,
- Accepts your regular monthly payment
- Advises you on potential upcoming rate changes
- If you make escrow payments, submits your property taxes and/or insurance payments on your behalf
If at any point you struggle to make your mortgage payment, your servicer may be able to help you with assistance options.
Your mortgage servicer may or may not be the company that provided your mortgage. It is normal for a mortgage to move from one servicer to another over the life of a loan.
Mortgage investor, guarantor, or insurer
Other participants in the mortgage finance industry include investors, insurers, and guarantors. In some cases, these different entities may require your servicer to follow guidelines that can affect what options your servicer can offer you. However, your mortgage servicer will know these guidelines and will work with you to service your account.
An investor is the company that owns your loan. Investors may include private companies such as Freddie Mac and Fannie Mae. There may also be government agencies that guarantee or insure lenders and investors against certain losses that result from a defaulted loan. These government agencies may include entities like Ginnie Mae, FHA, USDA, and the VA.
What happens if my payment is late?
It’s important to always pay your mortgage on time. Your payment is due on the 1st of every month. If your payment is late, your servicer may charge you a late fee and attempt to contact you. The good news is that, you have until the 15th of the month to make your payment before a late fee is charged. A late fee can be charged for each month that you miss a payment. Additional fees can also be charged if you go into default (more than 30 days late). If you miss a mortgage payment, your loan will be “past due.” If your loan is 30 days past due, it may be reported on your credit report. A single late or missed payment on your credit report can reduce your credit score.
What are the important dates to know?
| As soon as you think you can't make your payment | 30 days past due | 36 days past due | 45 days past due | 121 days past due |
|---|---|---|---|---|
|
Contact your mortgage servicer or housing counselor. |
Your servicer may report you to credit reporting companies as delinquent on your loan. |
Your servicer is required to try and make live contact with you. |
Your servicer is required to assign you personnel to respond to your inquiries and assist you with available assistance options, and send you a written notice. |
Your loan may be referred to foreclosure attorneys unless you have an active loss mitigation application package. |
Free, expert help is available
Your mortgage servicer or a HUD-approved housing counseling agency can help at no cost to you. The sooner you call your servicer or a housing counselor, the more options you will have.
How can your mortgage servicer help you?
If you are having trouble with your mortgage, your servicer will try to understand your situation. If there is a hardship, your servicer will explore mortgage assistance options with you. Options might include,
- A repayment plan
- A loan modification
- Short sale or Deed-In-Lieu of foreclosure.
If you cannot reach a solution with your mortgage servicer, and the account remains delinquent, your home may be foreclosed on.
Reach out to your servicer now!
Your servicer will send you a list of the documentation that you will need to provide to be evaluated for help. Examples include paystubs, bank statements, and award letters. Documentation may also include other types of formal documentation that identify certain monthly benefits to which you may be entitled – such as Social Security. Some documents may need updating periodically and therefore, the services may request documents several times.
You may need to provide a “hardship letter” and proof of hardship to your servicer. The hardship letter should include enough details so your servicer can better understand your situation.
Your servicer may also ask you to sign documents to allow them to check your credit report or seek tax information to confirm some of the financial information you provide.
How will the servicer use these documents?
Your servicer will use the documentation to determine your eligibility for mortgage assistance options.
A housing counselor can help!
A HUD-approved housing counselor is a trained professional who can advise you on choices that may be available to prevent foreclosure. The U.S. Department of Housing and Urban Development (HUD) supports a network of housing counseling agencies throughout the country. Housing counseling is available in many languages. The HOPE Hotline provides assistance from a housing counselor by telephone 24 hours a day, 7 days a week at (888) 995-HOPE (4673).
A housing counselor will:
- Help you to understand your current situation, explain your mortgage assistance options and review what documents you will need to provide to your servicer.
- Be able to contact the servicer and help prepare and submit your application to the servicer on your behalf.
- Help you make a budget to help you pay your monthly mortgage payment and other expenses.
- Provide information about local resources that may be helpful to you.
How to find a housing counselor:
- www.hud.gov/findacounselor or our find a housing counselor page
- HOPE Hotline at (888) 995-HOPE (4673)
Hearing and speech impaired individuals can use the following TTY number for assistance: 877-304-9709.
There is no charge to work with a HUD-approved housing counseling agency when you’re having trouble paying your mortgage – Help is free!
What types of mortgage assistance options might be available to you?
Below is a list of mortgage assistance options that your mortgage servicer might make available to you. The first time that you complete an application for mortgage assistance (also called loss mitigation), your servicer must evaluate you for all options available to you. It’s important to work with your mortgage servicer or housing counselor to try to find the mortgage assistance option that works best for you. If you bring your account current any time after submitting your first completed application, you can re-apply in the future and your servicer must fully review your new complete application.
The programs below are general types of mortgage assistance solutions that are often available to homeowners. However, you should be aware that each mortgage servicer and investor may offer customers different types of solutions that have different eligibility requirements. Every situation and solution is unique. What your mortgage servicer can offer you will depend on your situation and the requirements of your loan’s investor. For additional information, see the helpful terms list on page 7 of this document.
| Does this sound like you? | How does it work? | |
|---|---|---|
| A reinstatement may be right for you if… |
You had a temporary financial hardship that prevented you from making your monthly mortgage payments, but now you have the money to pay the amount that you owe. |
No formalized plan. Simply repay the amount owed. |
| A forbearance plan may be right for you if… |
You are experiencing a temporary financial hardship but will resume your previous level of income in the next few months. For example, you are a victim of a natural disaster and need some time to take care of your home and family. |
Pay a reduced payment during temporary hardship. Loan will continue to accrue interest and arrearages will be due at the end of the forbearance plan. |
| A repayment plan may be right for you if… |
You missed a few payments, but can afford to pay more than your monthly mortgage payment for the next few months to catch-up. |
Pay an increased payment temporarily until the mortgage debt is brought current. Repayment plans are generally between 2 and 6 months but may be longer. |
| A modification may be right for you if… |
You want to keep your home, but you can no longer afford the payment because
|
An attempt is made to reduce your monthly mortgage payment to an affordable amount and bring your loan current by adding those missed payments to the amount you owe. Modifications may require a three or four-month trial plan, which requires you to make consecutive, on-time payments before the loan is modified. |
| A short sale may be right for you if… |
You can no longer afford your monthly mortgage payment, and you owe more on your mortgage than your home is worth. You would like to sell your home, and you prefer to manage the process yourself. |
Available if your mortgage balance exceeds the value of your home. You work with your servicer to determine the listing price. |
| A deed in lieu of foreclosure may be right for you if… |
You can no longer afford your monthly mortgage payment. You would like to sell your home but prefer not to participate in the selling process. |
You work with your servicer to relinquish ownership of the property in exchange for relief from some or all of the mortgage debt. |
Understanding your numbers
Calculate your additional income
To feel comfortable with your monthly mortgage payment, it is important to understand how much you have to spend on other expenses after you pay your monthly mortgage payment.
Total monthly income after taxes |
$ |
| Proposed monthly mortgage payment from your mortgage servicer | - $ |
| Monthly car payment(s) | - $ |
| Student loan payment(s) | - $ |
| Monthly credit card payment(s) | - $ |
| Other financial obligations | - $ |
|
Your remaining monthly amount to cover living expenses any other debt and obligations This money must cover your utilities, groceries, child care or child support, health insurance, repairs, and everything else. If this isn't enough, consider options such as buying a less expensive home or paying down debts. |
= $ |
Did you know? Even if you previously had an unsuccessful loan modification, you may still have other options!
Helpful Terms
Delinquent
A mortgage is considered delinquent or late when a scheduled payment is not made on or before the due date.
Default
A mortgage is considered in default when you fail to make any payments due and such failure continues for a period of 30 days or more.
Temporary hardship
A temporary hardship is a hardship that will come to an end and your previous level of income will return within a few months. Examples include temporary unemployment or a natural disaster.
Scheduled payment increases
To get you the most help possible, a temporary low initial interest rate may be applied. Later the rate will be "stepped up" incrementally until you are set at a normal standard rate.
Principal forbearance
To achieve a lower monthly payment, a portion of the principal is deferred and becomes non-interest bearing. You will have to pay this portion back at the end of the loan.
Balloon amounts
A balloon amount is a portion of your loan’s principal balance that is not paid by your scheduled monthly payments. This amount is due at the end of your loan term and may or may not accrue interest.
Term extension
Adding additional months onto your loan term may result in a lower monthly payment because the same loan balance is spread over a longer period of time. Modification terms can extend the duration of your loan, but are generally not longer than 40 years.
Fair Housing Information
Do you believe your lender or mortgage servicer discriminated against you or against someone associated with you or your home?
Under the Fair Housing Act your lender cannot discriminate against you for,
- Race
- Color
- Religion
- Sex
- Familial Status
- National Origin
- Disability
Under the Equal Credit Opportunity Act (ECOA) your lender cannot discriminate against you for
- Race
- Color
- Religion
- National Origin
- Sex
- Marital Status
- Age
- Receiving income from a public assistance program
- Exercising any right under the Consumer Credit Protection Act
If you feel that you have been unlawfully discriminated against, you may file a complaint under the Fair Housing Act or the Equal Credit Opportunity Act (ECOA).
You may file a fair housing complaint with HUD at: http://www.hud.gov/fairhousing or by calling 800-669-9777 or TTY 800-927-9275. For more information on filing an ECOA complaint, see: https://www.justice.gov/crt/equal-credit-opportunity-act-3 .