If you are having trouble making your monthly mortgage payments, you may be able to protect your home, but you must act immediately. Your action may prevent the loss of your home through foreclosure. This Fact Sheet will give you an overview of your options to avoid foreclosure, but it is only the beginning. If you are in serious financial difficulty, you should seek professional assistance and/or legal counsel to best protect your investment and your home.
The very first thing you must do is call your mortgage lender. Mortgage lenders are NOT in the business to foreclose on property. They want to work with you and help you find a way to keep your home. The longer you wait, the more difficult this will be. If you are three months behind in your mortgage payments and the lender has not heard from you, they will feel justified in pursuing foreclosure. They will assume that you do not intend to pay. DON’T AVOID YOUR MORTGAGE LENDER. Take action right away to save your home and your credit record.
If your lender does not have an office in your area, check your loan papers for a toll-free long distance telephone number. If they don’t have a toll-free number, check to see if they will accept a collect call from you (their borrower). If they won’t accept a collect call, go ahead and pay for it yourself--this is important.
Be ready to discuss your problem honestly and in detail. Your lender needs complete information in order to help you. Think about the questions you may be asked and make notes to help you answer them. It will impress your lender that you are prepared and sincere.
Request a copy of “Getting Out of Debt” (Pub. No.354-027) from your local Virginia Cooperative Extension office. It will help you prepare information for the lender and contains many useful suggestions for dealing with financial difficulties.
There are many different ways in which your lender might be able to help you. Generally each case is considered on an individual basis.
Delinquent - The homeowner is delinquent when their monthly payment is one day late. When the payment has been missed completely and the succeeding payment is due, the mortgage moves into default.
Default - Any breach of the mortgage contract can constitute default (e.g. failure to maintain the property, pay real estate taxes, or carry adequate insurance). Commonly default occurs when then homeowner fails to make their monthly payments. It is important to read and understand your mortgage contract as to what it specifically regards as default.
Forbearance - The period of time during which foreclosure proceedings are stalled while possible solutions are being fulfilled (e.g. sale of home, bankruptcy).
Foreclosure - The process by which the lender takes back and sells the property. There are three types of foreclosure:
There are other sources of help, besides your lender. Virginia Cooperative Extension offers financial counseling in many locations. Contact your local Virginia Cooperative Extension office, listed in the county or city government pages in the phone book. Many communities have non-profit agencies or groups that will help you with financial counseling or housing problems. Check to see if your local government or United Way Agencies sponsor organizations which can give you assistance.
If your mortgage is an FHA (HUD), VA-guaranteed, or FmHA Mortgage contact the appropriate local government office. These agencies may have special programs to assist you. If you cannot locate these agencies in your local phone book, contact:
U.S. Department of Housing and Urban Development
Dept. of Housing and Urban Development(HUD), Richmond Office
600 East Broad Street, Third Floor
Richmond, VA 23219
Phone: (800) 842-2610
Housing Counseling Listings in your area visit:
http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm and click on Virginia or
Call (800) 569-4287 or TTY (800) 877-8339.
USDA Farmers Home Administration
1606 Santa Rosa Road
Richmond, VA 23229-5041 (804) 287-1599
U.S. Department of Veterans Affairs
210 Franklin Road, SW
Roanoke, VA 24011
Loan Service & Claims Office
(540) 857-2135 or (800)-933-5499
Virginia Cooperative Extension materials are available for public use, reprint, or citation without further permission, provided the use includes credit to the author and to Virginia Cooperative Extension, Virginia Tech, and Virginia State University.
Issued in furtherance of Cooperative Extension work, Virginia Polytechnic Institute and State University, Virginia State University, and the U.S. Department of Agriculture cooperating. Edwin J. Jones, Director, Virginia Cooperative Extension, Virginia Tech, Blacksburg; M. Ray McKinnie, Administrator, 1890 Extension Program, Virginia State University, Petersburg.
May 1, 2009