Whatever you do, don’t skip a payment and think nobody will notice. Living paycheck to paycheck is not really uncommon for most homeowners. And quite often, when you find yourself in a bind and you’re struggling to make the next mortgage payment, you may be tempted to try and skip a payment, thinking you’ll be able to repay it later once you get back on track.
But a passive approach to a financial issue – particularly one involving something as impactful as your mortgage – is not really advisable. Being proactive and straightforward with your creditors is far more prudent in a personal financial crisis.
Where to start If You Can’t Pay Your Mortgage Payment
The power of honesty
“The first and most important thing I always tell clients concerning delinquent mortgage payments is to contact their lender/servicer, in writing, to advise them of the hardship and inability to make payments,” says Cydney Bulger, attorney with The Bulger Firm in Jacksonville, Florida.
Openly admitting your incapacity to pay your mortgage is most likely one of the last things you want to do, being forthright regarding your situation will serve you far better in the long run.
Don’t wait too long
The longer you wait to make your financial struggle known and the harder you are trying to work the system, the less favorably your very own financial crisis is probably going to work out.
“The farther the issues go, the less affordable a modified loan can be,” warns Bryant H. Dunivan, Jr., a real estate and consumer protection attorney in Florida. Don’t assume that you have no options – you won’t know if your bank or servicer will work with you unless you ask.
Educate yourself
For homeowners who have already missed a mortgage payment, Dunivan recommends making the most of rules restricting dual tracking, by seeking loan assistance at the earliest opportunity.
Dual tracking is when a mortgage servicer forecloses on a property while simultaneously considering a loan modification. Developed by the Consumer Financial Protection Bureau (CFPB) in 2013, the rule restricting dual tracking prohibits the practice in the 120-day period after a default.
Dunivan explains that this rule has “… allowed for a lot more protecting for homeowners going into, or already in, foreclosure.” Violations of this rule, “… may subject the servicer to damages, and may give a borrower leverage in a foreclosure lawsuit,” he adds.
Pursue all possible options
“There may be some state programs that make mortgage payments for people,” says Dunivan.
The Hardest Hit Fund (HHF) was created in 2010 for homeowners who struggle to make their monthly mortgage payments in an attempt to prevent foreclosure and stabilize neighborhoods.
Not all states participate in the HHF, but those that do concentrate on helping two groups of people stay in their homes: unemployed homeowners who are searching for new work, and homeowners who owe more on their mortgage than their home may be worth.
But don’t expect miracles
“Calling your bank gets the ball rolling on any potential loan modification option,” says Dunivan. But banks may or may not offer leniency, even if you’re honest about your situation.
And if your situation is more serious along with your ability to pay back the loan is really compromised, “it’s a typical handoff system where once you meet certain criteria, you are put into foreclosure and then a series of automated messages are sent out by mail.”
Be proactive
Failure to act can lead lenders to think that you don’t care about your financial obligations.
“Now, more than ever [post-2007 housing crash], lenders are willing to work with delinquent homeowners, but if the homeowners fail to advise them of the problem, [lenders] don’t know that they need help, and assume the worst,” says Bulger.
If you wait too long to ask for help, you could eventually discover that it’s too late. If foreclosure is inevitable, consider reaching out to an attorney who specializes in helping people through – or, for those who have a good case, fighting – the foreclosure process.
Nick & Cindy Davis have assisted over 225 families negotiate the short sale process here in the Tampa Bay and Surrounding Areas. We can assist you too. We are both Certified Distressed property Experts (CDPE) as well as Short Sale Foreclosure Resource Certified (SFR), we are always just a click here or call to 813-300-7116 away.