Financial hardships can strike when we least expect them. Maybe you’ve been part of a downsizing at work, a catastrophic illness has wiped out your savings, or you’re facing any number of other financial challenges. For any kind of financial hardship, there are multiple options to help you get back on track.
I’ve missed one or more payments. What should I do?
As soon as—or, better, before—you miss a payment, contact your mortgage servicer. The company may offer mortgage-relief options that could help you stay in your home. Be sure to ask how each of these options will affect your credit score.
What are my options to catch up on my mortgage?
Ask your mortgage servicer if you qualify for one of these mortgage-relief options that can help you avoid foreclosure:
- Forbearance. Temporarily pause or reduce your monthly payments for anywhere from one month to a year, but interest accrues; then, repay on an agreed-upon schedule or at the end of your loan.
- Deferment. Stop or defer payments for as long as 36 months and repay the past-due amount in a lump sum at the end of the loan.
- Loan modification. Reduce the interest rate, extend the loan term, or add past-due amounts to the loan balance. These changes would be permanent for the life of your loan.
- Reinstatement. If your hardship was temporary and you have the funds, you can arrange to pay the entire past-due amount, including late fees.
- Refinancing. If interest rates are favorable compared to your current rate, you might also be able to refinance your mortgage to lower your monthly mortgage payments.
What if I can’t pay back the missed payments?
If your hardship is longer term, options can include:
- Selling your home. You can sell if you have the equity to pay off the loan.
- Initiating a short sale. If your mortgage balance is more than the current market value of your home, you may have the lender forgive or defer payment on the difference under a short sale. To avoid having a debt collector come back to you later, you’ll need to obtain a written deficiency waiver from the lender. Note: cancelled debt from a short sale must be reported to the IRS and is considered taxable income.
- Deed-in-lieu of foreclosure. You can voluntarily transfer the title of your home to your lender in exchange for cancellation of the rest of your mortgage debt.
What if I’ve already received a notice of foreclosure?
Each state has unique foreclosure timelines and processes. Maryland’s process can be found in this brochure, available in both English and Spanish.
If you receive a Notice of Intent to Foreclose, timely action is essential. A lender can file a foreclosure action in court as soon as 45 days after sending this notice. A reputable housing counselor can help guide you through this process.
If your mortgage company has already filed a foreclosure action in court, you have a short window of time to act to prevent foreclosure. If you have received a Notice of Intent to Foreclose (NOI) or an Order to Docket (OTD) from the courts, consider contacting a nonprofit legal services provider as soon as possible.
In Maryland, you have the right to request foreclosure mediation with your mortgage lender once foreclosure proceedings are initiated with the court system. You will have 25 days to complete the Request for Foreclosure Mediation form and file it with the Circuit Court to have your request for mediation granted.
Where else can I turn to for assistance?
- The Maryland Department of Housing and Community Development has several resources for homeowners who have fallen behind on their mortgage payments. You can visit their website, or call 1-877-462-7555 to find a state-approved nonprofit agency that can provide individual guidance to homeowners facing foreclosure.
- If you choose to sell your home, a REALTOR® can help you. Those who hold the Short Sales and Foreclosure Resource Certification have special training to help you through a difficult sale.
Be wary of mortgage-relief scams!
Scammers prey on vulnerable homeowners by promising to get you modifications on your loan or help you avoid foreclosure. Never pay a company upfront for mortgage-relief help and only use reputable housing counseling agencies.
The State of Maryland has resources on how to avoid common real estate scams and hotlines to report predatory activity. The Federal Trade Commission also offers helpful information about mortgage-relief scams.
