By Mark Cole, Chief Executive Officer, HLP
Despite a booming economy and record low unemployment, some homeowners will suffer a financial setback and have trouble paying their mortgage. People fall behind on their mortgage payment for a variety of reasons, but the primary ones are loss of a job, divorce and unexpected major expenses, such as major medical bills. Often, people in these situations do not have any emergency savings or have reached the limit on their credit cards and or other ways to borrow money.
According to Realty Trac, there were approximately 435,507 properties in U.S. that are in some stage of foreclosure — default, auction or bank owned – as of January 2019. New Jersey has the highest foreclosure rate in the nation, with one in every 605 properties in some stage of foreclosure in 2018, Experian reported. Delaware, Maryland, Illinois and Connecticut rounded out the top five.
Almost any homeowner that falls behind on their monthly mortgage payments faces the possibility of foreclosure. Once a homeowner is behind on their payments, lenders will begin sending notices demanding payment and possible penalties.
If you suffer a financial setback and fear you may not be able to make your mortgage payment, there are several actions you can take to keep your home. Here are some immediate steps to take to help keep your home:
Tap All Possible Sources to Continue Making Each Mortgage Payment. If your financial setback is temporary, it’s important to continue making your mortgage payments. For example, if you lose a job, you may be able to find another within a short period, so you don’t want to fall behind on payments and incur possible penalties. If you don’t have any emergency savings or are unable to borrow money, consider asking friends or relatives for a one-time gift or loan. You may also sell household items or even a second car to raise the needed cash.
Contact a Nonprofit Housing Counseling organization. These organizations, approved by the US Department of Housing and Urban Development (HUD), can provide information and assistance needed to avoid foreclosure. Housing counselors will help you understand all possible options and work with your mortgage company to find a solution. These agencies are often funded, in part, by HUD and NeighborWorks® America, and are free of charge. There is no need to pay a private company for these services. To find out more, visit https://www.hud.gov/i_want_to/talk_to_a_housing_counselor.
Consider Applying for Loan Modification Directly to Your Lender. If your financial setback is permanent and will have a long-term impact on your ability to make mortgage payments, consider a loan modification. A loan modification changes the terms of your loan to make it more affordable, and many lenders will work with homeowners to do just that.
Before considering this request, lenders will require a variety of documents. Homeowners can use HLP’s Homeowner Connect website to submit information and documents directly to your mortgage company to request a loan modification. Homeowners can also chat online with a nonprofit housing counselor while filling out the documents to guide you or answer any questions. Check to see if your mortgage company participates and begin the process by going here create a secure account.
Consider a Short Sale or Deed-in-Lieu. Unfortunately, not all homeowners will be able to achieve a loan modification or other solution to prevent foreclosure. While this outcome means the homeowner and their representative will face difficult choices, HLP may still be able to help.
Homeowners that cannot continue to afford their home may want to consider a short sale or deed-in-lieu. These two options enable the homeowner to leave the home without a foreclosure as part of their credit history. HLP can help the homeowner or their representative understand all of their options and connect them with a mortgage company that may consider these “non-retention” options.
Mark Cole is Chief Executive Officer of HLP, a nonprofit mortgage technology company based in Baltimore. HLP ’s web portal is a one-stop technology solution to help homeowners nationwide ensure that critical documents from distressed homeowners reach mortgage companies. To find out more about HLP’s services, visit www.hlp.org.