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Facing A Mortgage Payment Shortfall: Do’s & Don’ts

February 15, 2017

You budget. You plan. You work hard to make ends meet. Good on ya! But if life throws you a curve ball and you find yourself unable to make your mortgage payment, what do you do? Here are four do’s and four don’ts.

Do contact your loan servicer sooner rather than later to explore solutions. Your proactiveness and willingness to remedy the situation will go a long way with the servicer. Plus, missing more than two months of payments is a surefire way to invite foreclosure proceedings. And as you’ve probably heard, foreclosure hugely impacts your credit for at least seven years.

Don’t put your head in the sand. That doesn’t even work for ostriches. Waiting to take the problem head-on may decrease the options available to get you back on track. Even if you’ve been turned down before, try, try again.

Do get your paperwork in order ASAP. Your loan servicer will need:

·      your gross monthly household income (recent pay stubs)

·      proof of other income, savings and assets

·      your monthly expenses

·      the amount of equity in your home

·      your most recent tax return

·      account balances and payment minimums (credit cards, home equity loans, car loans, student loans, etc.)

·      a completed Hardship Affidavit, which allows you to explain your situation

Don’t just wish it away—unless you have a genie ready to grant you three wishes. (Even then, verify the genie’s references.) The good news is that most lenders don’t wish to own your house. They’re in the business of loaning money. That means they typically are willing to work with you

Do what it takes to avoid defaulting or going into foreclosure. Options on the table include:

·      Reinstatement

·      Repayment plan

·      Forbearance

·      Loan modification

·      Sell your home

·      Bankruptcy

FHA and VA loans may have additional solutions. Check with your loan servicer for details.

The Nevada Hardest Hit Fund has a number of programs available to homeowners at risk of default or foreclosure. First, the Hardest Hit Fund offers loan principal reduction for borrowers who have suffered an eligible financial hardship and owe more than their home is worth. Secondly, there is an unemployment mortgage assistance program for borrowers who have suffered a loss of income due to unemployment or underemployment. The final program offered provides mortgage reinstatement assistance for borrowers who were previously unemployed and are now employed or underemployed and whose primary mortgage is delinquent. You can apply assistance from the Nevada Hardest Hit Fund if:

·      the home is your primary residence

·      you do not own more than one home

·      you are not in an active bankruptcy

·      you have a manufactured home and it has been converted to real property

·      you are a U.S. citizen or legal U.S. resident

Visit the Hardest Hit Fund website at www.nahac.org for additional details.

Be sure to discuss all options with your loan servicer. Together, you can arrive at an agreement with the least amount of repercussions to your credit and future financial dealings based on the expected duration of your hardship and other financial information. 

Don’t fall prey to scam artists. If you’re asked to pay a fee for foreclosure avoidance counseling, it’s most likely a scam. The U.S. Department of Housing and Urban Development and Homeownership Preservation Foundation are two great, legitimate and FREE resources.

Do keep track of every conversation and correspondence. Be religious about logging the dates, times, names of people you talked to, their contact info, and the gist of the correspondence. After all, you are your own advocate. It’s up to you to keep on top of the progress that benefits you.

Don’t get frustrated if the situation doesn’t resolve itself as quickly as you think it should. Patience is definitely a virtue, and has paid dividends to many people in similar situations.

From Here On Out

To help ensure financial hardship doesn’t happen to you—either again or in the first place—we strongly suggest you create a budget. There are several user-friendly budgeting tools to bring out your inner budgeting rock starness. If you have further questions, feel free to contact one of our HIP-qualified lenders. They’ve proven to be standup people, and super knowledgeable, too.

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