If you are struggling to make your mortgage payment or have already fallen behind, taking action early can give you more options. Foreclosure generally does not happen immediately, and mortgage servicers may have loss mitigation programs designed to help eligible homeowners resolve a delinquency or avoid foreclosure.
The most important first step is to contact your mortgage servicer rather than waiting for the problem to resolve itself.
How Does the Foreclosure Process Start?
Foreclosure is the legal process through which a lender or mortgage holder can ultimately take and sell a property after a borrower defaults on the mortgage.
Under federal mortgage servicing rules, a servicer generally cannot make the first notice or filing required to begin foreclosure because of delinquency until the mortgage is more than 120 days delinquent. Certain exceptions apply, and the timeline after foreclosure begins depends on state law and the individual case.
That 120-day federal rule should not be treated as a reason to wait. Homeowners may have more opportunities to resolve a delinquency when they contact their servicer early.
Contact Your Mortgage Servicer as Soon as Possible
If you know you will have difficulty making a payment, call your mortgage servicer using the contact information on your mortgage statement. Explain why you are having trouble, whether you expect the hardship to be temporary or ongoing, and ask about available loss mitigation options.
Be prepared to provide information about your income, household expenses, assets, and financial hardship. Your servicer may ask you to complete a loss mitigation application and provide supporting documents.
Respond quickly to requests for additional information. An incomplete application can delay the review of your options.
Ask About Loss Mitigation Options
Loss mitigation is a general term for options a mortgage servicer may offer to help a borrower address missed payments or avoid foreclosure. The options available depend on your mortgage, investor or insurer requirements, hardship, and financial circumstances.
Possible solutions may include:
- Repayment plan: You repay overdue amounts over an agreed period in addition to regular mortgage payments.
- Forbearance: Your payments may be temporarily reduced or paused, with a plan for addressing the missed amounts afterward.
- Loan modification: Certain terms of the existing mortgage may be changed to create a more sustainable payment when eligibility requirements are met.
- Other program-specific options: FHA, VA, conventional, and other mortgages can have different loss mitigation programs.
Not every homeowner will qualify for every option, and a forbearance does not automatically forgive the payments that were not made.
Can You Refinance to Avoid Foreclosure?
Refinancing may be possible in some situations, particularly before a borrower becomes seriously delinquent. A refinance replaces the current mortgage with a new loan, so the homeowner still needs to satisfy the new lender's qualification and program requirements.
Once payments have been missed, refinancing can become more difficult. Credit history, income, debts, equity, property value, and the specific mortgage program can all affect eligibility.
Do not delay contacting your current servicer while assuming a refinance will solve the problem. Explore available loss mitigation options at the same time.
Get Free Help From a HUD-Approved Housing Counselor
A HUD-approved housing counselor can help you understand your mortgage, evaluate foreclosure prevention options, prepare a loss mitigation application, and communicate with your mortgage company.
HUD-approved foreclosure prevention counseling is available free of charge. Homeowners can locate a HUD-approved housing counseling agency by calling 800-569-4287.
A housing counselor can be particularly helpful if you are having difficulty understanding your servicer's requests or determining which option may fit your circumstances.
Consider Selling Before Foreclosure if Keeping the Home Is Not Realistic
Sometimes the most practical solution is selling the property before foreclosure is completed. If the home is worth enough to pay the mortgage balance, liens, selling expenses, and other obligations, a traditional sale may allow you to resolve the mortgage and potentially retain remaining proceeds.
If the expected sale proceeds are insufficient to satisfy what is owed, ask your servicer whether a short sale or another foreclosure alternative may be available. These options generally require approval and have specific requirements.
A deed-in-lieu of foreclosure may also be available in certain situations. With this arrangement, ownership is voluntarily transferred rather than completing a foreclosure, subject to servicer and program requirements.
What if a Foreclosure Sale Has Already Been Scheduled?
Act immediately. Federal protections can depend heavily on when a complete loss mitigation application reaches the servicer.
Under CFPB servicing rules, if a servicer receives a complete loss mitigation application more than 37 days before a scheduled foreclosure sale, it generally must evaluate the application and provide a written response within 30 days. Additional protections or appeal rights may apply depending on timing and circumstances.
If a foreclosure lawsuit or sale is already pending, consider speaking with a qualified foreclosure attorney or legal aid organization about your rights and deadlines under Florida law.
Watch for Foreclosure Rescue Scams
Financial distress can make homeowners targets for scammers. Be suspicious of anyone who guarantees they can stop foreclosure, tells you to stop communicating with your mortgage servicer, asks you to send mortgage payments to someone other than your servicer, or pressures you to sign over the title to your home.
Upfront fees and promises of guaranteed loan modifications are also major warning signs. Free foreclosure prevention assistance is available through HUD-approved housing counseling agencies.
Never sign documents you do not understand or provide sensitive financial information to an organization you have not independently verified.
Do Not Rely on Outdated Foreclosure Programs
Older foreclosure articles may still recommend programs such as the Home Affordable Modification Program (HAMP) or Home Affordable Refinance Program (HARP). Those programs are no longer current options for homeowners.
Today, available assistance depends on your mortgage type, servicer, investor or insurer, and financial circumstances. Contact your servicer and a HUD-approved housing counselor for information about programs currently available to you.
What Should You Do if You Are Facing Foreclosure?
Start by opening every letter from your mortgage servicer and responding to calls or requests for information. Contact the servicer, explain your hardship, request information about loss mitigation, and submit required documents as quickly as possible.
If you need additional assistance, contact a HUD-approved housing counselor. If legal foreclosure proceedings have started, obtaining advice from a qualified Florida attorney or legal aid provider can also help you understand important deadlines and rights.
Loan Wolf Lending can help Florida homeowners explore mortgage financing when refinancing is a viable option. However, homeowners already experiencing mortgage delinquency should contact their current mortgage servicer promptly for available loss mitigation assistance.