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Contact your servicer immediately if you are unable to make your mortgage payments. (Your servicer is the company that sends you statements and the people you make your payments to.) Even if you are already delinquent or in foreclosure, your servicer may be able to help you with a solution. Don’t delay.
Ask your servicer about alternatives to foreclosure, including repayment plans, postponements of regular payments (called a forbearance), and other "work-out" options. Visit our Glossary of Foreclosure Terms for more information on these terms.
Remember: Work-out options are tailored to fit your individual situation, but you must qualify for the plan being considered.
Provide any information requested by your servicer quickly to avoid further foreclosure action – don’t wait until the last minute. Servicers must evaluate each borrower’s circumstances on a case-by-case basis and go through an approval process to arrange work-out plans. This can take time, so it’s important you act immediately to be in touch and promptly provide any information the servicer requests.
Be prepared to provide detailed financial information to assist your servicer in qualifying you for a potential work-out option. Be honest about your circumstances and personal finances – it will help lead to the work-out option that best fits your situation.
Be ready to change your spending habits. By creating a workable budget and understanding where your money is going, you are more likely to be successful in a work-out plan.
If you need additional assistance or are uncomfortable calling your servicer, request financial counseling from a reputable third party first. For the U.S. Department of Housing and Urban Development’s (HUD) list of approved counselors call (800) 569-4287. For free counseling from NeighborWorks America and the Homeownership Preservation Foundation, call (888) 995-HOPE or visit http://995hope.org/. See our Credit Counseling page for more information.
Be sure you open all mail from your servicer or your servicer’s law firm and return calls promptly. Failure to respond quickly may result in further foreclosure actions and additional costs.
Ask the critical questions:
- What is the anticipated timeline to complete a work-out?
- Will the foreclosure sale be postponed while your servicer reviews the work-out option?
- What are your obligations under the work-out arrangement: due dates, amounts due, how long your servicer will postpone collection of payments, if applicable, and when such deferred payments must be paid back?
If you are not making payments into an escrow account for real estate taxes and insurance, your servicer will likely require that you begin doing that and will work with you to recover any payments already made on your behalf. You can usually save money and get better coverage if you obtain your own homeowner's hazard insurance policy instead of having your servicer arrange coverage for you.
Stay in contact with your servicer and/or counselor at all times. Notify your servicer and counselor of any change in your circumstances, including new employment or problems with making payments under a work-out plan.
Be realistic about your own financial condition. If you cannot afford to keep your property, consider selling it to get your equity out, or talk to your servicer about other options to give up your property.
Understand that the servicer is trying to ensure a positive result for you. Be cooperative, honest and keep your promises on any work-out arrangement.
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