Problem Making Your Payment?
The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you are having trouble making ends meet because you or a family member lost a job or you’re having other financial problems.
Regardless of the reason for your mortgage anxiety, Montana Housing wants you to know how to help save your home and how to recognize and avoid foreclosure scams.
If You’re Behind On Your Payments
If you are having trouble making your payments, contact Montana Housing to discuss your options as early as you can. The longer you wait to call, the fewer options you will have.
Many options are available to borrowers – it’s worth calling even if your request has been turned down before. Be patient, and be persistent if you don’t reach us. Leave a detailed message including your name, loan number or property address and the best number to reach you at.
Prevention Options for Avoiding Default and Foreclosure
Reinstatement: You pay the loan servicer the entire past-due amount, plus any late fees or penalties, by a date you both agree to. This option may be appropriate if your problem paying your mortgage is temporary.
Repayment plan: Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payment. This option may be appropriate if you’ve missed a small number of payments.
Selling your home: Depending on the real estate market in your area, selling your home may provide the funds you need to pay off your current mortgage debt in full.
Bankruptcy: Personal bankruptcy generally is considered the debt management option of last resort because the results are long-lasting and far-reaching. A bankruptcy stays on your credit report for 10 years, and can make it difficult to get credit, buy another home, get life insurance, or sometimes, get a job. Still, it is a legal procedure that can offer a fresh start for people who can’t satisfy their debts.
Housing and Credit Counseling
You don’t have to go through the foreclosure prevention process alone. A counselor with a housing counseling agency can assess your situation, answer your questions, go over your options, prioritize your debts, and help you prepare for discussions with your loan servicer. Housing counseling services usually are free or low cost.
While some agencies limit their counseling services to homeowners with FHA mortgages, many others offer free help to any homeowner who is having trouble making mortgage payments.
When choosing a counselor, beware of anyone charging large up-front fees or guaranteeing you a loan modification or other solution to stop foreclosure. They shouldn’t be charging you high fees or making any guarantees. Take your business elsewhere.
What happens if I default on my mortgage?
Defaulting on your mortgage can add the cost of various fees to the amount you already owe. It also can damage your credit score. Ultimately, it can lead to you losing your home.
If your payment is late, you may be charged a late fee. Late fees can add hundreds of dollars to your mortgage bill.
Your mortgage servicer is the company that manages your mortgage loan account. If you're in default, your servicer may charge you for "default-related services," which can add hundreds or thousands of dollars to your loan over time.
Default-related services can include:
- Property inspections to make sure you are living in the home and maintaining the property.
- Property preservation services including lawn mowing, landscaping and repairing or boarding up broken windows and doors.
- Foreclosure costs which may include attorneys fees, property title search fees and charges for mailing and posting foreclosure notices.
Damage to Your Credit Score
Mortgage servicers provide information about your payment history to credit reporting companies, including whether you've been late with a payment or missed any payments. Even one late payment lowers your credit score, which affects whether you can get a loan in the future - and what your interest rate will be.
If you are in default, your servicer may start the foreclosure process. Not only will this add to the costs you will have to pay to bring your account current, but the foreclosure filing will be a matter of public record. This will make it tougher for you to get credit and buy another home in the future. If you aren't able to bring your loan current or work out another solution, your home could be sold at a foreclosure auction. In many states, you also may be responsible for paying a "deficiency judgment." That's the difference between what you owe and the price the home sells for at the foreclosure auction.