If you are struggling to make mortgage payments, you are not alone. According to a recent estimate from Harvard University, over 2 million homeowners are behind on their mortgages and could soon face the possibility of eviction. Many homeowners were able to hold out with the help of federal limitations on foreclosures, but the deadline for those protections is soon ending.
What were the protections?
The biggest protection for homeowners likely came with the federal Coronavirus Aid, Relief and Economic Security Act (CARES) last year. This law essentially resulted in a freeze on foreclosures. This foreclosure freeze option was used by over 7 million homeowners.
Now homeowners who may be months behind in their mortgage payments are wondering how they can keep their homes when these protections expire.
What options are available?
Homeowners who are struggling to make their mortgage payments generally have three choices: they can prepare to resume payment, renegotiate the terms of the loan or prepare to leave their home. Those who cannot afford to restart payments have different options depending on the type of loan. If federally backed, they can likely apply for an additional extension. If this is not an option, the homeowner can attempt to negotiate with their lender. In some cases, the lender may be willing to adjust the terms of the loan and agree to a more manageable payment plan.
Leaving the home through foreclosure is generally a last option. Before going this route, it is often helpful to explore other loss mitigation options with a professional. It is important to explore these options sooner rather than later, as it can be difficult to stop the foreclosure process once it begins.