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What are my options if I cannot afford my mortgage payment?

On Behalf of | Aug 16, 2022 | Mortgages |

The pandemic hit the country hard. People lost jobs or were unable to work and may continue to struggle to find suitable employment. This translates to difficulties making mortgage payments for households throughout the country. To help keep people in their homes, lawmakers provided different bailout programs during the initial stages of the pandemic — and people responded. A recent report estimates 7.7 million borrowers partook in these programs.

As the programs come to a close, the lenders begin to expect borrowers to start paying back their mortgages. If you find yourself struggling to make these payments, know you are not alone. The researchers behind the report noted above also found that 23% of homeowners needed to either sell or refinance their homes after these programs ended and almost 10% are using loss mitigation efforts to actively avoid losing their homes.

What is loss mitigation?

The Consumer Financial Protection Bureau explains that loss mitigation refers to the process taken between the homeowner and the loan provider to avoid foreclosure. The first step is generally to try to negotiate a more manageable loan modification with lenders. If this does not work, other options can include a deed-in-lieu of foreclosure or short sale.

A deed-in-lieu of foreclosure involves the homeowner voluntarily turning over the ownership of the home to the lender. This helps to avoid the foreclosure process. In exchange, the homeowner may not be personally liable for a remaining balance on the mortgage. A short sale involves selling the property for less than what is owed on the mortgage. Although it offers an alternative to foreclosure, it is a sale so the homeowner would need not be able to keep the property.

These are just two options to consider when struggling to make mortgage payments. An attorney experienced in loss mitigation options can review your situation and discuss the benefits and risks of each option so you can choose the path that is best for your situation.