It seems like only yesterday that the word “foreclosure” dominated the headlines as millions of Americans lost their homes during the Great Recession. Now, that dreaded “F” word is reappearing in media accounts of the COVID-19 pandemic’s effect on the economy. Yes, they’re speculating. Nobody really knows what will happen nor how long this will last.
All it takes is the prospect of missing one mortgage payment, however, to bring back all those dreadful memories from years ago. Put “foreclosure” to the back of your mind. I have some suggestions to help you deal with if you are unable to make your mortgage payments.
You’re safe for now
“President Trump on Saturday ordered foreclosures and evictions to cease for 60 days across the U.S. in response to the coronavirus pandemic that has idled millions of workers.” Good news for the tens of thousands of Americans who have lost their jobs over the past few weeks. At least for one month, they will have one less bill to worry about. But what happens next month? A lot depends on your current financial picture. If you’re a saver, you have far more options than those Americans who live paycheck-to-paycheck.
That first call
It’s a scary one – calling your mortgage company or bank to tell them you can’t make your payment. But, call, and afterward, you’ll be glad you did.
Many mortgage companies and banks are offering deferral programs during the COVID-19 crisis. Keep in mind that a deferral isn’t forgiveness and you’ll be expected to make up the missed payments at a later date (unless you can convince them to tack the missed payments onto the end of the loan). As well, the interest on the loan will most likely continue to accrue. You will most likely need to offer proof of your hardship and many lenders require pay stubs and bank statements (to show a declining income) and a profit and loss statement from the self-employed. Also note, it might have an impact on your FICO score.
What if my lender won’t work with me?
I have yet to hear of a lender who is refusing to at least listen to homeowners at this time. This doesn’t mean they don’t exist. If you have a conventional loan and the lender refuses to work with you, call a HUD-approved housing counsellor at 800-569-4287. VA borrowers can find help on the U.S. Department of Veterans Affairs website.
If your lender won’t work with you, or you prefer not to pursue the aforementioned solutions, consider the following ways of dealing with mortgage payments that you cannot afford at this time:
- Sell the home
- Apply to refinance your mortgage
Avoid foreclosure prevention scams
Many of these scam companies chose names and phone numbers that were quite similar to those of government programs. They charged high up-front fees while promising to pay off the borrower’s delinquent mortgage.
If you have any questions or suspicions about offers you receive, call a HUD housing counselor (800-569-4287) or reach out to me so I can point you in the right direction.