Home ownership is a cornerstone of the American Dream, and the way most Americans build wealth. But what happens when life throws you a curveball? How can you avoid losing your home and all of your hard work? 

For the past three years, homeowners have had special rights under the CARES Act. They were able to pause payments on any home loan underwritten by the US Government without penalties or fees. And they were able to request this relief without filling out complicated forms—homeowners who were financially impacted by COVID simply needed to request relief from their mortgage servicer. SixFifty built a free tool called HelloLender that helps homeowners request this relief. Thousands of Americans have used HelloLender to access forbearance. 

Generally speaking, those special rights end in May 2023 when the COVID-19 Public Health Emergency (PHE) ends. Homeowners with mortgages backed by the Federal Housing Administration (FHA) and United States Department of Agriculture (USDA) can request CARES Act forbearance through May 31st, 2023. Homeowners whose mortgages are backed by Fannie Mae or Freddie Mac may have more time—an official end date has not been announced as of May 4, 2023. And all homeowners still have options. 

Read this guide to learn about your rights, your options, and what to do when you can’t pay your mortgage. 

Don’t wait 

If you can’t afford your mortgage payment, don’t wait. Call your mortgage servicer right away. Your mortgage servicer can’t start the foreclosure process until you’re 121 days past due, but being just 30 days past due can rack up fees and hurt your credit. The sooner you contact your mortgage company, the more options you’re likely to have. 

Mortgage payments are due on the 1st of each month, and your mortgage servicer can charge late fees starting on the 16th of the month. If you can’t afford your mortgage, the last thing you need is to add fees to your payment. Call your mortgage servicer as soon as you think you might miss a payment. That way you can set up a plan, avoid fees, protect your credit, and prevent foreclosure.

Call your mortgage company as soon as you’ve read the tips and instructions below.

Call your mortgage servicer

You can usually find your mortgage servicer’s number on your mortgage statement or on the mortgage servicer’s website. If you don’t know the name of your mortgage servicer, you can contact a HUD-approved housing counselor for help.

If you’re nervous about talking to someone on the phone, write some notes for yourself beforehand. Every mortgage company is different, but yours will most likely want to know these details: 

  • Why you can’t afford your mortgage payment. Your answer can be simple and short, like, “I had an unexpected medical expense” or, “I’ve lost income due to COVID.”
  • When you think you’ll be able to pay again. No one can predict the future, but how long do you think it will be until you can pay your mortgage again? Is it possible you won’t be able to pay your mortgage again? 
  • Information about your income and expenses. If you’re asking for forbearance under the CARES Act, you don’t need to answer this question. Use this page from the Consumer Financial Protection Bureau to check whether this applies to you. 
  • Whether you’re in the military. Active service members are entitled to additional benefits and protections. So make sure to let your mortgage company know if you’re in the military. 

Some mortgage companies may ask you to complete a “mortgage assistance application” and provide a “hardship letter” and proof of hardship. If you’re asking for forbearance under the CARES Act, your mortgage servicer can only require a hardship letter and you can use HelloLender to create a free hardship letter. 

Choose the right option for your situation 

You might have several options to keep your house, and it’s important to understand them. Before you call your mortgage servicer, read through these options. That way you can work with your mortgage servicer to find the best solution for you and your home. You can also get free help from a HUD-approved housing counselor to find the right options. Keep reading for more information about housing counselors. 

  • Reinstatement: If you had a temporary financial hardship and couldn’t afford your mortgage payment, but now you can, you don’t need a formal plan. Just let your mortgage servicer know that you can now pay your mortgage, and ask if they can waive a late fee and avoid hurting your credit. 
  • Forbearance: If you’re experiencing a temporary financial hardship but you believe you’ll have money for your mortgage in the next few months, forbearance may be your best option. With forbearance you pay a reduced payment, or no payment, for a temporary period. Loans typically continue to accrue interest and skipped or reduced payments could be due at the end of the forbearance plan. You can use HelloLender to request forbearance in writing. 
  • Refinance: Could you afford your mortgage payment if it were a little lower? One way to lower your monthly mortgage payment may be to refinance your house. This means taking out a new loan to pay off your existing loan. But there are pros and cons to consider. You might lower your payment, but pay a higher interest rate, which can cost tens of thousands of dollars over the life of your mortgage. Usually when you refinance, you also have to pay “closing costs.” The national average closing cost is about $2400. Consider all of these factors when deciding whether to refinance. 
  • Loan modification: Another possible way to lower your monthly mortgage payment is loan modification. The modification can reduce your monthly payment to an amount you can afford. This could include extending the number of years of your loan, reducing your interest rate, or reducing your principal balance.  
  • Repayment plan: These plans are a good fit if you’ve missed several mortgage payments but you can afford to pay more than your normal payment for the next few months to get caught up. For example, if your payment is usually $3,000 and you missed two payments, that means you owe $6,000 (plus any fees). You could offer to pay an extra $1,000 for the next 6 months in order to catch up without having to pay it all at once. Repayment plans usually last between 2 and 6 months.
  • Short-sale: Nobody wants to sell their house for less than it’s worth. But sometimes that’s the best option. If you can’t afford my monthly mortgage payment, and you owe more on my mortgage than your home is worth, you might consider short-selling. If you think short-selling is the best option for you, work with your mortgage servicer to choose a price for your house that works for you and for the servicer.
  • Give your home to your lender (Deed-in-lieu of foreclosure): This process is like selling your home but without actually selling it. You would give up ownership of the home, and in exchange the mortgage servicer would erase some or all of your mortgage debt. 

In some cases, you might need more than one option. After a mortgage forbearance plan, for example, you usually owe all of the skipped payments and interest. In those cases, you would likely need to go on a repayment plan. Otherwise, you’d need to pay all the skipped payments at once. 

Understand what your loan servicer has to do (and what they can’t do) 

Many of your options will vary depending on where you live, how much you owe, and who services your mortgage. But all homeowners in the US have rights and certain protections. 

  • When your payment is 36 days past due, your loan servicer must try to contact you. When they do, they’re required to provide you with accurate information and tell you which options you may be eligible for. 
  • If you ask for help, your mortgage servicer has to tell you what options you may have to keep your home. If you might be better served by leaving your home, your mortgage servicer must tell you about those options as well. 
  • When your mortgage payment is 45 days past due, your servicer must assign someone to send you a written notice, respond to your questions, and help you with available options. 
  • Your mortgage servicer can’t start foreclosure until your mortgage payment is more than 120 days late. And the mortgage servicer can’t start foreclosure while your options are being evaluated or if you’re following the terms of a loan modification. 

Get Help!

Wherever you are in the US, and whoever services your mortgage, you can get free expert help from a HUD-approved housing counseling agency. To find a HUD-approved housing counselor visit this CFPB site or call (800) 569-4287. You can also call the HOPE™ Hotline, which is open 24 hours a day, seven days a week, at (888) 995-HOPE. 

Here are some of the ways a HUD-approved housing counselor can help you for free: 

  • Discuss your specific situation and let you know if you qualify for additional help
  • Help you understand the options your mortgage servicer provided and discuss which might work best for your home.
  • Walk you through the process, including any forms or other paperwork you may need. 

Another resource is The Homeowner Assistance Fund. This federal program is available to homeowners in almost every state. The process and eligibility requirements vary by state, so use this link to find details for your state. 

If foreclosure is imminent or you’ve been served with legal papers, you may need to consult an attorney. Active-duty military, retired service members, and their families are eligible for free legal assistance. If you’re not in the military, affordable legal help may still be available. You can find affordable legal help in your area here

SixFifty can help too! 

We built a free tool called HelloLender to help you write a letter to your mortgage servicer requesting forbearance under the CARES Act. In June of 2023 we’ll update HelloLender to include a general forbearance letter. HelloLender is just one of the free tools you can find in SixFifty’s Legal Aid Library.