Tag: loan modification

Housing Trends and News, Real Estate

What If I Can’t Afford To Make My Mortgage Payment Anymore?

Lupe Ruiz, REALTOR®/Broker

According to a report from Attom, in the first quarter of 2022, the U.S. had 44.9% residential properties which were equity-rich, while only 3.2% were considered seriously underwater. (Attomdata.com). Despite higher interest rates, this would indicate the majority of the mortgaged homes have plenty of equity for the long run.

Nonetheless, a serious illness, a loss of a job, or a major life change can drastically affect a homeowner’s ability to continue making mortgage payments. Many times, it is a temporary season. However, there are those times when despite all the efforts, it is not possible to get back on track.

SEEK OPTIONS

My first recommendation is “don’t give up.” Some homeowners give up and choose to stop making payments. Unfortunately, they wait for the property to foreclose and not only is their morale down but their credit is also damaged.

Before giving up, contact your loan servicer (i.e. the bank where you make your monthly payments). Depending on your particular situation, there can be loss mitigation options such as a forbearance agreement, a payment plan, or a loan modification.

If you are still not able to make the payments, you can ask for Forbearance Assistance.

This pauses your payments temporarily until you are back on your feet. Your servicer will work with you on a repayment plan when you are ready to reinstate your payments.

If you are back on your feet and can continue making your payments, you can arrange a:

Payment Plan:

A repayment plan where you either add the back payments onto your monthly payments or to the backend of the loan.

Loan Modification:

Change the terms of your original loan in order to roll the back payments into the loan. Some of the terms which can be changed are the interest rate or the term of the loan.

CONSIDER SELLING

If you are still not able to make your payments, consider selling your house. If you have equity, it can be a standard sale. If you do not have equity, it can be a short sale. What is equity? Equity is the difference between the value of your home and how much you owe on the loan. In short, if you owe less than what the house is worth you have equity and vice versa.

If you have fallen behind in your mortgage payments and choose to sell your house, it is very important that you work with a real estate agent who is experienced in short sales and properties in default. You want your agent to know how to communicate with the loan servicer so your file does not fall through the cracks; and this requires experience.

In summary, if you are having challenges making your mortgage payment, seek assistance before giving up on making the payments. It might be tempting to remove the expense from your monthly list and not worry about it anymore; but instead of giving into temptation, seek help from professionals who can guide you through the process.

Content image 1 by: Procondo CA – Unsplash.com

Content image 2 by: Evelyn Paris – Unsplash.com

Featured image by: Towfigu Barbhuiya – Unsplash.com

COVID and Real Estate, Foreclosure Moratorium, Pandemic Response, Real Estate

THE END OF THE FORECLOSURE MORATORIUM IS NEAR

Lupe Ruiz, REALTOR®/Broker

Back in 2020, homeowners whose income was affected by the pandemic were given the opportunity to apply for a forbearance on their mortgage payments. According to a report from the Joint Center for Housing Studies of Harvard University, Black Knight reported that 14% of all mortgage holders filed for a forbearance during the pandemic. By March 2021, 68% of them had already exited the program either by resolving the delinquency or paying off their loans. Eight percent were still working some sort of loss mitigation agreement and 4% were still in delinquency in the first quarter of 2021. They also reported that about 22% of mortgage holders still in forbearance by the time the 18 months are up, have 10% or less equity and more likely will not have enough equity to sell with equity. (jchs.harvard.edu)

Recently, it was announced that the foreclosure moratorium would end July 2021. So, what if you are one of those mortgage holders who is in forbearance and at risk of foreclosure?  What is next?

The Consumer Financial Protection Bureau (CFBP) has implemented protections for you that will take effect on August 31, 2021.

  • Servicers will need to give you time to process your options and consider your situation. They must meet certain steps before they can initiate a foreclosure.
  • Servicers can offer streamlined loan modifications, which cannot increase your payment.
  • Servicers will be required to increase their outreach to borrowers before they can initiate foreclosure.

What are your options:

  • Resume regular mortgage payment. You can ask to defer your missed payments by moving them to the end of the mortgage.
  • Lower monthly mortgage payment. Ask to modify your loan. This can be changing the interest rate, principal balance or the term of the loan.
  • Sell your home. If you find yourself not being able to make your mortgage payments and have enough equity, you may be able to sell with some profit. If you find you do not have enough equity, you may apply for a short sale. Foreclosure should be the last thing to consider if you do not have enough equity.

A servicer can initiate foreclosure if you:

  • Abandon the property;
  • Were more than 120 days behind in your mortgage before March 1, 2020;
  • Are more than 120 days behind on your mortgage payment and have not responded to specific required outreach for more than 90 days; or
  • Have evaluated all options other than foreclosure and there is no other options available. (consumerfinance.gov)

Feel free to contact me if you are currently in forbearance and need guidance on exiting the program, or believe you will need to sell your home. I am here to help. I’ll be happy to guide you through the process.