Trouble Due to a Loss of Income or Increased Expenses

A sudden increase in family expenses or a loss in income can make it hard to meet your obligations. Take action to avoid foreclosure and protect your credit.

Avoid Fraud

No matter which choice you make, be careful to avoid fraud. Here's how:

Never pay a fee up front.
Never make your payments to anyone other than your servicer.
Never sign over the deed to your home.

How Long is the Problem Expected to Last?

Is your change in income or expenses expected to be short term or long term?

Short Term

Help for Short-term (3-6 months) Change in Income or Expenses

Take action to help you survive a short-term problem and avoid foreclosure. Consider using these options:

Budgeting – Implement a crisis budget. Click here for tips on setting up a crisis budget.
Community Resources – Call 2-1-1 or your local United Way office to identify community resources available for assistance.
Evaluating Your Mortgage Terms – Would a lower rate or a longer term lower your payment?
- If your loan principal balance is less than the current market value of your home, see a HUD-certified housing counselor or your credit union mortgage lender to see if you can refinance your mortgage loan to a better mortgage product with lower fixed rate and/or a longer term.
  
  Click here for documents and information you will need.
- If you owe more on your mortgage than the current market value of your home, contact a HUD-certified housing counselor and or your lender to ask for a loan modification to adjust the rate, term or principal amount of the loan to make your payments lower.
  
  Click here for documents and information you will need
Change in Payments – Contact a HUD certified housing counselor or you lender to ask for a forbearance agreement to suspend or reduce your payments for a short period of time.
Government or Lender Programs – Contact a HUD-certified housing counselor to determine if you qualify for “Making Homes Affordable” or other current government or lender programs for mortgage rescue and assistance.
Insurance – If you have private mortgage insurance, contact your lender to request an insurance loan or an insurance partial claim to help you make your payments temporarily.

Long Term

Help for Long-term or Permanent Loss of Income or Increase in Expenses

A long-term change needs a long-term solution. Now is the time to decide:

Do you want to stay in your home?
Do you want to move out without foreclosure? You may need to relocate to more affordable housing or move for employment.

If you want to stay in your home, consider these options.

Refinancing – Refinance if you can. If your loan principal balance is less than the current market value of your home, see a HUD-certified housing counselor or your credit union mortgage lender to see if you can refinance your mortgage loan to a better mortgage product with lower fixed rate and/or a longer term.
Loan Modification – Ask for a loan modification if you owe more on your mortgage than the current market value of your home. Contact a HUD-certified housing counselor and or your lender to ask for a loan modification to adjust the rate, term or principal amount of your current mortgage to decrease your payment amount. Click here for documents and information you will need
Government or Lender Programs – Contact a HUD-certified housing counselor to determine if you qualify for “Making Homes Affordable” or other current government or lender programs for mortgage rescue and assistance.
Reverse Mortgage – If you are over 62 years of age and have equity in your home, ask your lender or a HUD-certified housing counselor if you qualify for a reverse mortgage.
Budgeting – Careful money management and a “crisis budget” can help while you are working out a solution.
Community Resources – Call 2-1-1 or your local United Way office to identify community resources available for assistance while you are seeking a mortgage solution.

If you want to move out, but owe more than the current value, consider these options.

Foreclosure Alternatives – Contact your lender to investigate foreclosure alternatives. Caution! Although not as detrimental as a foreclosure or a bankruptcy, these options may have a negative effect on your credit rating. Contact a HUD-certified housing counselor or a non-profit credit counselor to investigate the best option for you.
- A pre-foreclosure short sale or short payoff allows you to sell the house at market price and use the proceeds to settle the debt.
- A loan assumption allows a buyer to take over your mortgage debt and make the payments even if the mortgage is non-assumable.
- A deed-in-lieu of foreclosure is a transfer of your property to the mortgage holder and can be an option if you are unable to sell your home.
Budgeting – Careful money management and a “crisis budget” can help while you are working out a solution.
Community Resources – Call 2-1-1 or your local United Way office to identify community resources available for assistance while you are seeking solution.

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