I was recently laid off from my job and can't afford to pay the mortgage payments on my home. Can I get help with my loan?
Yes, possibly. Depending on your circumstances and where you live, you might be able to get help through a federal, state, or lender program that:
If you lose your job though no fault of your own, you might be eligible to receive mortgage payment assistance from a Hardest Hit Fund program, if your state offers one.
The U.S. Department of the Treasury created the Hardest Hit Fund (HHF) to provide millions of dollars in aid to the states that experienced the most extreme home price declines and high unemployment rates as a result of the Great Recession. These states then used the funds to establish programs designed to distribute money to distressed homeowners to prevent mortgages from going into default or foreclosure.
The following states established HHF programs: Alabama, Arizona, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee, and Washington, D.C.
However, some of these states have since ended their programs because funding ran out.
The various HHF programs typically provide funds to:
So, if you qualify, you can remain in your home while you search for new employment without worrying about making mortgage payments.
Again, some states have ended their programs because they ran out of money.
However, while all of the state Hardest Hit Fund programs were scheduled to close by the end of 2020, some have remained open or reopened to help homeowners affected by the coronavirus pandemic.
If a temporary hardship, such as a job loss, causes you to fall behind in your mortgage payments, a forbearance agreement could help you.
With a forbearance agreement, your mortgage servicer agrees to reduce or suspend your monthly mortgage payments for a set amount of time. At the end of the forbearance, you generally must resume the full payment and get current on the missed payments, including principal, interest, taxes, and insurance. You can usually do this by:
Sometimes, the servicer can extend the forbearance if your hardship isn't resolved by the end of the forbearance period. You won't be subject to foreclosure during a forbearance period.
If you have an FHA-insured loan and you lose your job, you might be eligible for a "special forbearance" (SFB). This program is designed to give homeowners a chance to stay in their homes until they land a new job and resume making their regular mortgage payments. The program was due to expire in August 2013, but FHA extended it indefinitely.
A SFB could last one year, but there isn't a maximum term limit. Also, it might be followed by a payment schedule based on your ability to pay or another option that will cure the default.
A "loan modification" is a long-term change to your existing loan terms, like an interest-rate reduction, which then lowers the monthly payment to make the loan more affordable.
If Fannie Mae or Freddie Mac own your loan, you might qualify for the Flex Modification program, which can lower an eligible borrower’s mortgage payment by around 20%. You’ll have to show that your household has a steady stream of income and can make payments under a modified loan.
Many lenders have their own in-house ("proprietary") mortgage modification programs. Again, you’ll have to show that your household has a steady stream of income and can make payments under a modified loan.
If you need additional information on any of the programs mentioned in this article or have general questions about how to obtain help with your mortgage, consider talking to a lawyer. You may also contact the U.S. Department of Housing and Urban Development (HUD)'s Housing Counseling Program and arrange to speak with a housing counselor.