I lost my job, can I get help with my mortgage?

Question

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?

Mortgage Relief After Being Laid Off

Yes, possibly. Depending on your circumstances and where you live, you might be able to get help through a program that:

• provides temporary financial assistance to pay overdue or future mortgage payments
• gives you a break from making payments altogether until you get back on your feet, or
• modifies your loan to reduce your monthly mortgage payments permanently.

Get Temporary Financial Assistance From a Homeowner Assistance Fund Program

If you lose your job on or after January 21, 2020, because of the coronavirus crisis, you might be eligible to receive mortgage payment assistance from your state's Homeowner Assistance Fund program.

On March 11, 2021, President Joe Biden signed the American Rescue Plan Act into law. Part of this law created a "Homeowner Assistance Fund" to provide $10 billion to the states to help struggling homeowners. Programs vary from state to state but generally offer assistance with paying overdue mortgage payments and, in some cases, future mortgage payments and covering other housing-related costs, like property taxes and utilities.

In some states, assistance is structured as a nonrecourse grant that you don't have to repay. In others, the assistance is in the form of a loan, which is sometimes forgivable. To learn about the Homeowner Assistance Fund program in your state, see our 2021 Foreclosure Legal Updates and 2022 Foreclosure Legal Updates pages.

This relief is in addition to COVID-19 forbearances for homeowners with federally backed mortgage loans and is available to those whose loans aren't federally backed, too.

Programs That Give You a Break From Making Payments

If a temporary hardship, such as a job loss, causes you to fall behind in your mortgage payments, a forbearance agreement could help you.

Forbearance Agreements in General

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:

• paying the lender a lump sum
• paying a portion of the overdue amount along with your regular mortgage payment over time
• deferring repayment until the loan ends, or
• completing a modification in which the lender adds the amount you owe to the loan balance.

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.

FHA Special Forbearance for Unemployed Homeowners

If you have a loan insured by the Federal Housing Administration (FHA) and 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.

An 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.

Programs That Modify Your Loan to Reduce Your Monthly Payment

A "loan modification" is a long-term change to your current loan terms, like an interest-rate reduction, which then lowers the monthly payment to make the loan more affordable.

Fannie Mae/Freddie Mac Flex Modification

If Fannie Mae or Freddie Mac owns 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 income stream and can make payments under a modified loan.

Governmental entities, like the FHA and Veterans Administration (VA), offer special kinds of modifications for borrowers with FHA-insured and VA-guaranteed loans.

In-House Modifications

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.

Getting Help

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) and arrange to speak with a housing counselor.