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?

Answer

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:

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

Get Temporary Financial Assistance From a Hardest Hit Fund Program

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.

What Is the Hardest Hit Fund?

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.

States That Have—or Had—Hardest Hit Fund programs

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.

What Kind of Hardest Hit Fund Programs Are Available?

The various HHF programs typically provide funds to:

• bring an unemployed homeowner’s loan current, and
• cover future mortgage payments.

So, if you qualify, you can remain in your home while you search for new employment without worrying about making mortgage payments.

When Will State HHF Programs End?

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.

Learn More

For more information about HHF programs, go to the U.S. Department of the Treasury's website. You’ll find links to each state’s program.

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, 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 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.

Programs That Modify Your Loan to Reduce Your Monthly Payment

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.

Fannie Mae/Freddie Mac Flex Modification

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.

Other governmental entities, like the FHA and Veterans Administration, 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)'s Housing Counseling Program and arrange to speak with a housing counselor.