April 27, 2020

What Should You Do If You Cannot Pay Your Home Mortgage?

By: Natasha Baker, Round Rock Chamber Board of Directors

One of the devastating side effects of COVID-19 has been people losing their jobs and ending up in financial hardship. Unemployment may make it difficult to pay your mortgage. What should you do if you find yourself in this unfortunate situation? My experience in real estate has been that the worst thing you can do is stick your head in the sand and hope that the situation blows over. The best thing to do, in my opinion, is to call your lender and communicate with them

Believe it or not, foreclosing on a home is actually not the banks first choice! They don’t want your home! Their least favorite situation to be in is the property management business! The bank also doesn’t care to put the effort, time, and money in to taking you to court or setting up an auction. Banks can actually lose money going through the foreclosure process. Because of this – and here’s the good part – they want to work with you and figure out a payment plan. But here’s the catch – you have to call and communicate with them, and it’s best to do this upfront and in the beginning….before you’re too far down the rabbit hole of financial devastation.

Communication is key. Don’t ignore their phone calls or letters; don’t call them after the third missed payment. Call them as early as possible, even before any payment has been missed. The more proactive you are, the better. If you foresee any financial issues in the near horizon, keep the bank in the loop of your situation. The sooner they know, the more options and solutions they may be able to offer you.

Some options your bank might be able to provide are:

  • Refinancing, which could make your monthly mortgage payments lower and more affordable.
  • Forbearance Plans, which temporarily suspend or reduce the amount of your regular monthly
    mortgage payments.
  • Loan Modifications, which are changes made to the original loan. Examples of changes would
    be the interest rate, changing the term from a 30-year to a 40-year loan, etc.
  • Repayment Plans, which divide up missed payments into manageable amounts and spread them out over time.
  • Short Sale, which allows you to sell your home for less than you owe on the mortgage and the
    bank possibly forgives the difference.

Here are links to some of the major banks’ websites, indicating what they are willing to do to help you through your situation:

Wells Fargo Payment Plans

Bank of America Home Loan Help

Chase Mortgage Assistance

Citibank Payment Help

The good news is that the bank doesn’t want your home; the bank wants money. Most banks want to get you back on track again and want you caught up with your mortgage payments. You just have to be proactive about it – pick up that 100 pound phone, dial a few numbers, and talk. Call your local bank/lender and work out a plan that is best for you!

Natasha Baker, Broker
Baker Realty

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