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personal stories Personal Stories
Carol called her lender when she knew she couldn’t make her payment, and they worked out a plan to allow her to catch up. Read her story.

Module 5
Life as a Homeowner
Your Obligations as an Owner
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ASK THE EXPERT: Difficulties Paying Your Home Loan edge

Dear H.O.M.E. Expert,

I am having trouble making my home loan payments, but don't want to lose my home. What can I do?

Signed,
Struggling to Stay Current
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Dear Struggling,

People fall behind on their home loan payments for many different reasons and it’s nothing to be ashamed of. Instead, reach out for help. Start by contacting your lender or servicer immediately to see if there are any options for you. (Even if your loan has been sold, your lender or servicer is still your first point of contact.) Don’t wait and don’t put it off. The longer you wait, the less likely they will be able to help you.

Some of the workout options your lender or servicer may recommend include:
  • Repayment Plan — a written agreement between the borrower and lender outlining how to handle missed payments. Generally, these agreements require higher payments than the regular amount for a short period of time until the loan is brought current.
  • Forbearance — a specified period of time (usually three to six months) that allows borrowers to make either lower payments or no payments at all. Unless the loan is extended, later payments will have to be higher than the original monthly home loan payments until the loan is brought current.
  • Loan modification — changes to one or more of the terms of a home loan that will bring a defaulted loan current. Modifications might include: reducing the interest rate of the loan, changing the loan product (for example from an adjustable rate to a fixed rate), or extending the term of the loan.
Your lender might offer all of these options, or only a few. Lenders have investors who purchase their loans and the investors’ guidelines determine what, if any, workout options lenders can offer you.

In addition to contacting your lender, consider other possible resources to help you repay your home loan. Can you reduce your expenses? Could you earn extra money with a second job? Can you borrow money from a relative? Can you borrow from your retirement fund or from an insurance policy?

If your financial difficulty stems from a military wage earner who has been deployed to active duty, keep in mind that the Service Members Civil Relief Act of 2003 (SCRA) provides important rights. SCRA covers a variety of issues including home loan interest rates and foreclosure. See the Web site listed in Helpful Links for more information.

You may also consider working overtime or getting a second part-time job. Or consult with a non-profit home ownership counseling organization or a reputable credit counseling agency to help you organize your finances and establish a workable repayment plan. Leave no stone unturned in trying to get the money to pay your loan.

Hopefully this information will help you find an option that works for you.

Best of luck!
Your H.O.M.E. Expert

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