After you miss one payment you are in default and may receive a “deficiency notice” from your lender. If you miss several payments, you may get a “notice of default” which explains how much you owe and advises you that foreclosure may be a possibility. Foreclosure proceedings can legally begin when you have not paid your mortgage for 90 days. The next step is a “Notice of Foreclosure Action.” Maryland law requires that the notice must be sent both certified and first class mail at least 45 days before filing a foreclosure action. Don’t wait for this to happen. The sooner you get help with your mortgage problems, the more likely you are to keep your home.
The Maryland HOPE Initiative (Home Owners Preserving Equity) has a variety of resources to help you keep your home. Call HOPE at 1-877-462-7555. Additionally, 2-1-1 Maryland can provide you with resources that may be able to help with mortgage assistance and mortgage counseling to help prevent a foreclosure. Please click on the links to search our database. You can find more foreclosure prevention information assistance for Marylanders by clicking here, and you can always call 2-1-1 for additional information.
Help with your Mortgage Payments
Generally, housing lenders do not want to foreclose on a mortgage. There are rarely winners in a foreclosure because of the costs involved. Try to work out a payment plan with your lender until you are better off financially. As the government reacts to the foreclosure crisis that many Americans are experiencing, more and more options are likely to become available to help you work out a way to stay in your home. The key is to ask for help early and persistently. Some lenders may allow skipped payments and some may suggest partial or interest-only payments for one to six months. You might consider selling or refinancing your home, but it is advisable to seek professional advice when considering these options.
Free and confidential foreclosure prevention assistance is available in many locations across Maryland. Housing counselors can help you understand your mortgage documents, explain the options you have and help you negotiate a “Workout Plan” with your lender. Come to the appointment prepared with settlement paperwork, tax returns and any notices or invoices from your lender, along with your household budget and list of creditors.
Possible Workout Plans, according the Maryland Department of Housing and Community Development (DHCD), could include:
- Repayment Plan - Catch up by adding a portion of the past due amount to your monthly payments.
- Forbearance Plan - Your monthly payments are temporarily reduced or suspended. There is usually a higher payment when the payments are reinstated.
- Loan Modification Plan - The lender agrees to change your terms in some way. They might reduce your interest, extend the loan payment period or negotiate the prepayment penalty.
- Partial Claim (available only for an FHA loan) - The lender may offer an interest-free loan to catch up the arrearage. The loan is due when you sell the property or when you pay off your first mortgage.
- Recast Plan (not available with Fannie Mae or Freddie Mac) - You put missed payments at the back end of the loan.
If your lender rejects your proposal, try to negotiate and find out what they might be willing to accept. If it seems unreasonable or unfair, ask to speak with a loss mitigation specialist or supervisor. Though a housing counselor can be a great help, you need to act as your own advocate. Even if foreclosure is inevitable, you can still negotiate better terms or a longer timeline so that you aren’t out in the cold. Be ready to keep fighting!
Once you are out of immediate danger, you need a long-term plan about how you are going to manage payments. The Maryland Department of Housing and Community Development (DHCD) has developed some refinancing options to help homeowners in exactly that situation.
Avoid Foreclosure Rescue Scams
Be sure that the person helping you with your mortgage is a legitimate housing counselor who is attached to a reputable nonprofit agency. There are many of these services available. Call 2-1-1 to locate the one closest to you. There are also many people who want to take advantage of desperate homeowners looking for help, so be smart and beware! Do not seek assistance through a company that advertises through flyers on telephone poles and median strips. Some scam artists lure homeowners into signing their deed over and then take the home for themselves and others charge enormous fees without delivering any services at all. Don’t sign any documents without first getting objective legal advice. If you feel you have been the victim of a real estate predator, you can report this to Maryland Department of Labor, Licensing & Regulation or by calling 1-888-784-0136.