What Are My Options If I’m
Behind on My Mortgage?
What State Are You In?
Are you in a judicial state or non-judicial state?
Judicial states, where you typically have a mortgage, require a civil lawsuit for the lender to foreclose. This is a much more time-consuming process than in a non-judicial state, where you’d have a deed of trust involving a trustee.
The non-judicial foreclosure process usually takes around 6 months or longer, while judicial foreclosures can take well over 6 months, and often over a year. Either way, most states require you to miss at least 3 payments before a lender can begin foreclosure.
Are You Still Residing in the Property?
Once you move out of the property, you lose some options, so consider staying in your home. Many people panic and move, thinking they’ll be evicted for not paying the mortgage. That’s not the case. You own the property right up until the bank conducts a foreclosure auction.
Lenders actually prefer that you stay in the home, even if you aren’t making payments. They know that a property is better maintained when it’s occupied, which helps them protect its value.
If you reach the point where you decide to sell, you may qualify for a small relocation assistance incentive. However, once you move out, you’re no longer eligible for that.
What Options Are Available?
You’ll need to contact your lender (servicer) to ask what programs are offered. Below are some of the most common options:
1. Loan Modification
A long-term payment plan, usually beginning with a 3–6 month trial period. If successful, it becomes permanent.
2. Partial Claim
Often used with FHA loans. The missed payments are moved to a second lien, held by HUD. This lien has no interest and is only paid back if you sell or refinance.
3. Deferment
Temporarily pauses your payments for a set period. Some plans pause interest, too. Once the deferment ends, you’ll need to make up the missed payments—often resulting in higher monthly payments.
4. Forbearance
Similar to deferment but more widely offered. It reduces or suspends payments for a short period during temporary financial hardship. Interest continues to accrue, and repayment is expected after the plan ends.
5. Repayment Plan
Lets you pay off missed payments over time. Your monthly payment will include an additional amount to cover the arrears. Plans can range from 3 months to a year or more.
6. Reinstatement
If you can afford it, you may pay everything you owe in one lump sum—including missed payments, interest, and penalties—to bring your loan current.
7. Sell
If you have equity, list the home with a good real estate agent and sell before the foreclosure sale. Don’t get greedy—act fast if time is limited.
If you don’t have equity:
Short Sale: Sell the property for less than what you owe, with lender approval.
Deed in Lieu: Voluntarily transfer ownership of the property to the lender. Most lenders require you to attempt a short sale first before accepting this option.
Lenders prefer short sales because homeowners usually get a higher sale price than what the bank would get if it foreclosed.
Every loan is different. Every situation is different. But in nearly all cases, doing nothing makes it worse. The sooner you understand your loan type,
how many payments you’ve missed, and which options are available, the more control you have.
Whether you’re fighting to save your home or planning your exit, staying informed is your greatest advantage.
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