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Avoiding Foreclosure

Foreclosure

This article explains how foreclosure works and how to avoid losing your home.

Learn how the foreclosure process works and what you can do if you are having difficulty making mortgage payments. This article explains how to ask your mortgage lender or servicer for help. If you need help with mortgage payments, apply with the Texas Homeowners Assistance Fund Program.

The information in this article was adapted from content from the website of the Texas Department of Housing and Community Affairs. It has been edited for style.

Revised on October 10, 2022.

What is foreclosure?

Foreclosure happens when you fail to make the mortgage payments on your home. If your home is foreclosed on, the lender repossesses your home and you lose your rights to the property.

What can I do if I am having difficulty making my mortgage payments?

If you are struggling to make your mortgage payments:

  • Take action. Don't panic. Avoid scams.
  • Read all notices you receive from your lender or servicer.
  • Ask your mortgage lender or servicer for help.
    • Consider reducing your spending by eliminating a cell phone, cable TV, or a second car.
    • Consider selling assets like jewelry, investments, or whole life insurance.
    • Look into the programs listed in this article, such as Texas Homeowner Assistance, to see if you qualify for financial assistance or payment deferral.
    • Reach out for guidance:
      • To reach a HUD-approved housing counseling agency, call (800) 569-4287, or visit HUD’s website for free or low-cost foreclosure counseling services.
      • For free, confidential and comprehensive financial and foreclosure prevention education, contact the national Homeowner’s HOPE™ hotline: 888-995-4673 (HOPE).
      • For consumer debt advice, visit the National Foundation for Credit Counseling website.

    What happens if I miss a mortgage payment?

    Your mortgage payment is typically due on the first of each month. If you do not make your payment by the due date, it is considered delinquent.

    A late fee may be assessed to your mortgage account after the 15th day. Your lender or servicer will mail you a first notice on the 16th day of the month. You may begin getting phone calls at this time.

    What if my mortgage payment is 30 or more days late?

    Your loan enters default when it is 30 days late. At this time, your lender or servicer will send you a second notice. When a loan goes into default, it can have a negative impact on your credit score.

    When does the foreclosure process begin?

    If your loan is 60 days past due, your lender or servicer may begin acceleration procedures and will notify you in writing that they have started the foreclosure process. Foreclosure usually happens if a loan is 90 or more days past due.

    What happens during acceleration procedures?

    If your lender or servicer has begun acceleration procedures, they may refuse to accept any partial payments and require that the past due balance on the mortgage be paid in full. It is also possible that your lender or servicer will void any payment agreement and call the loan due in full.

    What happens if I abandon my property?

    If you abandon your property when acceleration has begun, your property will be red-tagged and your home will be repossessed.

    How do I know who my lender or servicer is and how can I contact them?

    Your monthly mortgage statement contains the name of your lender or servicer, their address, and phone number. This information is also on your mortgage coupons.

    What is the difference between a lender and a servicer?

    When you begin the process of buying a home, a lender will qualify you for a mortgage. After you close on the home loan, a servicer is responsible for collecting your monthly mortgage payments. The servicer may or may not be a different company than the original lender. The terms "lender" and "servicer" are often used interchangeably. Contact the company to which you send your monthly payments.

    How do I ask my lender or servicer for help?

    Contact your lender or servicer and ask to speak with the loss mitigation department (if one exists). Tell them you want to begin a workout process. Write down the time, date, and the person you talked with. Make sure you confirm all agreements in writing.

    What documents do I need to have when I call my lender or servicer?

    Have the following ready:

    • Completed Application Form
    • Pay Stubs of Income Verification
    • W-2 Forms from the Previous Year
    • Completed Budget
    • Hardship Letter explaining your situation

    It may take a few weeks or longer for the loss mitigation specialist to make a decision about the workout plan for your mortgage loan. Check the status of your request regularly. 

    Keep in mind that the collections department will still be contacting you even though you are in the process of a workout solution.

    How can I get financial help if I am behind on mortgage payments?

    Visit Texas Homeowners Assistance to learn if you are eligible for help with your mortgage payments and ownership-related costs.

    Can I defer paying my mortgage payments until later?

    If your mortgage is with Fannie Mae, you may be eligible for deferral. Deferral of a Fannie Mae mortgage means that missed payments get moved to the end of the loan. Use the Fannie Mae lookup tool to see if it owns the loan on your home.

    Even if your loan is not with Fannie Mae, you may still be eligible for deferral. Contact your lender or servicer to find out.

    More information

    Read Foreclosure Prevention - Preserving the Dream of Homeownership on the Texas Department of Housing and Community Affairs website.

    Read How to Avoid Foreclosure from the Consumer Financial Protection Bureau.

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