Avoiding 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.

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.

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.

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.

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.

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.

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

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.

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.

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.

Don't hesitate to talk to your servicer. There are many rules and programs meant to help those who are struggling to pay their mortgage.

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.

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

Your lender or servicer may be willing to temporarily pause your payments. Contact your lender or servicer to ask about deferral and forbearance options.

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.