Here’s What to Do if you Can’t Pay Your Mortgage:
There are few things scarier than suddenly not being able to pay your mortgage. If you find yourself out of work or with reduced hours, there are a couple things you can do to improve your situation.
- Don’t panic. Remember that the repercussions of the coronavirus economy are no one’s fault. The fact that you cannot make your mortgage payment this month says absolutely nothing about who you are as a person. Please don’t feel embarrassed or ashamed. There are many, many people who are in a similar situation. You will get through this.
- Contact your bank or investor. It is best to inform your bank with a “hardship letter” as soon as you know you won’t be able to make your mortgage payment. The sooner you let them know, the better they will be able to advise you.
What to Include in your Hardship Letter:
- State what type of work out plan you are seeking. For example, would a loan modification help you? What about delaying payments for a few months until you are back at work? Or perhaps you want to sell your house now, while you are confident there is still value. Ask your investor to delay reporting to the credit agencies until you sell and can payoff the loan in full.
- Explain your hardship circumstances. This can be brief but make it personal. Did you lose your job? Did you have to close your business? Are there health concerns or medical bills piling up?
- Explain what caused you to fall behind on your mortgage payments. Loss of income, lay-off, debt, failing health, are all valid reasons.
- Do you have a plan for repayment? If you know how you will be able to get back on track, mention it here.
- Include proof of hardship if you have it. If you’ve been lay-off letter or paystubs showing reduced income, attach them with your hardship letter.
- Include Contact Information. Your investor or bank will want to reach out to you with a solution. Don’t forget to include your name, address, phone number, and email address.
There IS help coming for homeowners affected by the economy. Banks don’t want to see you loose your home due to foreclosure. Remember that it’s important to communicate with them as soon as you have trouble paying your mortgage. However if you avoid contact, and are unable to pay your mortgage for many months, they may move to foreclose eventually (currently all foreclosures and evictions are halted until at least April 30th, 2020).
Another Option to Consider: Sell Now While you Still Can
Were you already thinking about selling your house before coronavirus hit? If you know you want to sell within the next two years, I urge you to do it now. If you owned a home during the Great Recession, I’m sure you remember home prices steadily falling month after month. Some homeowners thought that declining values wouldn’t last long and they could wait it out. Values declined for years and then took years to bounce back, essentially trapping homeowners. Consider selling right now if you were already planning to sell in the near future so you can get the top value possible if the economy takes a nosedive.
We are all in this together, navigating this suddenly declining economy together. I have worked with every major bank throughout my real estate career selling REOs, short sales, and helping homeowners stay in their homes if at all possible. Please reach out if you would like personal advice regarding your hardship letter.
I’m Allan Sanchez, real estate broker in the Rocklin, Roseville, and Sacramento area. I’ve sold 600 homes in my 20+ years of real estate sales, completed 1000’s of BPOs, 100+ short sales, and over 300 REOs. If you have a real estate question, I’m here to help: (916)205-2265 or email@example.com