Missing a mortgage payment is terrifying — but it's not immediately catastrophic. There are options, and the earlier you act, the more options you have.
Call your servicer immediately
Before you miss a payment, call your servicer and explain the situation. Most servicers have a loss mitigation department specifically for this. They'd rather work with you than foreclose — foreclosure is expensive and slow for them too.
Forbearance
Forbearance is a temporary pause or reduction in your mortgage payments, typically lasting 3-12 months. During forbearance, the servicer agrees not to start foreclosure proceedings. How it's reported to the credit bureaus depends on your agreement and loan type — ask your servicer, in writing, how it will be reported. The missed payments don't disappear — they're deferred and must be repaid, either in a lump sum, spread out, or added to the end of the loan.
Loan modification
A loan modification permanently changes the terms of your mortgage — lowering the interest rate, extending the loan term, or adding missed payments to the back of the loan. This is for borrowers with a long-term hardship (job loss, disability, divorce) rather than a temporary one. Modifications typically require documentation of hardship and income.
Other options
- Repayment plan: You resume normal payments plus pay a little extra each month to catch up on missed payments.
- Short sale: You sell the home for less than you owe, with lender approval. Avoids foreclosure but still impacts credit.
- Deed in lieu: You voluntarily transfer the home to the lender to avoid foreclosure. Less damaging than foreclosure but still serious.
What not to do
Don't ignore calls from your servicer. Don't stop opening mail. Don't pay other bills before your mortgage if keeping the home is the priority. And don't pay a "foreclosure rescue" company — most are scams. Free HUD-approved housing counselors are available at 1-800-569-4287.
Options and eligibility vary by loan type, servicer, and situation. Contact your servicer as early as possible — the earlier you reach out, the more options are available.