What happens if I can’t make my mortgage payments?

If you can’t make your mortgage payments and you do nothing, eventually you will lose your home.  Your mortgage lender has the right to foreclose and sell your home if the payments are not made.  So, just as soon as you miss your first mortgage payment, you need to start communicating with your mortgage lender about your alternatives.  One missed payment does not mean that you will immediately lose your home.  Even if you are headed for foreclosure, you have lots of options along the way.  Ask your lender for an “RMA” – Request for Mortgage Assistance.  This is a packet of information you complete and submit to your mortgage lender to seek a modification or other mortgage relief.

Where do I turn for help?

Find a HUD approved housing counselor.  A complete list for the State of Maryland can easily be found online by googling HUD Approved Housing Counseling Agencies.  For legal advice, turn to an attorney with knowledge both of Maryland foreclosure procedures and Bankruptcy law, such as The Law Firm of Shaw & Crowson, P.A. Do not run scared to a company you only know through the internet, especially if the company is not a Maryland-qualified Mortgage Assistance Relief Services Provider.  Any out-of-state foreclosure relief company who wants you to send them fees in advance for securing you a mortgage modification is violating both federal and Maryland law.

How can I get my mortgage modified?

There is no legal way to force your lender to modify your mortgage.  Whether or not you can get your mortgage modified depends upon whether or not your lender offers a modification program that you qualify for.  Generally, the first step in getting a mortgage modification is to submit an “RMA” (Request for Mortgage Assistance) to your lender.  You must establish a hardship that makes you unable to pay your agreed upon mortgage payments.  You must also provide the lender with detailed financial information and, almost always, tax returns.  Be sure to write your loan number on every page of every document you send your lender Keep copies of everything you send your lender. Be patient and perseverant.  Most lenders ask for the same information and documents over and over again.  Keep a diary of everything you send to your lender and every conversation you have with your lender about your mortgage modification.  While you are trying to modify your mortgage, your lender may not accept your monthly payments.  Do not spend that money on other things.  Save it.  If you are refused a mortgage modification, your lender will want you to pay all of your back payments at once.

What is a Trial Period?

Most lenders offer a Trial Period before offering a final loan modification.  The Trial Period usually lasts for three months.  Each month you must make a modified mortgage payment on time.  Once you pass the Trial Period, you may be offered a final loan modification.  Your monthly mortgage payment may be for a different amount under your final modification than during your trial period.

What is a Forbearance Agreement?

A Forbearance Agreement is a type of mortgage modification.  If you have missed making several mortgage payments, a forbearance agreement may allow you to catch up on past due payments over several months.  Or, a forbearance agreement could take those past due payments and move them to the end of your loan term.

Can Bankruptcy help me avoid foreclosure?

The filing of a Bankruptcy before a foreclosure sale stops pending state foreclosure proceedings.  Filing a Chapter 7 interrupts the process until the lender can get an Order from the Bankruptcy Court allowing the state court foreclosure to proceeds.  A Chapter 13 Bankruptcy payment plan lets you catch up on your past due mortgage payments.  Chapter 13 Bankruptcy is very complicated and only a few local attorneys, including The Law Firm of Shaw & Crowson, P.A., handle Chapter 13 cases.

Should I try Mortgage Mediation?

Yes.  If you live in your home, under Maryland law, you have the right to Mortgage Mediation before any foreclosure sale happens.  But you must timely file the mediation request with the Court or you can lose your chance for mediation.

What happens at the mediation?

The mediation is an informal procedure attended by an administrative law judge, the attorney for your lender, and you.  You have the right to be represented by an attorney or to have a housing counselor attend with you.  The administrative law judge will explain the purpose and the process of the mediation.  The lender’s attorney usually talks about the amount due on your mortgage loan and how many payments you are behind.  You have an opportunity to speak, or to have your attorney speak for you.  The Mortgage Mediation may be your last chance to try for a loan modification or any other alternative to avoid foreclosure.

How soon will I have to move out?

Maybe not for a long time.  Under Maryland law, if you live in your home, your lender must wait at least 45 days after you have missed your first payment before you are sent a Notice of Intent to Foreclose.  The foreclosure cannot be filed with the state court until you are at least 90 days behind.  For most larger lenders, though, federal law controls instead of state law.  For lenders subject to federal law, the timeline is even longer.  Beyond when the lender has the right to file a foreclosure, the time it takes for your home to be sold, the sale to be approved by the court, and for you to have to move is very hard to predict. Multiple things can impact the timing of the foreclosure sale, including you and what you do or do not do to try to avoid foreclosure.  But, at the end, most homeowners still do not have to move until about 45 days after the home is actually sold

Will my lender pay me to move out?

Maybe.  Many lenders offer foreclosed-upon homeowners “Cash for Keys”.  You agree to vacate the property in a specified time, leave the home “broom clean” with the appliances that have been there, and the lender pays you an agreed upon sum.  The amount you receive usually depends upon the kind of mortgage you have and how quickly you can move.

Once my lender has foreclosed on my home, am I done with them?

Not necessarily.  If the price your home brings at the foreclosure sale is less than the full amount you owe your lender, your lender has the legal right to obtain a deficiency judgments against you, personally, for the rest.  This does not happen too often, but it does happen.

I have a home equity line of credit.  Does the foreclosure make that go away?

Yes.  And no.  If the Maryland foreclosure procedure is properly followed, the home equity line of credit goes away as a lien against your home.  But, if the balance due on the home equity line of credit is not paid through the proceeds of the foreclosure sale, you remain personally obligated for the amount due.  The holder of the home equity line of credit note can sue you personally in state court and get a personal money judgment against you.

What is a short sale?

If you owe more on your home than it is worth in today’s market, one alternative to foreclosure is to negotiate a “short sale”.  A properly documented short sale allows you to sell your home at its fair market value, pay your lender the net sales proceeds, and be done with the problem. But, focus on the words “properly documented”.  A short sale that is not handled right could still leave you owning your lender money.  (You might want to look at “Short Sale FAQs”.

Can I just give my lender a Deed in Lieu?

A Deed in Lieu of Foreclosure is just that:  the homeowner voluntarily signs a deed for the home over to the lender.  Then, the lender has title to the home, so a foreclosure is no longer necessary.  But, for you to be able to do this, your lender must be willing to accept a Deed in Lieu.  Many lenders just aren’t.  Then, the title to your home must be free of junior liens and judgments, such as home equity lines of credit.

Why is it all so confusing?

Because State of Maryland law is involved, federal law is involved, investors such as FANNIEMAE and FREDDIMAC are involved, and there are “businesses” out there more interested in taking a desperate homeowner’s money than providing accurate information or meaningful help. Cut through the confusion.  Contact a HUD Approved Housing Counselor or contact us, The Law Firm of Shaw & Crowson, P.A.