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Mortgage Options For Permanent Financial Distress
I Am Behind On My Mortgage And My Finances Are Permanently Reduced

The foreclosure avoidance options listed below assume that you had a permanent financial hardship that makes it difficult or impossible to afford your current monthly mortgage payment.  Though your specific options will depend on your exact financial situation and what type of loan you have, in general, if you have a permanent hardship, you need a loan modification that permanently changes to the terms of your loan.  This can mean lowering your interest rate, lengthening the time you have to pay back the loan (called the “term”), and/or forgiving or forbearing a portion of the principal.

Not all options listed below may be available to you depending on your financial situation, what type of loan you have and your lender's available programs.  These foreclosure avoidance options are not legally required to be offered by your lender, but most lenders will offer most of these options as a way to reinstate your loan to good standing.  Everyone looses money, including your lender, when a foreclosure is filed.  Your lender wants to enter into an agreement with you to avoid foreclosure if it is financially feasible to do so.  Your lender may push you to agree to a plan that it prefers, but there are usually other options available.  Avoid agreeing to a plan on which you may not be able to make the payments.  Consider all available options before choosing the one that is best for you.

 
  • Refinance
    Refinancing will completely replace your current mortgage loan with a new one.  The new loan will pay off the old one and provide you with a new interest rate, new term (the loan length) and a new monthly payment.  If you have an adjustable-rate mortgage that is adjusting or want to secure a lower interest rate than your current mortgage, refinancing may be able to reduce your monthly payments to a more sustainable level.


    Refinancing may make sense if you:

    • Have enough equity in your home to qualify for a new loan.
    • Are current on your mortgage payments.
    • Have acceptable credit.
    • Want to secure a lower rate, longer term or a different type of loan.

    You do not have to refinance with your current lender.  In fact, it is advisable to shop around with different banks and lenders to get the best terms possible for your new mortgage.

  • Special Home Refinancing Programs

    The United States housing crisis was a real estate bubble affecting over half of the United States. Increased foreclosure rates in 2006–2007 among U.S. homeowners led to a crisis in August 2008.  Concerns about the impact of the collapsing housing and credit markets on the larger U.S. economy caused President George W. Bush to announce a limited bailout of the U.S. housing market for homeowners who were unable to pay their mortgage debts.  In 2008 alone, the United States government allocated over $900 billion to special loans and rescues related to the U.S. housing bubble shared between the public and private sectors.  These special home rescue programs were successful, but limited in time. Though some programs operated through 2016, all such programs have now ended.

    Although these resources are no longer available to homeowners, help is still attainable.  Mortgage companies will continue to offer assistance. If your loan is owned by Freddie Mac, Fannie Mae, VA or HUD you may qualify for a special refinance or mortgage modification program specific to that agency.      To quickly find if Fannie Mae owns your loan, click the Fannie Mae Loan Lookup Tool.  To see if Freddie Mac owns your loan, click the Freddie Mac Loan Lookup Tool. If you’re having difficulty making your mortgage payments, you are encouraged to contact your mortgage company or lender directly to inquire about available solutions.
    If you are experiencing difficulty communicating with your mortgage company or lender about your need for mortgage relief, housing counselors are available to help you do so at no cost.  If you need a list of other servicers or have additional questions about getting mortgage help, contact a free HUD housing expert at 888-995-HOPE (4673). The HUD-approved housing counselors at the Homeowner's Hope Hotline will help you understand your options, design a plan to suit your individual situation and prepare your application.  Research shows that homeowners who work with housing experts like these are more successful and have better long-term outcomes.  There is no cost to you for this valuable, around-the-clock service.  Help is available in more than 160 languages.


  • Loan Modification
    For homeowners who are several months behind on their mortgage – or expect to fall behind soon – a loan modification of the mortgage terms may provide a solution.  With a loan modification, you and your mortgage company will have a written agreement that changes one or more of the original terms of your mortgage note (such as the interest rate or duration of loan) to make your payments more affordable and sustainable.


    A modification may make sense if you:

    • Are not current on your mortgage.
    • Can afford the modified mortgage payments.

    Mortgages are modified to the benefit of the borrower in one or more of the following ways:

    • Reduction in interest rate, or a change from a floating to a fixed rate, or in how the floating rate is computed.
    • Reduction in principal.
    • Reduction in late fees or other penalties.
    • Lengthening of the loan term.
    • Capping the monthly payment to a percentage of household income.

    Be aware that all workout options affect your credit rating and some affect it more than others.  You should discuss all potential impacts with your lender.  You may also visit www.myfico.com for more information about your credit.

  • FHA

  • Veteran's Affairs (VA)

  • USDA's Special Loan Servicing

     FHA, VA and USDA all offer mortgage modification programs for struggling homeowners designed to lower monthly mortgage payment to no more than 31% of the homeowner's verified monthly gross (pre-tax) income — making monthly mortgage payments much more affordable.  If you have a loan that is insured or guaranteed by the Federal Housing Administration (FHA), Veteran's Affairs or the United States Department of Agriculture you may be eligible for a program offered through that government agency.


    • Save The Dream Ohio
     
    • Mortgage Assistance
      Save the Dream Ohio is the State of Ohio’s foreclosure prevention program, administered by the Ohio Housing Finance Agency (OHFA).  It assists Ohio homeowners experiencing mortgage distress and works with approved housing counseling agencies to help homeowners get the assistance they need to avoid foreclosure. Save the Dream Ohio administers one program that offers monetary assistance of up to $25,000, with an average assistance amount of $14,400.  You may be eligible if you or your spouse have been determined eligible for unemployment or disability benefits on or after January 1, 2014.  For eligibility details see the program eligibility webpage.

      See the Save the Dream Ohio page of this website for further information.



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    This website provides general legal information and not legal advice.  The law is complex and changes frequently. 
    Before you apply any general legal information to a particular situation, consult an attorney. 
    If you cannot afford an attorney call 1-866-Law-Ohio (1-866-529-6446) or visit OhioLegalHelp.org for your closest legal aid office.
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