Can't pay your mortgage? What to do in the first week

This guide is for you if you will not be able to pay your mortgagemortgageA mortgage is an agreement between you and a lender (a bank, a credit union or a mortgage company) that gives the lender the right to take your property if you do not repay the money it lent you, plus interest. Mortgage loans are used to buy a home or to borrow money against the value of a home you already own. You repay it in monthly payments that cover the principal (the money borrowed) and the interest, and often the property taxes and insurance as well. In Spanish, "hipoteca" and "préstamo hipotecario" mean the same thing.See the full definitionClose this month, or if you have already fallen behind. Take a breath: there are clear steps and free help. You will see what to do in the first days, which options the Consumer Financial Protection Bureau (CFPB) describes, which federal rules protect you and how to spot a scam. We do not promise an outcome: we tell you what the official sources say.

At the latest, your servicer must try to reach you live

Day 36¹³

At the latest, it must send you written examples of options and how to apply

Day 45¹³

Behind before the first foreclosure notice, with exceptions

120+ days¹⁴

Foreclosure prevention counseling at HUD-approved agencies

Free¹⁰

First: call your loan servicer today

Your loan servicerloan servicerThe loan servicer is the company that sends you your mortgage statements and handles the day-to-day tasks of the loan: it processes your payments, answers your questions, keeps track of principal and interest paid and manages your escrow account, if you have one. It can also offer options if you fall behind and, in certain cases, start a foreclosure. It may be the same company that lent you the money or a different one, and it is common for another company to take over the loan after closing.See the full definitionClose is the company you send your mortgage payment to each month. The CFPB says to call it as soon as you know you cannot make your payment, and to answer if it calls you. The phone number is on your monthly bill. Ask to speak with a specialist about assistance options, and keep asking questions until you understand what comes next.²

Be ready to explain why you cannot pay, whether the problem is temporary or permanent, and your income, expenses and savings. If you are a servicemember with permanent change of station (PCS) orders, say so. If they give you an assistance application, fill it out: the servicer uses it to decide which options to avoid foreclosureforeclosureForeclosure is the process by which the lender or servicer takes back the property after the homeowner fails to make mortgage payments. The rules and timelines depend on each state; all of them include advance notices and, in general, time to catch up or ask for an alternative, such as a repayment plan or a loan modification. If you fall behind, call your servicer and a HUD-approved housing counseling agency early: foreclosure counseling is free and exists for exactly this.See the full definitionClose (“loss mitigation”) it can offer you, if any. If you do not know who your servicer is, a HUD-approved housing counseling agency can help you find out.¹

Also ask who owns, insures or backs your loan: the servicer must give you that party’s name, address and phone number. Many homeowners with loans backed by HUD/FHA, USDA, VA, Fannie Mae or Freddie Mac are eligible for assistance, and others may be eligible for something similar.²

The first months, step by step

Federal rules set a calendar. This is the path Regulation X and the CFPB describe, from the first payment you cannot make:

From the first missed payment to your options, under federal rules

1. 1. You call your servicer

   As soon as you know you cannot pay

   Explain why, ask what options you have to stay in your home and write down who you spoke with.²

2. 2. You call a HUD counselor

   The same week

   Foreclosure prevention counseling is free at HUD-approved agencies; the HOPE Hotline is open 24 hours a day.¹

3. 3. The servicer reaches out

   No later than day 36 of delinquency

   It must try to reach you live, and again every 36 days while you remain behind, and tell you whether options exist.¹³

4. 4. A letter with options arrives

   No later than day 45 of delinquency

   With the assigned staff's phone number, examples of options, how to apply and where to find counselors.¹³

5. 5. You send a complete application

   As soon as you can

   If it arrives 45 days or more before a sale, within 5 days (excluding holidays and weekends) they tell you whether it is complete or what is missing.¹⁴

6. 6. You get a written answer

   Within 30 days

   If your complete application arrived more than 37 days before the sale, they must evaluate you for all available options.¹⁴

7. 7. The 120-day line

   More than 120 days behind

   Before then, in general, they may not make the first foreclosure notice or filing; after that, timing depends on your state.¹⁴

That calendar runs whether or not you act, so use it in your favor: the sooner you send a complete application, the more protections you have. The sections below explain each step.

What your servicer has to do when you fall behind

Regulation X, which includes the CFPB’s federal rules for mortgage servicers, requires “early intervention” (12 CFR §1024.39):

• Live contact. No later than the 36th day of your delinquency, and again no later than 36 days after each payment due date while you remain behind, the servicer must establish live contact with you or make good faith efforts to do so. Then, if appropriate, it must tell you that options to avoid foreclosure exist.
• A letter. No later than the 45th day of your delinquency, it must send you a notice with the phone number of the assigned staff, examples of options, how to apply and where to find the CFPB or HUD list of housing counselors.¹³

There are exceptions, for example while a borrower is in bankruptcy.¹³ And §§1024.39 through 1024.41 cover only loans on a principal residence; among other cases, they do not apply to small servicers or reverse mortgages, except for what §1024.41(j) says.¹²

The 120-day rule

A servicer may not make the first notice or filing required by law to start a foreclosure, judicial or non-judicial, unless your loan is more than 120 days delinquent. The exceptions: the foreclosure is based on a violation of a due-on-sale clause, or the servicer is joining a foreclosure started by another creditor with a superior or subordinate lien.¹⁴ Small servicers follow this rule too.¹⁴ After that, how long it takes to reach a sale depends on your state’s laws.⁹

The options your servicer may offer

According to the CFPB, your servicer might offer one of these options: refinancing, a loan modificationloan modificationA loan modification is a change in the terms of your mortgage that you agree on with your loan servicer when you have trouble paying. It is a type of loss mitigation, meaning one of the options to avoid foreclosure. It can extend the time you have to repay, lower the interest rate, or defer or reduce part of the principal balance, which can lower your monthly payment. Often you start with a trial modification for a few months; if you make those payments on time, the change becomes permanent.See the full definitionClose, a repayment plan, forbearanceforbearanceForbearance is an agreement with your loan servicer to pause your mortgage payments, or make smaller payments, for a while when you face a hardship such as losing your job, a natural disaster or unexpected medical costs. It does not erase or reduce what you owe: you have to repay the missed or reduced amounts later. Depending on the agreement, you may repay it all at once at the end, add it to the end of the loan, repay it with a new loan or spread it out through higher payments for a time. You have to request it from your servicer.See the full definitionClose, a short saleshort saleA short sale is selling your home for less than what you still owe on the mortgage, with your lender's or servicer's permission. It is an alternative to foreclosure, but because it is a sale, you have to leave the home. If the lender approves, the sale proceeds pay off the mortgage even if they do not cover the whole balance. In some states the lender can later sue you for the difference, called the deficiency. That is why the CFPB says to ask the lender to waive the deficiency and to keep the waiver in writing.See the full definitionClose or a deed-in-lieu of foreclosuredeed in lieu of foreclosureA deed in lieu of foreclosure is an arrangement in which you voluntarily turn over ownership of your home to the lender to avoid the foreclosure process. The lender agrees to take the house instead of the debt. It may help you avoid owing what is left on the mortgage, but in some states you could still owe the difference between the home's value and what you owe. That is why the CFPB says to make sure the deal covers the entire debt and to get any waiver of the difference in writing.See the full definitionClose.¹ None is guaranteed: the regulation does not require any specific one.¹⁴ The CFPB says that in most cases the worst thing you can do is nothing.³

Three options to stay in your home

A temporary problem

Forbearance

• You pause or reduce your payments for a while.⁴
• You still owe everything: forbearance does not erase or reduce what you owe.⁴
• What was paused is repaid all at once, at the end of the loan, with a new loan or with higher payments for some months.⁴

To catch up

Repayment plan

• You add part of the past-due amount to your regular payments for a while.⁵
• The servicer may still treat your loan as delinquent, and report it, until you repay everything.⁵

The terms change

Loan modification

• It can include more years, a lower rate, or a pause or reduction of the balance, to lower your payment.⁶
• All or some of the missed payments are added to what you owe.³
• If you still cannot make the payments, you may lose your home.⁶

Before accepting any of them, ask how much you will pay, for how long and how the total you owe changes.⁴

There are two more ways to stay. With a deferral or a partial claim, the missed amount moves to the end of the loan, or into a subordinate lien you repay when you refinance, sell or end the mortgage.⁷ And refinancing, taking a new loan that pays off the old one, is something the CFPB suggests considering if you have not missed any recent payments.³

If you decide to leave the home, don't just walk away

If it is worth more than you owe

Sell the home

• The CFPB lists it as an option if the home is worth more than you owe on the mortgage.³

Needs approval

Short sale

• You need your servicer's approval, and a complete application with documents.³

Instead of foreclosure

Deed-in-lieu of foreclosure

• You hand over the home; you might not have to pay the difference (the deficiency).³
• You also need a complete application with documents.³

The CFPB says these exits are typically less expensive and take less time than foreclosure, and can do less damage to your credit.³

Before you accept:

• Interest and repayment. Ask how interest works and when and how you will repay what was paused.⁴ During forbearance, homeowners association (HOA) or condo fees are still yours to pay, and so are property taxes and insurance if you have no escrow accountescrow accountAn escrow account is an account set up by your mortgage lender to pay certain property-related expenses on your behalf, mainly property taxes and homeowners insurance. The money comes from a portion of your monthly mortgage payment: each month you contribute a share and the loan servicer pays the bills when they come due. That is why your payment is higher than principal and interest alone, and why it can change when taxes or the insurance premium go up. In some states the word also names the period between the offer and the closing.See the full definitionClose.⁸
• Lump sums. For most government-backed loans, servicers cannot require you to repay a forbearance all at once. If that is the only option you hear about, ask about others.⁷
• Repayment plans. Do not sign anything you do not understand; if you cannot keep up with the plan, other options might be available.⁵
• Modifications. Understand how your monthly payments and the total you owe change, in the short and long term.⁶

If this is you

The problem is temporary

Forbearance or a repayment plan might help; ask how and when you will repay what was paused.⁴

You have no escrow or you pay HOA dues

During forbearance, property taxes, insurance and association fees are still yours to pay.⁸

You serve in the military or have a VA loan

If you have permanent change of station (PCS) orders, say so when you call.¹ VA loans are among those that may get assistance.²

Your income changes month to month

Have your pay stubs or what you take in, tax returns and bank statements ready.¹⁰

The complete application and what it protects

The application to avoid foreclosure (the “loss mitigation application”) opens the door to most protections. It is complete when the servicer has received all the information it requires from you.¹⁴

• Acknowledgment. If it arrives 45 days or more before a foreclosure sale, the servicer must tell you in writing within 5 days (excluding legal holidays and weekends) whether it is complete and what is missing.¹⁴
• Evaluation. If the complete application arrives more than 37 days before the sale, the servicer has 30 days to evaluate you for all available options and answer in writing.¹⁴
• A pause in the process. If you send it before the first foreclosure notice or filing, the servicer may not make that filing. If it already did and the sale is more than 37 days away, it may not move for judgment or an order of sale, or hold the sale. This lasts until it finds you ineligible (and any appeal is over), you reject every option, or you fail to keep an agreement.¹⁴
• Appeal. If you are denied a modification, the servicer must give you the reason. If your complete application arrived 90 days or more before the sale, or within your first 120 days behind, you may appeal within 14 days of the decision; different staff review it and you get an answer within 30 days.¹⁴

Free help: HUD counselors and legal aid

A housing counselorHUD-approved housing counselorA HUD-approved housing counselor works at an agency HUD has approved to provide housing counseling: independent, expert advice customized to your situation about buying a home, renting, a missed mortgage payment, a foreclosure or credit problems. The agencies usually charge little or nothing; many serve in Spanish and offer the homebuyer education course several assistance programs require. They are not lenders or real estate agents and sell you nothing. Your county page lists the official agencies with phone numbers.See the full definitionClose at a HUD-approved agency can review your situation, explain your servicer’s options, guide you through the paperwork and help with your budget. The HOPE Hotline is open 24 hours a day, seven days a week, at (888) 995-4673.¹ Foreclosure prevention counseling is free, but a counselor cannot promise you will keep your home. They will ask about your loan, such as how much you owe and the date of your last payment, and maybe for pay stubs, tax returns and bank statements. The CFPB can also connect you with one at (855) 411-2372.¹⁰

HUD-approved counseling agencies by state

State	HUD-approved counselors
Alabama	25
Alaska	1
Arizona	21
Arkansas	14
California	81
Colorado	26
Connecticut	13
Delaware	12
District of Columbia	17
Florida	98
Georgia	42
Hawaii	17
Idaho	10
Illinois	81
Indiana	21
Iowa	11
Kansas	3
Kentucky	19
Louisiana	26
Maine	7
Maryland	41
Massachusetts	37
Michigan	59
Minnesota	33
Mississippi	16
Missouri	18
Montana	11
Nebraska	8
Nevada	8
New Hampshire	5
New Jersey	34
New Mexico	7
New York	93
North Carolina	52
North Dakota	3
Ohio	54
Oklahoma	6
Oregon	25
Pennsylvania	75
Puerto Rico	9
Rhode Island	5
South Carolina	13
South Dakota	13
Tennessee	32
Texas	51
Utah	7
Vermont	7
Virginia	49
Washington	15
West Virginia	8
Wisconsin	26
Wyoming	1

Only states with their own page on this site appear; tap yours to see the agencies and their languages. Source: HUD

Your state’s page under Places lists HUD-approved agencies with the languages they declare, and the housing counselors guide explains what counseling looks like.

If foreclosure is imminent or you have been served legal papers, the CFPB says you might also need an attorney.¹ You may qualify for free legal services through a legal aidlegal aidLegal aid is the free civil legal help that nonprofit organizations and their lawyers provide to low-income people in civil, not criminal, matters. In housing, that includes representing families facing eviction or foreclosure, alongside matters such as custody, child support, protection from domestic violence and access to benefits. In the United States, the Legal Services Corporation, created by Congress, funds a nationwide network of these organizations; its finder points you to the one in your area. Each sets its own income limits.See the full definitionClose office.³ And if you have a problem with your servicer, you can file a complaint with the CFPB: it forwards it to the company and works to get you a response, generally within 15 days.²

“Rescue” scams: never pay up front or sign over your title

The CFPB is clear: you do not have to pay anyone to help you avoid foreclosure, because help is free from your servicer or a HUD-approved agency.¹ A mortgage relief company cannot charge you until it gives you a written offer from your lender or servicer that you decide to accept.¹¹ Regulation O puts it this way: no payment may be requested or received until you sign a written agreement with your lender or servicer that includes that offer.¹⁶ There is a narrow exception for certain licensed attorneys who hold the money in a client trust account.¹⁷ And no one selling this service may tell you that you cannot or should not talk to your lender or servicer.¹⁵

Scam warning signs and what to do instead

• Mistake: Paying up front to someone who promises to save your home.

  Instead: Help is free from your servicer or a HUD-approved agency.¹ A relief company cannot charge you before you sign an agreement with your lender.¹⁶

• Mistake: Believing someone who guarantees you will not lose your home.

  Instead: No one can guarantee that; the CFPB lists it as a scam sign.¹

• Mistake: Signing your home's title over to someone, or signing papers you do not understand.

  Instead: Before you sign, show the papers to a HUD counselor or legal aid.¹

• Mistake: Stopping payments or sending them to someone else because you were told to.

  Instead: Pay only your servicer; stopping payments without an agreement is reported to the credit bureaus.¹⁸

• Mistake: Stopping talking to your servicer because a company asked you to.

  Instead: No one selling mortgage relief may tell you not to talk to your lender or servicer.¹⁵

• Mistake: Doing nothing and waiting.

  Instead: Call, ask for the application and send it back complete as soon as you can.³

What to do this week

1. Call your servicer today (the number is on your statement) and explain why you cannot pay.²
2. Ask for the assistance application, send it back complete as soon as you can, keep copies and write down the date you sent it.¹⁴
3. Call a HUD-approved housing counseling agency or the HOPE Hotline, (888) 995-4673.¹
4. Gather your papers: statement, date of your last payment, pay stubs, tax returns, bank statements and your other monthly bills.¹⁰
5. Go over your family budget to see how much you could pay each month.
6. If you received court papers or a notice of sale, find a free legal aid office today.¹³
7. Do not pay anyone up front, and do not sign your home’s title over to anyone.¹