It can happen to anyone: One day you’re gainfully employed, and the next day you’re not. Even though the nation’s unemployment rate is at a 17-year low and job growth is strong, layoffs are still happening.
In fact, while unemployment rates have fallen in many cities across the nation, in a dozen or so states, they have actually gone up. From public schools laying off teachers to states laying off workers, if you work for someone else, there are no guarantees that it won’t happen to you, too.
If you find yourself without a job, now is not the time to panic. Keep these tips in mind while you plan your next steps.
Get Some Advice
Start with the U.S. Department of Housing and Urban Development (HUD), which offers no-cost housing counselors who can walk you through your options. Find one in our area on HUD’s website.
If you’ve already waited too long and are facing foreclosure, get in touch with an attorney. You may be entitled to free legal services if you are income-qualified. You can find out what you qualify for by contacting Maryland’s legal aid department; find the contact information for each state’s legal aid office here.
Be Upfront
You need to know exactly where you stand financially. Go over your monthly bills to determine how much you owe and to figure out ways you can cut your budget. Next, determine whether your situation is temporary or if you might be unemployed long term. When you have this information, you are ready to call your mortgage servicer.
Don’t delay this call. Yes, it’s uncomfortable and may even be embarrassing, but resist the urge to procrastinate. Be proactive.
If you expect to be back to work soon, ask your mortgage servicer for a forbearance, which is an agreement wherein the lender promises not to exercise the legal right to collect the debt or to foreclose due to non-payment. You will have to agree to the servicer’s plan on how you will get current on the loan, and you’ll typically be given a time limit.
If your spouse or someone else in your household has an income, you may be able to make smaller payments. If this is the case, ask the servicer for a loan extension. The advantage of reduced payments are obvious, but the loan will end up costing you more in the long run.
Some mortgage servicers will allow the borrower to pay just the interest on the mortgage until he or she can afford the full payment.
Be aware that not all servicers are willing to make these concessions, but they are required by law to discuss your situation with you. The earlier you let them know, the more amenable they may be to your proposals.
Get Help From the Government
The Home Affordable Modification Program (HAMP) expired last year, but the Home Affordability Refinance Program (HARP) is still in effect until the end of September 2017. You may be eligible for this program if the following applies:
- You are up-to-date on your mortgage payments and have no late payments (30 days or longer) within the past six months and have no more than one within the past year.
- Your loan is owned by Freddie Mac or Fannie Mae.
- You obtained your mortgage before May 31, 2009.
- Your loan-to-value ratio is greater than 80 percent.
You can find out if your loan is owned by Fannie Mae here, and click here to find out if Freddie Mac owns your loan. Calculate your loan-to-value ratio using Fannie Mae’s calculator.
Fannie Mae and Freddie Max will offer the new Flex Modification foreclosure prevention program, which kicks into effect on Oct. 1, 2017.
The program will provide a 20 percent reduction in mortgage payments to those who qualify. You may qualify even if you’re 60 days delinquent on your loan, but it is also an option for those who are current.
Again, this program is limited to loans owned by Freddie and Fannie.
Asking for help may be uncomfortable, but losing your home would be worse. Seek help right away if you find yourself unemployed and unable to make your house payments.
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