Call or write to your lender as soon as possible. Clearly explain the situation and be prepared to provide him or her with financial information.

Talk to your lender or a HUD-approved counseling agency for details. Listed below are a few options that may help you get back on track.

For FHA loans:

  • Keep living in your home to qualify for assistance.

  • Contact a HUD-approved housing counseling agency (1-800-569-4287 or TDD: 1-800-877-8339) and cooperate with the counselor/lender trying to help you.

HUD has a number of special loss mitigation programs available to help you:

  • Special Forbearance: Your lender will arrange for a revised repayment plan which may include temporary reduction or suspension of payments; you can qualify by having an involuntary reduction in your income or increase in living expenses.

  • Mortgage Modification: Allows you to refinance debt and/or extend the term of the mortgage loan which may reduce your monthly payments; you can qualify if you have recovered from financial problems, but net income is less than before.

  • Partial Claim: Your lender may be able to help you obtain an interest-free loan from HUD to bring your mortgage current.

  • Pre-foreclosure Sale: Allows you to sell your property and pay off your mortgage loan to avoid foreclosure.

  • Deed-in-lieu of Foreclosure: Lets you voluntarily "give back" your property to the lender; it won't save your house but will help you avoid the costs, time, and effort of the foreclosure process.

If you are having difficulty with an uncooperative lender or feel your loan servicer is not providing you with the most effective loss mitigation options, call the FHA Loss Mitigation Center at 1-888-297-8685 for additional help.
For conventional loans:

Talk to your lender about specific loss mitigation options. Work directly with him or her to request a "workout packet." A secondary lender, like Fannie Mae or Freddie Mac, may have purchased your loan. Your lender can follow the appropriate guidelines set by Fannie or Freddie to determine the best option for your situation. Fannie Mae does not deal directly with the borrower. They work with the lender to determine the loss mitigation program that best fits your needs. Freddie Mac, like Fannie Mae, will usually only work with the loan servicer. However, if you encounter problems with your lender during the loss mitigation process, you can call customer service for help at 1-800-FREDDIE (1-800-373-3343). In any loss mitigation situation, it is important to remember a few helpful hints:

  • Explore every reasonable alternative to avoid losing your home, but beware of scams. For example, watch out for:
    • Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out.

    • Phony counseling agencies: offer counseling for a fee when it is often given at no charge.

  • Don't sign anything you don't understand.