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The Florida Bar

If you miss a payment, take action; learn the terminology

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Helpful steps to take
Terms to know and understand as you deal with housing issues
If you and your lender agree that you cannot keep your home, there may still be options to avoid foreclosure
Avoid foreclosure-prevention or loss-mitigation companies

Contact your lender or loan servicing company as soon as you realize you may have a problem and may have missed a payment. Studies show that at least 50 percent of all consumers who default on a mortgage or miss payments never contact their lenders. This is a mistake. Lenders can discuss options with you to help you work through payments during difficult financial times.

Lenders prefer to have you keep your home and most will work with you. Be honest with your lender about your financial circumstances. The Federal Housing Administration External Link opens in a new window has information about contacting your lender and what documents you should gather before speaking with your lender.

Helpful steps to take

    Gather information. Learn all that you can about your mortgage rights and foreclosure laws in Florida.
    Review your loan documents to determine what your lender may do if you can’t make your payments.
    Review Florida laws, particularly Chapter 702, Florida Statutes External Link opens in a new window, and Section 45.031, Florida Statutes External Link opens in a new window, to learn about foreclosure proceedings. Attend a foreclosure prevention information session.
    Check for free clinics on The Florida Bar website; the website of Florida’s Chief Financial Officer External Link opens in a new window; or the calendar in your local newspaper.
    Contact a nonprofit housing counselor. Help and information is available to you free of cost. The HOPE NOW alliance provides a 24-hour hotline (888) 995-4673 to provide mortgage counseling assistance in multiple languages. You may also obtain a list of HUD Approved Housing Counseling Agencies in Florida External Link opens in a new window.

Terms to know and understand as you deal with housing issues

If you are working with your lender or an approved housing counselor to keep your home, there are several options:

Reinstatement: Your lender may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund or other source will become available at a specific time. Be aware that there may be late fees and other costs associated with a reinstatement plan.

Forbearance: Your lender may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments.

Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period, you have gradually paid back the amount of your mortgage that was delinquent.

Loan modification: This is a written agreement between you and your mortgage company that permanently changes one or more of the original terms of your note to make the payments more affordable. Loan modification options may include a reduction of the principal amount or interest rate or the agreement to place all of the delinquent payments at the end of the loan term.

If you and your lender agree that you cannot keep your home, there may still be options to avoid foreclosure

Short payoff: If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage company may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.

Deed-in-lieu of foreclosure: A deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage company. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors or tax liens.

Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.

Refinancing: While refinancing is not necessarily a good option when facing foreclosure and can sometimes be a predatory practice, there are instances where it may help. Talk to your lender to see if refinancing is an option for you.

Avoid foreclosure-prevention or loss-mitigation companies

If you fall behind in your mortgage payments, many for-profit companies will contact you promising to help you avoid foreclosure. Some may even appear to be affiliated with your lender or the federal Department of Housing and Urban Development. Many also list their services on the Internet and ask that you fill out a referral form online. It is best to avoid dealing with these companies. Most will charge you a hefty fee up-front for information that your lender or a HUD-approved counselor will provide to you for free. You can obtain the same workout plan or a better plan for free by contacting your lender or a HUD-approved counselor. Use your money to pay the mortgage instead.

[Revised: 06-19-2013]