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Life sometimes has a way of surprising us with unexpected challenges. Maybe you’ve been laid off from work or lost a loved one. Perhaps caring for additional family members has put a strain on your finances.

If a life change has made it difficult to make your mortgage payment, don’t bear the burden in silence. Talk to your mortgage servicer. You have options. Quicken Loans and any mortgage servicer wants to do everything they can to help you stay in your home or at least get you into the best situation possible.

We’ll take you through an option to work with your lender and servicer to modify your mortgage payment to stay in your home and options that let you get out from under it if you no longer have the budget. This can be done with less negative impact than a foreclosure.

In order to decide whether you have the resources to handle a modification, you first need to know how a modification works. This used to be complicated and once depended on which mortgage investor owned your loan. Now things have been greatly simplified, making the process better for both servicers and their clients.

Examining the Standard Modification

If a challenge has caused you to fall a couple of months behind on your mortgage payment, one option your servicer will take a look at to help you get back on track is a modification.

The purpose of a modification is to lower your payment to the point where you can afford it with your current financial situation. The standard modification accomplishes this in a couple of steps.

You’re given a special standardized interest rate for modification that’s designed to tie closely with current market rates. No matter which mortgage investor you use, they take their interest rate cue from an index available from Freddie Mac.

For some of you, this in and of itself may lower your payment by lowering your mortgage rate. If that alone doesn’t do it, they also have the ability to extend your mortgage term to 40 years, instead of the standard 30 years. By re-amortizing your payments over a more extended period, your payments are substantially lowered.

Some homeowners are not only having trouble with their monthly payment, but they may actually owe more on their home than it’s worth. If that’s the case, one option available to your servicer is to set aside some of the excess principal in a process called forbearance. No interest is charged on the principal that’s set aside and the payment on this remaining principal is due when the rest of the loan is paid off.

A modification is a great solution if you have the budget and want to stay in your home. If, for whatever reason, you can’t make a modification work, then your servicer will take a look at working with you to sell the house. There are a couple of options for this.

Options for a Managed Sale

If you can’t make a modification work with your budget, you do have a couple of options that won’t hurt as much as a foreclosure from a credit perspective. Let’s go over them.

Short Sale

If you know you’re struggling to make your mortgage payment and don’t want to do a modification, a short sale can help you leave your home gracefully with a smaller credit impact than you would see in a foreclosure. This may be the preferred option for clients who have some equity in their home.

In a short sale, your lender agrees to take less than the full payoff amount in order to find a buyer for the property. This is particularly helpful if you’re in an area where your home might appraise for less than what you owe due to property values not fully recovering.

Deed in Lieu

If you have very little equity in your home and just want the option to leave your home to the lender without having a foreclosure on your record, you can do so with a deed in lieu.

By working with a lender on your deed in lieu, you may be able to obtain some funds to assist in relocating to another living arrangement.

If you’re falling behind or struggling to make your mortgage payment, please contact your mortgage servicer. They can work through your situation and help you out. Fannie Mae has great general information on avoiding foreclosure as well. If you’re a Quicken Loans client, you can reach out to us at (800) 863-4332. We can work through this with you.

If you’re looking for advice on how to be successful in your modification, check out these tips. If you have any questions, will be happy to answer them in the comments below.

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This Post Has 16 Comments

  1. Just laid off and it looks like January could be tough for the mortgage payment. I will secure work again soon but I was wondering what options we had for the upcoming payment.

    Thank you.

    1. Hi Matt:

      I’m sorry to hear about your struggles. I’m going to have someone reach out about your payment options. Thanks for contacting us!

    1. Hi Osiris:

      The major mortgage investors we work with (Fannie Mae, Freddie Mac, FHA, etc.) don’t offer payment deferrals as an option if you’re struggling with your mortgage payment. It depends on the situation as to whether the option to help you would impact your credit in any way. I’m going to have someone reach out from the Client Relations team to look into your specific circumstances and go over your options. Thanks for reaching out!

  2. Good morning QL Team,
    I am in need of assistance, I need to defer a payment in other to get back on my feet, is there any possibility of doing this, please let me know if it is possible.
    Looking forward to your prompt response.

    1. Hi Gerson:

      I’m sorry to hear you’re having trouble, but we’re here to help. I’m going to get this to our Client Relations team to have someone reach out and go over your options. Thanks!

      1. Hi Debra:

        I’m going to make sure we have someone reach out to you about the options that are available. Someone will be in contact to help you shortly. Thanks!

  3. Hi anyway to defer 1 payment .current on my mortgage but having to pay late last 2 months.have taken in my homeless sister in law just need to defer 1 payment if possible.also had major car repair.still have same income also seeking to go back to work.

    1. Hi William:

      I’m sorry to hear about your troubles. I’m going to get this to our Client Relations team to have someone reach out and go over options with you. Thanks for making us aware of your situation.

    1. Hi Nicholas:

      I’m going to have someone from our client relations team reach out to go over potential options to get back on your feet. Thanks!

  4. We have had a financial change in our life and was wondering if we could defer a payment? We are current on our payment.

    Thank you,

    1. Hi Dee:

      I’m going to get this over to our client relations team to talk about the options you have.


  5. I have not worked since November 2016 due to three back surgeries. We are still current on our mortgage payment, however have increased our credit obligations. How difficult and what is involved in extending the mortgage commitment to 40 years also is there a negative impact on your credit score if you changed from a 30 year conventional to a 40 year program

    1. Hi Gary:

      I see you’ve recently contacted us. I’m going to have someone reach out to you regarding your options in this type of situation and what you would need to do to move forward.

      Kevin Graham

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