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What To Do When Mortgages Default


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TERMINOLOGY

Mortgages default every day in the world and they are just a normal part of the business for mortgage lenders. There are a certain number of mortgages that will default every year and it is planned for accordingly. While it is common business practice for lenders, it can be devastating for you individually. If you default on a mortgage, it can ruin your credit and your financial outlook for the future. Mortgage default is a major setback for you, but it is not the end of the road. If you are faced with a default on your home, you can take measures to get back in good standing with the lender. Here are a few things you can do when your mortgage has defaulted.

Do Not Give Up
The first thing you need to realize is that it is not too late to keep your house. Until the house is sold to someone else and the title is transferred, it is not lost. Many people have saved their houses from going into foreclosure at what would seem like the last possible moment. You should know that you do have options in front of you. Just because you get a letter in the mail that says your mortgage is in default does not mean that you should just concede your house to the bank. Take action and there is still time to make it right.

Talk to the Bank
Once you have decided to try and keep your house, the first thing you should do is talk to your mortgage holder. The bank or mortgage broker that has your loan does not want you to go into default. The last thing they want is to handle a foreclosure and auction off your property. Every time a foreclosure gets to that point, it means lost money for them. They have to write off the loss and too many of these can be devastating to their bottom line. 

With this in mind, you should know that they are willing to work with you. In many cases, they are willing to negotiate a new loan for you. They can modify your existing loan and try to give you some more affordable options. They might be able to offer you a lower interest rate and a lower payment depending on the circumstances. They could waive any late fees you have and possibly get you back to square one on your payments if you're willing to work with them. It is in both parties' best interest to work out an agreement. It will save your credit and it will save them a great deal of money. 

Stick to the Plan
After you get your mortgage back on track with a loan modification or a different method, it is critical that you stick to the plan. If you let yourself fall back into the same trap again, they will be much less likely to work with you the second time around.