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Mortgage Options For Temporary Financial Distress
I Am Behind On My Mortgage But My Finances Are Back On Track

The foreclosure avoidance options listed below assume that you had a temporary financial hardship that has been resolved.  You can once again afford to pay your normal monthly mortgage payment, but you are behind in your payments.  In order to avoid foreclosure, you and your mortgage lender must agree on a plan to bring your mortgage current. 

Not all options listed below may be available to you depending on your financial situation, what type of loan you have and your lender's available programs.  These foreclosure avoidance options are not legally required to be offered by your lender, but most lenders will offer most of these options as a way to reinstate your loan to good standing.  Everyone looses money, including your lender, when a foreclosure is filed.  Your lender wants to enter into an agreement with you to avoid foreclosure if it is financially feasible to do so.  Your lender may push you to agree to a plan that it prefers, but there are usually other options available.  Avoid agreeing to a plan on which you may not be able to make the payments.  Consider all available options before choosing the one that is best for you.


 
  • Reinstatement
    With a reinstatement, you bring your loan current and avoid foreclosure by paying the missed mortgage payments along with any associated fees and late charges.  The typical arrangement is to make a lump sum payment on a specific date.


    A reinstatement agreement may make sense if you:

    • Are recovering from a short-term financial hardship.
    • Are behind on your mortgage and have received a notice of default.
    • Can demonstrate to your lender that you can afford your current monthly mortgage payment.
    • You are able to pay the lump sum payment.

    Be aware that there may be late fees and other costs associated with a reinstatement agreement.  Reinstatement is often combined with forbearance when you can show that funds from a bonus, tax refund, inheritance, new employment, sale of a vacation cabin or other source will become available at a specific time in the future.


  • Repayment Plan
    If you are a few months behind on your mortgage due to a short-term financial setback, but are now financially secure, you may be eligible for a repayment plan.  This option will enable you to make up your missed payments and late fees over a fixed amount of time by combining a portion of what is past due with your regular monthly payment.  By the end of the repayment period you will have paid back the amount of your mortgage that was delinquent.


    A repayment plan may make sense if you:

    • Have recovered from a short-term financial hardship that caused you to miss a few mortgage payments and receive a notice of default.
    • Can demonstrate to your lender that you have the funds to repay past-due amounts – along with any associated fees and late charges – and can afford your current monthly mortgage payments.

    Be aware that there may be late fees and other costs associated with a repayment plan.  Repayment is often combined with forbearance when you can show that funds from a bonus, tax refund, inheritance, new employment, sale of a vacation cabin or other source will become available at a specific time in the future.


  • Forbearance
    If you are facing a short-term financial hardship and need temporary assistance with your mortgage, your lender may offer you a "forbearance."  With this option, your lender is temporarily reducing or suspending your mortgage payments for up to six months while you get back on your feet.


    Forbearance may make sense if you:

    • Are facing a short-term financial hardship.
    • Think you may fall behind on your mortgage payments, or have already missed one or two payments.
    • Can demonstrate to your lender that your financial situation will improve in a few months and you will be able to once again afford your current monthly mortgage payment.

    Be aware that there may be late fees and other costs associated with a forbearance agreement.  Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments when your financial situation has stabilized.


  • Unemployment Forbearance
    Unemployment is a reality that many homeowners currently face.  To provide you with a greater measure of security and more time to find new employment, your lender may be able to provide you with short-term unemployment forbearance (6 months) and, if necessary, extended unemployment forbearance for up to an additional 6 months if you are unemployed.  Unemployment forbearance is available for loans owned by Freddie Mac.  For non-Freddie Mac loans, check with your lender to see if this foreclosure avoidance option is available.


    Unemployment Forbearance may make sense if you:

    • Have a loan that is owned by Freddie Mac.  Visit the Freddie Mac Loan Look-up Tool to see if Freddie Mac owns your loan.
    • Are facing financial hardship due to unemployment.
    • Are looking for assistance with the mortgage for your primary residence.

    If you are unemployed and were or currently are in an existing short-term forbearance plan, you can also be evaluated for an extended unemployment forbearance under Freddie Mac's policy.

Save The Dream Ohio

Save the Dream Ohio is the State of Ohio’s foreclosure prevention program, administered by the Ohio Housing Finance Agency (OHFA).  It assists Ohio homeowners experiencing mortgage distress because of a temporary or permanent reduction in income or increase in medical expenses.  You can qualify for up to $35,000 in Save the Dream Ohio assistance whether you are current on your mortgage payments, behind on your payments, or in active foreclosure.  The program helps homeowners experiencing an involuntary financial hardship, which makes it difficult for them to afford their mortgage payments. 

Save the Dream Ohio differs from the foreclosure avoidance options listed above in that it is a three-party agreement between you, your lender and OHFA, rather than an agreement just between you, the borrower, and the mortgage lender.  Save the Dream Ohio consists of six different assistance programs, the majority of which take the form of a five-year, zero-interest, non-amortizing loan secured by a recorded second mortgage that is only repayable through the net proceeds of a home sale within five years.  In other words, if you keep your home for five years after receiving Save the Dream Ohio assistance then you pay nothing back and the loan is entirely forgiven.  See the Save the Dream Ohio page of this website for further information.


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This website provides general legal information and not legal advice.  The law is complex and changes frequently. 
Before you apply any general legal information to a particular situation, consult an attorney. 
If you cannot afford an attorney call 1-866-Law-Ohio (1-866-529-6446) or visit OhioLegalServices.org for your closest legal aid office.

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