Behind on Mortgage Payments? 5 Things NH Homeowners Should Know

You have more time than you think, but less than you would like

Federal rules generally prevent your mortgage servicer from starting foreclosure until you are more than 120 days behind on mortgage payments, with limited exceptions. In New Hampshire, homeowners generally must receive notice at least 45 days before a residential foreclosure sale.

• 30 days behind: do everything you reasonably can to catch up, and if you can’t, call your servicer.
• 60 days behind: don’t wait another day to contact your mortgage servicer.

Late fees add up, missed payments can hurt your credit, and another month behind can limit your choices.

Most refinances require your mortgage to be current

Here is the distinction that matters most:

• 30 daysOne 30-day late payment may still allow some refinance options, depending on the program and the rest of your file.
• 60 daysA 60-day late payment can be much more restrictive. For example, Fannie Mae automated underwriting generally treats a reported 60-day-or-greater mortgage delinquency in the prior 12 months as ineligible.
• 90+ daysAfter 90 days or more, traditional refinancing becomes especially challenging, even once the loan is current.

As an independent mortgage broker, I can compare programs and lender requirements. But no broker can simply waive an investor’s delinquency rules.

A few important exceptions exist

For eligible veterans: VA IRRRL

VA permits certain InterestInterest: the cost of borrowing money, charged as a percentage of the outstanding balance and paid in arrears (unlike rent, which is paid in advance). More Rate Reduction Refinance Loans (IRRRLs) on delinquent VA mortgages. These cases can require VA prior approval and evidence that the cause of the delinquency has been resolved and the new payment is affordable. Not every lender offers this option.

For homeowners age 62 and older: FHA reverse mortgage

An FHA-insured Home EquityEquity is the portion of your home's value that you own. It's calculated by subtracting the balance of your mortgage and any other loans secured by the home from its current market value. Your equity grows in two ways: by paying down... More Conversion Mortgage (HECM) may pay off a delinquent mortgage, including past-due amounts and allowable costs, if the homeowner qualifies and the numbers work. It eliminates required monthly principal and interestInterest: the cost of borrowing money, charged as a percentage of the outstanding balance and paid in arrears (unlike rent, which is paid in advance). More payments, but not property taxes, homeowners insuranceHomeowners Insurance: a policy covering a home's structure, personal belongings, and liability against covered losses; required by lenders to protect the property securing the loan. More, utilities, maintenance, or applicable homeowners association (HOA) fees. Homeowners are always responsible for these charges.

HECM eligibility includes counseling from a U.S. Department of Housing and Urban Development (HUD)-approved counselor, an assessment of the homeowner’s finances, and enough available proceeds to meet required obligations. For homeowners who are behind, a set-aside for future taxes and insurance is often required, so this option does require significant home equityEquity is the portion of your home's value that you own. It's calculated by subtracting the balance of your mortgage and any other loans secured by the home from its current market value. Your equity grows in two ways: by paying down... More. Learn more about reverse mortgages.

Private or hard-money lending

Some specialty lenders may consider delinquent loans, particularly on investment properties. These loans often have high costs, short terms, and strict equityEquity is the portion of your home's value that you own. It's calculated by subtracting the balance of your mortgage and any other loans secured by the home from its current market value. Your equity grows in two ways: by paying down... More and repayment-plan requirements. Be especially cautious about anyone asking you to mislabel a personal home refinance as a business-purpose loan. Read more about private-money and bailout lending →

Your mortgage servicer may have the best solution

For many homeowners, the answer is not a new mortgage. It is assistance on the loan they already have. The company you send your payment to (your servicer) is required to review you for options that can help you catch up and keep your home. Options may include:

• Repayment plan: add an agreed amount to regular payments to catch up over time.
• Forbearance: temporarily reduce or pause payments during a hardship.
• Loan modification: change certain loan terms to make payments more manageable.
• “Catch-up” programs: if you have an FHA loan, HUD may pay your past-due amount through a partial claim, a zero-interest second mortgage with no monthly payments that’s repaid only when you sell, refinance, or pay off the loan. VA now offers its own partial claim, and Fannie Mae and Freddie Mac loans have a “payment deferral” that moves missed payments to the end of the loan. How the FHA partial claim works →

Contact your servicer as early as possible. Ask what options you qualify for and what documents are needed. A complete loss-mitigation application submitted within applicable deadlines may provide important protections during foreclosure.

Watch out for foreclosure-rescue offers

A homeowner behind on payments may be approached by companies promising a quick fix. Be cautious of anyone who guarantees a foreclosure can be stopped, demands prohibited advance fees for rescue services, tells you to avoid your servicer or attorney, asks you to sign over your deed, or asks you to misrepresent the purpose of a loan.