The year 2020 has been rife with unimaginable struggles for everyone – especially regarding rising debt. As of the third quarter of 2020, six months into the COVID-19 pandemic, Americans were carrying more than $14 trillion in mortgage debt – a number that is likely to increase due to financial challenges from job layoffs, illnesses and more.
Under the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the federal government has extended the moratorium for evictions and foreclosures until the end of 2020 in the hopes that homeowners can focus on financial recovery. Although, homeowners may still face hardships once the moratorium ends. As of September 2020, the number of coronavirus cases reported in the United States has topped 7 million with a vaccine still a ways to go. What’s more, “normality”, including people returning to their jobs, possibly may not occur until the end of 2021 leaving homeowners’ finances in the air.
That said, for many people, mortgage loan issues can be more emotionally charged than any other type of debt. Since mortgage loans are secured by the property, falling behind on the loan can mean facing foreclosure. The idea of losing your home is, naturally, a serious stressor but the emotional response to the possibility of foreclosure can also prompt a lot of very bad, very costly decisions.
If you’re struggling with mortgage debt, it’s important to get clear about your priorities and realistic about your options.
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Managing Mortgage Loan Debt
If you’re experiencing difficulty with paying your mortgage due to the COVID-19 pandemic, you should consider forbearance. Mortgage forbearance allows you to pause (suspend), or reduce your payments due to economic hardship. As of September 2020, 3.7 million borrowers, 7% of all active mortgages, are still in government and private mortgage forbearance programs. Though the number of people in these programs has declined, one still has to wonder what will happen to these borrowers once the forbearance period ends later this year.
If you’re seriously underwater, leaving your home may be the best and most cost-effective option. But that doesn’t mean you must or should give in and move out at the first sign of trouble.
Everything from how you handle negotiations to how you care for your home can impact your options, including how much it will cost to settle your mortgage debt. Most people who face foreclosure lose their homes quickly, because they don’t know how to take control of the process. DebtCleanse members have the information and help they need to turn the tables on mortgage servicers and take charge of negotiations.
The Stress of Facing Foreclosure
The foreclosure process works differently from state to state. In some states, the lender must file a lawsuit to foreclose on a home and sell the property. In other states, known as “non-judicial” states, the foreclosure process is more informal and moves more quickly.
Typically, you’ll receive a demand letter for full payment of your mortgage after you’ve missed three payments. At that point, you can try to make payment arrangements with the mortgage servicer (regardless of what the letter says) and negotiate with the servicer, in writing, to delay the foreclosure process. Without this type of delay, foreclosure proceedings may begin as soon as 30 days after the demand letter.
What many people don’t know is that it’s often possible to stay in your home for months, or even years, without making a mortgage payment. And, the longer you’re able to hold on to the property without making a payment, the more options you may have.
DebtCleanse Can Help
When you sign up with DebtCleanse, we’ll connect you with a consumer advocate attorney who will help you understand your legal rights and empower you to fight your lender. Take the first step today at no risk to you - At DebtCleanse we’re confident that our approach will help you overcome your debt which is why we offer a 30-day money-back guarantee.
So what are you waiting for? Call us at (800) 500-0908 or get started online now.