If you’re struggling to pay your mortgage, it’s important to take action. There are concrete steps that you can take now that could help save your home.
Pre-foreclosure is the period from when you miss your first mortgage payment to when your lender files a foreclosure in court. To take your home, Ohio law requires your lender to file a court action. Usually, lenders wait 90-120 days from your first missed payment before they file for foreclosure.
If you’re in pre-foreclosure, here’s what you can do.
Stay in your home
If you move out of your home, you could lose some of your rights. Someone could also vandalize your home while you’re gone, and you could end up paying for the damage.
Call your servicer
Your loan servicer can offer you options to help you get back on track and help you save your home. A lot of homeowners are seeking help right now, so be prepared to wait on hold. Make sure to have your account number ready. Ask your servicer:
- What options are available to help temporarily lower or suspend your payments?
- Are there forbearance, loan modification or other options available?
- Can they waive late fees on your mortgage account?
Make sure to get any agreement in writing. You should ask your loan servicer for written documentation. Also, make sure you understand the terms of any agreement.
Coronavirus (COVID-19) changes
To help homeowners who are at risk of losing their homes, the new Coronavirus Aid, Relief, and Economic Security Act (CARES Act) gives two helpful protections:
- A foreclosure moratorium, at least through August 31, 2020. The CARES Act set an initial moratorium through May 17, 2020. That moratorium was extended on May 14, 2020 and June 17, 2020. A moratorium stops or suspends the foreclosure; and,
- A right to up to a 12-month forbearance for homeowners impacted by COVID-19. You do not need to submit additional documentation to qualify other than your claim to have a COVID-19 related financial hardship.
During the forbearance period, your servicer should not charge additional fees, penalties or additional interest. Your mortgage will continue to accrue your regularly scheduled interest.
The foreclosure moratorium and right to forbearance applies to homeowners with a mortgage backed by the Federal Housing Administration (FHA), Freddie Mac, Fannie Mae, U.S. Department of Veterans Affairs (VA) and U.S. Department of Agriculture (USDA).
Almost half of the mortgages in the U.S. are backed by Freddie Mac or Fannie Mae, so many homeowners will qualify for these protections. You can see if your mortgage is backed by Freddie Mac or Fannie Mae by going to their websites.
A forbearance provides a temporary suspension or reduction of payments, but it is not forgiveness. You will still owe the payments at some point. Remember that while the payments will become due after the forbearance, the Federal Housing Finance Agency says that a lump sum payment at the end of the forbearance is not required for homeowners with mortgages backed by Freddie Mac or Fannie Mae. Instead, if you get a forbearance, your loan servicer should contact you about 30-days before the end of the forbearance plan to discuss different repayment options. At that time your servicer should work with you to:
- Set up a repayment plan;
- Modify the loan so that your payments are added to the end of your mortgage; or
- Set up a loan modification that reduces your monthly mortgage payment.
Similar repayment options are available for FHA, VA and USDA mortgages.
Contact a HUD-approved housing counselor
If you want help working with your loan servicer, you may want to contact a HUD-approved housing counselor. Foreclosure prevention counseling is available for free through HUD’s Housing Counseling Program. To find your local HUD-approved housing counselor, go to Local Government and Community Resources.
Foreclosure is the period from when your lender files a foreclosure complaint through when your home is sold at sheriff's sale and you are evicted. The court foreclosure process can take anywhere from six months to more than a year. It depends on your case.
Talk to a lawyer
Defending yourself from foreclosure can be complicated. Find a lawyer for legal advice or representation if you can. If you cannot afford a lawyer, you may be able to get help with your foreclosure from your local legal aid organization.
File a foreclosure answer
You must file an answer with the court within 28 days. This is true even if you’re foreclosure has been suspended or you are talking to your lender or servicer about other options. If you do not file an answer you will lose your home.
To file an answer, fill out this form and take it to your Clerk of Court's office. You can find your Clerk of Court under "Local Government and Community Resources" on this page.
Look out for scams
There are scammers who try to take advantage of people who are trying to save their homes. Sometimes they try to get you to pay them cash. Sometimes they try to get you to sign over the deed to your home. Don't let scammers take your hard earned money or your home. Some common scams are:
- Asking for cash so that they can “negotiate” a loan modification for you or "help save your home."
- Suggesting that you deed your house to them and then rent it back from them.
- Posing as the federal government offering you “special bailout funds.”
- Offering you cash to sign over the deed to your home. This lets them collect any money you are owed after your home is sold at auction.
To keep yourself safe from scammers:
- Never sign papers under pressure.
- Never sign papers you don't understand.
- Don’t sign anything with blank lines or spaces.
- Never pay someone who is not your lender or loan servicer.
- Don't stop communicating with your lender or loan servicer.
- Never give out personal information (unless it's to your lender or loan servicer).
- Never sign over the deed to your home (unless you are selling it).
Read more to learn about foreclosure timeline in Ohio.