Behind on your mortgage: what to do, and when

If you’ve missed a mortgage payment, or know you’re about to, you have more options and more time than most people assume. Federal rules give you about four months after the first missed payment before a servicer can start foreclosure, and every major loan program has workout options for borrowers who hit a hardship. The catch is that most of those options require you to ask, apply, and send documents, and the people who wait until a foreclosure notice arrives have fewer choices left.

This guide describes federal rules and the major loan programs. State foreclosure law varies a lot, so a housing counselor or a local attorney should check your situation.

What to do this week:

1. Call a housing counselor (see the box above).
2. Call your servicer and say you’re requesting “mortgage assistance.” Ask what they need from you.
3. Gather the documents listed under How to apply and send the application in a way you can prove.
4. Open every letter from your servicer and any court. Many have deadlines.
5. If a foreclosure sale date is already set, read the next section today.

If a sale date is already set

The federal protections below depend on timing, and they get weaker as a sale gets close. If you have a sale date:

1. Call a counselor and your servicer today. Ask the servicer in writing to postpone the sale while you’re reviewed.
2. Send a complete application anyway. If it arrives 37 days or less before the sale, federal rules don’t require the servicer to stop the sale, but your loan program or state may still require a review, and servicers often postpone anyway.
3. Ask for a written reinstatement quote: the total you’d need to pay to catch up. Most mortgages let you stop a foreclosure by paying it before a deadline shortly before the sale (see Reinstatement).
4. If you have a buyer, send the signed contract to the servicer and ask for a postponement to close the sale.
5. If nothing is in writing a week before the sale, talk to a foreclosure or bankruptcy attorney.

Call before you miss, if you can

If you can see the problem coming (a layoff notice, a medical leave, a pay cut), call your servicer before the payment is late. Fannie Mae, Freddie Mac, and FHA all let servicers evaluate a borrower who is current but in “imminent default.” Starting early keeps your options open and stops late fees from piling up while you wait for paperwork.

Your credit stays clean only while you keep making full payments. Before you agree to a forbearance or a reduced payment, ask the servicer how it will be reported to the credit bureaus.

Your servicer is the company you send payments to, listed on your mortgage statement. It may not be the lender you closed with.

What happens after a missed payment

The dates below count from the payment’s due date. They come from your loan documents, the credit bureaus’ reporting rules, and Regulation X, the federal mortgage servicing rules.

The day-36 and day-45 rules are in §1024.39. The 120-day limit is in §1024.41(f). It has narrow exceptions: a servicer can file sooner to join a foreclosure another lienholder started, such as an HOA.

Small servicers are exempt from the early contact rules. A small servicer handles 5,000 or fewer loans, all of which it or an affiliate made or owns; some credit unions, small banks, and state housing finance agencies qualify. They still can’t start foreclosure before you’re more than 120 days behind.

If you aren’t on a workout plan, late fees and missed payments keep adding up through this whole period. Miss three payments on a $2,000-a-month loan and you owe $6,000 plus about $300 in late fees before any foreclosure costs. Very few people who fall behind can pay a lump sum like that, which is why most workout options exist. Once you’re on a forbearance or repayment plan with Fannie Mae, Freddie Mac, or FHA, late fees are usually stopped or waived. Ask.

Judicial and nonjudicial states

After day 120, the timeline depends on your state. In a judicial foreclosure state, the lender has to sue you and get a court order, which often takes a year or more. In a nonjudicial state, the lender can sell the home after mailing and publishing notices, sometimes within a few months of the first filing. No judge reviews a nonjudicial foreclosure unless you sue to stop the sale, so talk to an attorney early if you think the servicer made a mistake.

Some states offer foreclosure mediation, but you often have to ask for it within a few weeks of the first notice. Ask a counselor right away whether your state has it.

The workout options

Servicers call these “loss mitigation” options. They fall into two groups: ways to keep the house, and ways to leave it without a foreclosure. Which ones fit depends on whether your hardship is temporary or permanent.

If the problem is temporary

• Forbearance. The servicer lets you pay less or nothing for a set number of months. The skipped payments aren’t forgiven. At the end you pay them back through one of the options below. Ask how repayment will work before you agree.
• Repayment plan. You pay your regular payment plus part of the past-due amount each month until you’re caught up. This works when the hardship is over and your income can cover a bit more than the normal payment.

If you’re back on your feet but can’t catch up

• Deferral or partial claim. The past-due amount is moved to a separate balance that you repay, with no interest, when you sell, refinance, or pay off the loan. Your principal and interest payment stays the same, but the total payment can rise if taxes or insurance were paid for you while you were behind. Fannie Mae and Freddie Mac call this a payment deferral. FHA and VA call it a partial claim.

If your income has dropped for good

• Loan modification. The servicer permanently changes the loan. It adds the past-due amount to the balance, then extends the term, lowers the rate, or sets part of the balance aside, so the new payment is affordable. If your rate is already low, don’t expect it to drop. Most modifications start with a trial period of three or four payments. Make every trial payment on time, because missing one usually ends the offer.

If keeping the house isn’t realistic

• Sell it yourself. If you have equity, a regular sale is almost always the best exit. You keep the equity that a foreclosure would eat up. Run the Seller Net Sheet to see what you’d walk away with. Listing the house doesn’t stop the foreclosure, though. Keep your application going, send the servicer any signed contract, and be wary of “we buy houses” offers far below market value.
• Short sale. If you owe more than the home would sell for, the servicer can agree to accept the sale price as payment in full.
• Deed in lieu of foreclosure. You sign the house over to the servicer and it releases the loan. Some programs pay relocation money for a short sale or deed in lieu.

How to apply

The protections in Regulation X turn on one thing: whether the servicer has your complete application. A phone call asking about options is a start, but the deadlines below run from the date the servicer has every document it asked for.

Some help doesn’t need a full application. A Fannie Mae or Freddie Mac servicer can offer a forbearance, a short repayment plan, or a payment deferral after talking through your hardship on the phone. If you’re 90 days or more behind and haven’t applied, you may get a modification trial offer in the mail; making the first trial payment accepts it, so don’t throw it away.

What a typical application includes:

• The servicer’s application form. Fannie Mae and Freddie Mac loans use the Mortgage Assistance Application (Form 710), and many other servicers use a similar form.
• A hardship letter: a few sentences on what happened, when, and whether it’s temporary or permanent.
• Proof of income for everyone in the household who contributes: recent pay stubs, a benefits award letter, or profit and loss statements if you’re self-employed.
• Two months of bank statements and your most recent tax return. The servicer may also ask you to sign IRS Form 4506-C so it can pull your tax transcript.
• Proof of the hardship where it applies, such as a layoff notice, medical bills, or a divorce decree.

Then:

1. Send it in a way you can prove. Upload through the servicer’s portal and save the confirmation, or fax or mail it with tracking. Keep copies of everything.
2. Watch for the acknowledgment. If you apply 45 or more days before any foreclosure sale, the servicer has 5 business days to tell you in writing whether the application is complete and, if not, what’s missing. Send the missing items fast. Once you’ve sent everything that letter listed, the application counts as complete for the foreclosure protections, even if the servicer later asks for more. The servicer also has to tell you in writing the date it received your complete application.
3. Wait for the decision. Once the application is complete (and more than 37 days before any sale), the servicer has 30 days to evaluate you for every option it offers and tell you the result in writing.
4. Respond to the offer. If you applied 90 or more days before a sale, you get at least 14 days to accept or reject an offer. If you applied 38 to 89 days before a sale, you may get only 7. If you’re denied a loan modification, you can appeal within 14 days if you applied 90 or more days before a sale. Different people have to review the appeal, and the servicer has 30 days to decide it.
5. Keep a log. Write down the date, the person’s name, and what they said on every call. If something goes wrong, the log is your evidence.

What a complete application protects you from

• Before foreclosure starts: if your complete application is in before the servicer has filed, it can’t start foreclosure until you’re denied (with any appeal decided), you turn down every offer, or you fail to keep up with a plan you accepted.
• After foreclosure starts: if the complete application arrives more than 37 days before a scheduled sale, the servicer can’t seek a judgment or hold the sale until one of those same things happens. This is the ban on “dual tracking” in §1024.41(g). Other steps in the foreclosure can continue during the review.
• Close to a sale: if a sale is 37 or fewer days away, these rules won’t stop it. Call a housing counselor or attorney the same day.
• Repeat applications: the servicer only has to follow these rules for one complete application while you stay behind. If you catch up and later fall behind again, the protections apply again.

Small servicers don’t have to meet the application deadlines above. They still can’t start foreclosure before you’re more than 120 days behind, and they can’t foreclose while you’re keeping up with a plan you agreed to.

The CFPB proposed in 2024 to replace the “complete application” framework with protections that start as soon as you ask for help. As of October 2026 that rule has not been finalized, so the deadlines above are still the ones that apply.

When the servicer gets it wrong

If the amount the servicer says you owe looks wrong, a payment wasn’t credited, or it started foreclosure when it shouldn’t have, send a written notice of error to the address the servicer lists for them (often different from the payment address). You can also send a written request for information, such as asking who owns your loan. The servicer generally has 30 business days to respond, 10 for the name of the loan’s owner, and it has to answer an error about a foreclosure sale before the sale. These rules apply to small servicers too.

You can also ask in writing for a payoff statement (the full amount to pay off the loan) and a reinstatement quote (the amount to catch up). Keep copies of both.

Options by loan type

Your loan type sets which of these options the servicer can offer. Your servicer can tell you whether the loan is owned by Fannie Mae or Freddie Mac, insured by FHA, or guaranteed by VA or USDA. Freddie Mac has a loan lookup you can check yourself, and Fannie Mae has one on its website.

Fannie Mae and Freddie Mac

Most conventional loans are owned by one of these two.

• Forbearance is granted up to 3 months at a time. Fannie Mae caps it at 12 months total in most cases, and its servicers can’t charge late fees during it.
• Repayment plans: on a Fannie Mae loan, the late fees that build up during the plan are waived if you keep to it.
• Payment deferral is for loans 2 to 6 months behind, at least 12 months old, where the hardship is over. The missed payments move to an interest-free balance due when you sell, refinance, or pay off the loan, up to 12 months of payments over the life of the loan. The servicer runs an escrow analysis first, and any escrow shortage is repaid over up to 60 months rather than deferred.
• Flex Modification is for loans at least 60 days behind (or current but about to fall behind) and at least 12 months old. The servicer adds the past-due amount to the balance, lowers the rate only if yours is above the current modification rate, extends the term up to 40 years, and may set part of the principal aside interest-free as a lump sum due when you sell, refinance, or reach the end of the loan. Fannie Mae’s target is about a 20% cut in principal and interest, but borrowers with low-rate loans often get less.
• Short sale and deed in lieu (Fannie Mae calls it a Mortgage Release) are the exit options.

FHA

FHA rewrote its loss mitigation rules effective October 1, 2025, and the COVID-era options ended then. These rules don’t cover an FHA reverse mortgage (HECM).

• Repayment plans can run up to 24 months.
• Forbearance is granted 1 to 3 months at a time, up to 12 months per hardship. No late fees are charged during it.
• Permanent options (below) require that you’ve made at least 4 payments on the loan and are at least 61 days behind or about to be. You attest to the hardship, and FHA usually doesn’t require income documents, though some hardships (divorce, death, a military transfer) need proof. Each option starts with a 3-month trial plan (4 if you weren’t behind yet). Sign and return the final papers by the deadline, or the offer is cancelled.
• Partial claim: HUD pays the past-due amount and takes a zero-interest second lien, due when you sell, refinance, or pay off the loan. All partial claims over the life of the loan are capped at 30% of the balance at the time of your first one.
• Loan modification: a new 30- or 40-year term at a current market rate, aiming to cut principal and interest by 25%, often combined with a partial claim.
• Payment Supplement: partial-claim money pays part of your monthly principal for 36 months, lowering the payment by up to 25%.
• You can get one permanent option every 24 months, except after a federally declared disaster.
• Pre-foreclosure sale and deed in lieu come with up to $3,000 for owner-occupants.

VA

• Partial claim: new in 2026. VA started accepting partial claims on June 15, 2026, and servicers have until November 28, 2026 to fully support them, so ask about it by name. VA pays up to 25% of the balance (30% if your past-due amount includes a payment missed between March 2020 and May 2025), and you repay it when you sell, refinance, or pay off the loan. You first make 3 trial payments on time. The home has to be your primary residence, and you get one per loan, with a second possible after a federally declared disaster. If VA already paid a COVID-era partial claim or Refund Modification on your loan, you don’t qualify. The program is authorized through July 2030. It’s a debt you owe VA, so get the repayment terms in writing.
• Repayment plans (including 12- and 18-month plans), special forbearance, and modifications with 30- or 40-year terms. A modification starts with a trial plan.
• A short sale or deed in lieu on a VA loan can reduce your VA home loan benefit for a future purchase.
• VA’s older purchase program (VASP) ended in 2025.
• VA loan technicians can help you deal with your servicer. Call 877-827-3702 or see VA’s page on trouble making payments.

USDA

For USDA guaranteed loans (made by a private lender), you have to live in the home and the hardship has to be beyond your control. The options are special forbearance, repayment plans, modifications up to 40 years, and a Mortgage Recovery Advance: an interest-free amount, with no monthly payment, that covers what you owe and is due when you sell or pay off the loan. Advances are capped at 30% of the balance in total.

If USDA itself services your loan (a direct loan), call its Customer Service Center at 800-414-1226 and ask about payment assistance or a moratorium, which postpones payments after a qualifying drop in income.

Bank and credit union loans

Loans a bank or credit union keeps on its own books don’t follow a program’s rules, so the options are whatever that lender offers. The Regulation X rules above still apply, unless the lender is a small servicer.

Reinstatement, redemption, and surplus

• Reinstatement. Most mortgages let you stop a foreclosure by paying the past-due amount plus fees and costs before a deadline. The standard Fannie Mae and Freddie Mac mortgage allows it until 5 days before a nonjudicial sale or until a court enters a foreclosure judgment, unless state law sets a different deadline. Get the quote in writing.
• Redemption. Some states let you buy the home back for a period after a foreclosure sale by paying what’s owed.
• Surplus. If a foreclosure sale brings in more than you owe, including fees and other liens, the extra belongs to you. You may have to claim it.

Servicemembers

The Servicemembers Civil Relief Act adds protections if your mortgage was taken out before you went on active duty. The interest rate is capped at 6% during your service and for a year after, and interest above 6% is forgiven, not postponed. The lender also needs a court order to foreclose during service and for a year after it ends.

To get the rate cap, send your servicer a written notice with a copy of your orders, no later than 180 days after your service ends. Don’t sign a waiver of these rights without legal advice. Your installation’s legal assistance office can help for free.

Bankruptcy

Filing for bankruptcy triggers an automatic stay that pauses a foreclosure, but the petition has to be filed before the sale happens. If you had a bankruptcy case dismissed in the past year, the stay may last only 30 days or not start at all. Filing without an attorney at the last minute often fails, and repeat filings are a common foreclosure scam.

Chapter 13 lets you keep the house and pay the past-due amount over three to five years, as long as you keep up with the regular payment too. Chapter 7 only delays a foreclosure unless you can catch up some other way. It does wipe out what you’d personally owe after a foreclosure, but if your equity is more than your state’s homestead exemption, the trustee can sell the home. Talk to a bankruptcy attorney before a sale date if a workout isn’t coming together; many offer a free first consultation.

Taxes on forgiven mortgage debt

A short sale, a deed in lieu, a foreclosure, or a modification that cuts your principal can leave debt forgiven. Forgiven debt is generally taxable income, and the servicer reports it on Form 1099-C. §108 lists the exceptions.

A foreclosure, short sale, or deed in lieu is also treated as a sale of the home. Any gain may be excluded under Section 121, and a loss on your own home isn’t deductible. If the loan was nonrecourse (the lender could only take the house, not come after you), there’s usually no forgiven-debt income at all; the whole debt counts as the sale price instead.

The special exclusion for forgiven debt on a main home expired at the end of 2025. It now covers only debt forgiven under a written agreement made before January 1, 2026. Other exclusions still apply. The main one is insolvency: if your debts were more than your assets right before the debt was forgiven, you can exclude forgiven debt up to the amount you were insolvent. Assets include retirement accounts. Debt wiped out in bankruptcy isn’t taxable either. Both are claimed on Form 982. A CPA is worth paying here; see IRS Publication 4681.

Whether the lender can come after you for the rest of the debt (a “deficiency”) depends on your state and the agreement, and it can follow a foreclosure as well as a short sale or deed in lieu. A second mortgage or HELOC lender can usually still collect even if the first lender waives its deficiency. Get any short sale or deed in lieu approval in writing, and check that it says the remaining debt is waived.

Scams that target people behind on payments

Foreclosure filings are public, and scammers use them to find people. The common versions:

• Upfront fees for a modification. Federal law (Regulation O) bans companies from charging for mortgage relief help until you’ve signed a written agreement with your servicer that includes the relief they got you. Anyone asking for money first is breaking the law. A lawyer licensed in your state can take money up front only if it goes into a client trust account.
• “Send your payments to us.” Only pay your servicer. Someone who tells you to stop paying the servicer and pay them instead is stealing your money.
• “Stop talking to your lender.” A legitimate helper never tells you this.
• Signing over the deed. A “rescue” company offers to take title so you can rent the home back and buy it later. You lose the house and often still owe the mortgage.
• Fake counselors and government programs. Check that any counselor is on HUD’s list, and hang up on anyone claiming to be from a government program who asks for payment.
• Forensic loan audits and mass lawsuits. Paid “audits” of your loan papers and flyers inviting you to join a group lawsuit against your lender rarely help and often cost thousands.
• Unusual payment methods. Requests to pay by wire, gift card, or payment app are a red flag.
• Guarantees. No one can promise a modification or that a foreclosure will stop.

Your servicer and a HUD-approved counselor will do everything these companies offer for free. Report scams at ReportFraud.ftc.gov, to the CFPB, and to your state attorney general.

Other bills tied to the house

• Property tax and insurance. If you have an escrow account, these are part of your mortgage payment and the servicer usually keeps paying them, adding the cost to what you owe. Without escrow, unpaid property tax can lead to a tax lien and a separate sale. A lapsed insurance policy gets replaced with expensive force-placed coverage.
• HOA or condo dues. Associations in many states can place a lien and foreclose for unpaid dues, separate from your lender. Call the HOA and ask for a payment plan.
• Second mortgage or HELOC. A separate lender with its own process. Contact it too; working out the first mortgage doesn’t cover the second.

Common mistakes

• Not opening the mail. Notices from the servicer and the court have deadlines. Ignoring them is how people lose options they had.
• Waiting for a foreclosure notice to call. By then you’re at least 120 days behind and the amount owed is large.
• Sending an incomplete application and assuming you’re protected. The sale protections only apply once the application is complete. Follow up on every missing document.
• Missing a trial payment. It usually voids the modification and you start over, further behind.
• Taking a forbearance without asking how it ends. Know whether you’ll be offered a deferral, a repayment plan, or a modification when it’s over.
• Moving out. Most options require that you live in the home, and leaving can disqualify you.
• Spending the money you can’t send. If the servicer won’t take a partial payment, set the money aside. You’ll need it for a trial plan or to reinstate.
• Disputing by phone only. If the amount owed looks wrong, send a written notice of error so the servicer has to respond.
• Draining retirement accounts to catch up on a loan you can’t afford long term. Early withdrawals cost taxes and penalties, and if the house is lost anyway the money is gone. Money in a 401(k) or IRA is also generally protected in bankruptcy.
• Walking away when there’s equity. A foreclosure can eat most of it through fees and a low auction price. Selling on your own terms keeps it.
• Paying a company for help that your servicer and a counselor provide for free.

After it’s over

Late payments stay on your credit report for seven years, as does a foreclosure. Lenders also make you wait before a new mortgage: up to 7 years for a conventional loan after a foreclosure, and less after a short sale or deed in lieu or with FHA and VA loans. The details are in bankruptcy and foreclosure waiting periods.

Tools you’ll use

• Seller Net Sheet: what you’d keep if you sell
• Home Equity: how much equity you have to protect
• Mortgage Calculator: what a modified rate or term would do to your payment

Related reading: decoding your mortgage statement, escrow accounts, divorce and your mortgage, improving your credit score.