Your main options when mortgage payments stop

When you cannot pay your mortgage, you have several paths forward, and which one works depends on your lender, your loan type, how far behind you are, and whether you want to keep the house. The fastest option is usually to contact your lender directly — most have loss mitigation departments that exist to handle this situation. They can offer forbearance (a pause on payments), a loan modification (a change to your terms), a repayment plan, or in some cases a short sale or deed in lieu of foreclosure. You do not have to wait until you miss a payment to call; lenders often prefer to hear from you before the account falls behind.

If you have a federally backed mortgage — one insured by FHA, VA, USDA, or owned by Fannie Mae or Freddie Mac — you have additional protections and options that private lenders do not offer. If you have a private conventional loan, your options depend on what your promissory note says and what your lender is willing to do. The sooner you reach out, the more options typically remain open to you.

Key Takeaways

  • Contact your lender's loss mitigation or mortgage information department before you miss a payment; they handle these calls constantly and can explain what your loan allows.
  • Forbearance pauses your payments temporarily but does not erase what you owe; you repay the paused amount later, usually when you sell or refinance.
  • A loan modification changes your interest rate, term, or principal, and is permanent if approved — it rewrites your loan rather than delaying it.
  • If you have an FHA, VA, USDA, or Fannie Mae/Freddie Mac loan, federal rules require your lender to consider loss mitigation options before starting foreclosure.
  • Selling the house, a short sale, or a deed in lieu of foreclosure are options if you cannot afford the mortgage long-term and want to avoid foreclosure.

Forbearance: pausing payments temporarily

Forbearance is an agreement with your lender to pause or reduce your mortgage payments for a set period — typically three to twelve months. You are not forgiven the money; you owe it back. The lender agrees to hold off on foreclosure while you are in forbearance, and the paused payments do not show as late on your credit report during the forbearance period itself.

When forbearance ends, you have options for repaying what you owe. You can resume full payments plus an extra amount each month until the arrearage is caught up. You can extend the loan term and roll the paused amount into the new schedule. You can pay it in a lump sum if you refinance or sell. Some lenders will forgive part of the paused amount if you stay current for a certain period after forbearance ends, though this is not may provide and depends on your loan type and lender policy.

Forbearance works best if your hardship is temporary — you lost a job but found a new one, you had a medical emergency but are now recovering. If your income is permanently lower or your house costs more than you can afford long-term, forbearance only delays the problem.

Loan modification: permanently changing your loan terms

A loan modification is a new agreement that changes the terms of your existing mortgage. Your lender might lower your interest rate, extend the loan term (spreading payments over more years), reduce the principal balance, or some combination of these. Once approved, the modification is permanent — you have a new loan with new terms.

Loan modifications are harder to obtain than forbearance and take longer to process, often two to four months. Your lender will ask for financial documents: recent pay stubs, tax returns, bank statements, and a written explanation of why you cannot pay. They use this to decide whether modification makes financial sense — whether you can afford the modified payment and whether the lender is better off modifying than foreclosing.

If you have a federally backed loan, your lender must consider you for modification before starting foreclosure. If you have a private conventional loan, modification is at the lender's discretion. Some private lenders offer it; others do not. The Home Affordable Modification Program (HAMP) ended in 2016, but some lenders still use its guidelines as a framework for their own modification programs.

Repayment plans and partial payment arrangements

A repayment plan lets you catch up on missed payments by adding a portion of the arrearage to your regular monthly payment over a set time. For example, if you are three months behind and your payment is $1,500, your lender might agree to let you pay $1,500 plus $500 extra each month for three months to catch up. You stay current on your regular payment while gradually paying down what you owe.

Repayment plans are simpler to set up than modifications and can be approved in days rather than months. They work well if you have fallen behind by only a few months and your income has stabilized. If you fall behind again during the repayment period, the plan typically ends and foreclosure can resume.

Some lenders also offer partial payment arrangements, where they accept less than your full payment for a limited time while you work toward full payment. These are less common and vary widely by lender.

Refinancing to lower your payment or cash out equity

If you have equity in your home and your credit is still acceptable, refinancing into a new loan can lower your monthly payment by extending the term, securing a lower interest rate, or both. You can also cash out equity to pay off other debts, which can free up money for your mortgage payment.

Refinancing requires a new process, appraisal, and underwriting — a process that typically takes 30 to 45 days. If you are already behind on payments, most lenders will not refinance you until you are current. If you are current but struggling, refinancing may be possible, but your credit score and the amount of equity you have will determine whether a lender will approve you and what rate you will receive.

Refinancing is not a loss mitigation option — it does not help if you cannot pay at all. But if your problem is that your payment is too high and you have equity, it can be a path forward.

Selling, short sale, or deed in lieu of foreclosure

If you cannot afford your mortgage long-term and want to avoid foreclosure, you can sell the house. If you owe more than the house is worth, a short sale lets you sell for less than the loan balance, with the lender's permission. The lender forgives the difference (called the deficiency), though they may require you to sign a promissory note for part of it, depending on your state's laws and the lender's policy.

A deed in lieu of foreclosure is an agreement to hand the house back to the lender instead of going through foreclosure. You avoid the foreclosure process and the damage to your credit that comes with it, though a deed in lieu still shows on your credit report as a negative mark. The lender must approve it, and they will typically require the house to be in good condition and free of other liens.

Both short sale and deed in lieu take time to negotiate and process — usually two to four months. Both affect your credit, though typically less severely than a foreclosure. Both require the lender's agreement; the lender is not obligated to accept either option. If you are considering either path, contact your lender's loss mitigation department to ask whether they will consider it.

Foreclosure and what happens if you do nothing

If you do not contact your lender and do not pursue any loss mitigation option, foreclosure will begin. The timeline varies by state and loan type. Some states require the lender to wait 120 days after you miss a payment before starting the foreclosure process; others allow it sooner. The foreclosure process itself can take several months to over a year, depending on whether it is judicial (goes through court) or non-judicial (handled by the lender and a trustee).

During foreclosure, you have the right to cure the debt — pay what you owe plus costs — and stop the sale. You also have the right to redeem the property after the sale in some states, meaning you can reclaim it by paying the full sale price. But these rights have important date, and they expire if you do not act. Once the foreclosure sale closes, you lose the house and any equity in it.

Foreclosure damages your credit for seven years and makes it much harder to borrow money, rent an apartment, or get certain jobs. It is the outcome loss mitigation options are designed to help you avoid. If you are behind or cannot pay, contacting your lender is always the first step.

How to contact your lender and what to ask for

Call the phone number on your mortgage statement and ask for the loss mitigation department, mortgage information department, or hardship department. Have your loan number ready. Explain your situation briefly — job loss, medical emergency, reduced income, whatever applies. Ask what options are available for your loan type and circumstances.

Request the conversation be documented in writing. Ask the lender to send you a summary of what was discussed and what options they offered. Get the name and direct contact information of the person handling your case. Ask for a timeline: how long does each option take, and what documents do you need to provide.

If your lender denies you for all options, ask why in writing. If you have a federally backed loan and believe the denial was improper, you can file a complaint with the Consumer Financial Protection Bureau (CFPB) or your state's attorney general. If you have a private loan, your recourse is more limited, but a housing counselor can review your situation and advise you on next steps.

Getting help from a housing counselor

HUD-approved housing counselors offer free guidance on mortgage options and can sometimes negotiate with your lender on your behalf. You can find a counselor through HUD's website (search "housing counselor" and your state) or by calling 211. Counselors understand loss mitigation programs, can help you gather documents, and can explain what each option means for your situation.

Housing counselors do not charge you and do not work for your lender. They are independent and can advocate for you. If you are overwhelmed by the process or unsure what to do, a counselor is a good first call.

Frequently Asked Questions

Will forbearance hurt my credit?

Forbearance itself does not show as a late payment on your credit report during the forbearance period. However, if you missed payments before entering forbearance, those missed payments will show. Once forbearance ends and you resume payments, your credit can begin to recover if you stay current.

Can my lender force me into a loan modification?

No. Your lender can offer modification, but you must agree to it. You have the right to refuse and pursue another option instead. However, if you refuse all loss mitigation options and do not pay, foreclosure will proceed.

What if I have a second mortgage or home equity line of credit?

Your first mortgage lender handles loss mitigation for the first loan. If you modify or forbear the first mortgage, the second lien holder is not automatically included. You may need to negotiate separately with the second lender, or the first lender's loss mitigation may require the second lender to agree. Discuss this with your first lender's loss mitigation department.

How long does foreclosure take if I do nothing?

It varies by state. Some states require a 120-day waiting period before foreclosure can begin, plus the time for the foreclosure process itself, which can be three to twelve months depending on whether it goes through court. Other states move faster. Contact your state's attorney general or a housing counselor to learn the timeline in your state.

Can I get my mortgage payment reduced permanently?

Yes, through a loan modification that lowers your interest rate, extends your term, or reduces your principal. This is permanent and rewrites your loan. Forbearance is temporary and does not reduce your payment permanently — you still owe the paused amount.