Learn how to avoid mortgage relief scams
Mortgage Payments After Disaster
A disaster can cause a lot of sudden expenses that make it difficult to pay your existing obligations. Your mortgage is one of these big obligations and, unfortunately, it will still need to be dealt with even as you recover.
Lenders Don’t Have To Forgive Late or Missed Payments
Even if you are experiencing financial hardship after a disaster, there is no law that requires a mortgage lender to accept late or missed payments. They can foreclose on your home. Nonpayment can also be reported to credit agencies. If you get an insurance settlement and it’s less than what you owe on your mortgage, you still need to pay the rest.
Options For Homeowners
Many lenders offer programs that help borrowers experiencing hardship. If you can’t make your payment, contact your lender or loan servicer as soon as possible to discuss your options. A few tips:
Be upfront with the lender that you’ve been affected by a disaster.
Ask for forbearance. By granting forbearance, the lender can delay mortgage charges and waive late fees. At the end of this period, however, you will still need to pay the past-due balance unless you qualify for a loan modification or other change to your mortgage terms. You should ask:
How many months’ payments will be postponed? When will they be due?
Will the missed payments be repaid over time or all at once?
Will the lender still report the missed payments to your credit agencies?
Get all lender promises to you in writing.
Give your lender an updated address where you can get mail. You can also ask them to message you through an online account, if applicable.
You might have to submit a written application for assistance. Continue to have regular contact with your lender until you get a letter that says your application is complete.
Insurance Claims
While your insurance claim is pending, you still must pay your mortgage, unless you got forbearance or another lender-approved change. You must also pay your mortgage when your claim is approved and repairs are underway. Check to see if your homeowner’s policy offers living expenses while your home is unlivable and under repair.
Note that you are not required to take the first estimate or offer from your insurance company. Don’t rush the process! If you feel you are owed more, ask your insurer to reconsider the offer. Include written estimates that show the true cost of repairs and negotiate the best deal. You could also hire an independent insurance adjuster, but keep in mind that they get paid a percentage of what you gain by using them.
As you navigate this process, remember these key tips:
Don’t rush to sell your property. Financial help may be available from sources you don’t know about yet.
Don’t fall for contractor scams.
Don’t borrow money from contractors to speed up home repairs. Work with your insurance company to get an accurate estimate and payout.
If Your Home Destroyed Without Insurance
If your home was destroyed and you don’t have insurance, you may be able to deduct some of your loss on your federal income tax return. Only major losses normally result in tax savings. You should visit www.irs.gov.