By Justin Liva, Mojo House BuyersThe CFPB's homeowner's guide names the kinds of hardship that put people here: earning less than before, rising expenses, a divorce, the death of a spouse or a stretch of unemployment. One missed payment becomes two, and opening the mail starts to feel like a threat.
Acting early matters. The CFPB says the earlier you complete an application for help, the more protections you get, and that in most cases the worst thing you can do is nothing. This guide lays out what the federal consumer agency and New Jersey's own rules say, and where selling fits.
Call your servicer and a housing counselor first
The Consumer Financial Protection Bureau's advice is direct: call your mortgage servicer right away and contact a HUD-approved housing counseling agency for free help. A counselor can tell you whether you qualify for any programs and explain the options your servicer may offer.
I'd add one thing from the seller's side of the table. Keep notes on every call: the date, the name of the person you spoke with and what they told you. The CFPB's guide warns that some documents may need updating and may be requested several times, so a record of what you sent and when is worth keeping.
Why the first 120 days matter
Under federal rules, your servicer can't make a first notice or filing for foreclosure until you're more than 120 days behind. The CFPB adds that once you send a complete application early enough, the servicer can't start foreclosure while you're being evaluated.
Use it. The CFPB says to make sure your servicer gets your complete application more than 37 days before any scheduled foreclosure sale, and that you should hear back in writing within 30 days. Waiting until the last minute leaves you with fewer protections.
New Jersey adds its own step. Before filing, a lender has to send a Notice of Intention to Foreclose at least 30 days ahead, and that notice states the amount needed to cure the default. I explain the full court process in my guide to how foreclosure works in New Jersey.
The options a servicer may offer
The CFPB calls these "loss mitigation" options. That same guide describes the common ones like this.
Options that keep you in the house:
- Reinstatement. You had a temporary setback but now have the money, so you pay what you owe and the loan is current again.
- Forbearance. You make reduced payments for a period during a temporary hardship. Interest keeps accruing, and the missed amounts come due when the plan ends.
- Repayment plan. You pay more than your regular payment for a few months until you're caught up. The CFPB says these generally run two to six months but can be longer.
- Loan modification. The servicer tries to lower your payment to something affordable, adding the missed payments to what you owe. The CFPB says it may require a three- or four-month trial plan first.
Options that end with you leaving:
- Short sale. You sell for less than you owe, working with your servicer. The CFPB says it's available when your balance is more than the house is worth, and you work with the servicer on the price.
- Deed in lieu of foreclosure. You give ownership back to the lender in exchange for relief from some or all of the debt.
Each servicer and loan investor has its own rules, so what you're offered depends on your loan.
When selling makes more sense
Sometimes the honest answer is that the payment just doesn't fit anymore, even with help. If you have equity, a sale on your own terms lets you pay off the loan and keep what's left.
How you sell depends on time and condition. If foreclosure is still months away and the house shows well, list it with an agent. You'll likely get more. If the house needs work, the timeline is tight or you can't face showings while dealing with everything else, a direct sale may be the better trade.
That's where I come in. I buy houses as-is, in any condition, including fire-damaged and unlivable ones, and I close on the seller's timeline. I don't charge commissions, and the offer is free with no obligation. You can leave behind whatever you don't want, and I take care of the cleanout after closing. I'll look at what you owe, the condition and what the house would sell for once fixed, and tell you plainly whether a sale to me leaves you with anything. If it doesn't, I'll say so, and a short sale or a conversation with your lender may be the right path. My guide comparing an agent and a cash buyer goes deeper on that choice.
Watch for foreclosure rescue scams
People in your position attract predators. The CFPB warns that you should not have to pay anyone to help you avoid foreclosure. Its list of red flags includes demands for upfront fees, guaranteed results, instructions to pay someone other than your servicer, advice to stop paying your mortgage and requests to sign over your title.
Notice that last one. Nobody honest asks you to sign over a deed in exchange for a promise to "save" the house. Before you work with any buyer, read my guide on how to vet a cash home buyer.
If you want a number to weigh against your other options, you can request an offer or learn more on my avoiding foreclosure page. A housing counselor or an attorney can tell you which path protects you best.