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The Maryland and Federal Foreclosure Moratoriums are scheduled to end June 30th, 2021.  So, starting July 1st the mortgage companies can start sending out new Notices of Intent to Foreclose.  These notices are the start of the foreclosure process in Maryland.

If you are behind on you mortgage do not wait to get this notice to take action. Start working on your options now.  The good news is that you have time to work on a solution.  Maryland’s foreclosure process takes time.

You should not be facing an auction of your residence in July. See our guide What You Need to Know About Foreclosures in Maryland for all the details on the foreclosure process.

If you want to avoid foreclosure and keep your house your best options are to seek a Forbearance, a Loan Modification or file a Chapter 13 Bankruptcy.

Mortgage Forbearance

In this option you are asking the mortgage company to pause your payments.  This will get you out of the pile of mortgage that they are going to file foreclosures on.  The mortgage company is most likely to grant a forbearance if you had a recent setback that you can explain why the set back is temporary. You are more likely to get a forbearance if you are going to be out of work for a month because of surgery than if got fired from your job.

While getting a forbearance may be the quickest solution, it is only a temporary one.  After all, the mortgage company is just agreeing to let you miss some payments.  You still must come up with an agreement to get caught back up on these payments.  You might think of this as a way to buy time to apply for a loan modification.

Loan Modification

With a loan modification the mortgage company is agreeing to change the terms your mortgage.  This agreement could be something as simple as the lender agreeing to put the missed payments at the end of the loan.  However, nothing is simple about the loan modification process.  Each lender has their own rules. For detail on this process see the Fannie Mae Website.

Getting a loan modification can be a war of attrition.  You need to submit a hardship letter and bunch of financial documents.  Eventually they may put you on trial period.  Over 3 months they will see if you can make the payments.  And then agree to modify your loan.  The decision to grant or deny you the modification is entirely up to the mortgage company.

The problem is that during this process the mortgage company might also be proceeding with the foreclosure.  When you are applying for a modification, you should think of the foreclosure department as a different company.  You may find that the not only does the left hand not know what the right hand is doing, it may not even know it exist.  You are in a race to see if you can get the modification before the lender gets the foreclosure auction done.

Chapter 13

This is a payment plan bankruptcy.  In this type of bankruptcy, you can use a five-year payment plan to get caught up on your mortgage.  When you file this type of case an Automatic Stay stops the foreclosure process.

After the case is filed you need to start making your regular mortgage payment and a payment to a Chapter 13 Trustee that will be used to cure your mortgage arrears and your other debts.  If you are less than a year behind on your mortgage, and don’t have much other debt, this payment plan can make getting caught up on your mortgage easy.

If you have other debts, it gets more complicated.  With your other debts we need to look at your assets, they type of debt you have and your income and expenses to figure out how much you would have to pay back.  To learn more about the Chapter 13 Bankruptcy process see Our Bankruptcy Guide.

Conclusion

If you fell behind on your mortgage the time to act is now.  Since none of these options are perfect, it can be hard to decide which option is best for you to try.  And each of these options work together as one plan.  If you get the forbearance, then you might apply for the modification.  If you get a foreclosure notice while you are applying for the modification you might file a Chapter 13 to stop the foreclosure.  In some instances, while you are in Chapter 13 you might apply for a loan modification.

Knowing your options—even if that option is filing for bankruptcy—is better than not having any answers at all. Even if things work out and you don’t have to file for bankruptcy, you won’t regret having learned about your options.

So if you are waiting to hear back if your mortgage company will work with you, give us a call, and schedule your free consultation. Then we can figure out if which of these options and is best for you. This consultation can be by phone, zoom, or in person.

Know your options. Be informed. Protect yourself.

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