Being faced with the prospect of foreclosure can be as emotionally challenging as it is financially. And they don’t happen overnight. In fact, many may have been avoidable. Most often, it starts with a missing or late payment that snowballs from there. According to ATTOM, a leading curator of real estate data, foreclosures are rising in many areas of the United States and rose by about 8% since 2023. So how can you keep yourself from becoming part of that statistic?
Related: Risks of Buying a Home as a Military Family
It’s Okay to Ask for Help
There are a lot of reasons you might miss a mortgage payment. You could be sick or caring for someone with a long-term illness. You may be juggling a lot of bills at the moment and put your payment on hold. Or maybe you just forgot to make it. Those discrepancies can usually be rectified by sending the payment to your mortgage servicer as soon as you can.
But if you’re unable to catch up and become a “rolling 30” always paying a month late or falling several months behind, that’s a different story — one you need to face openly and frankly about because there are many options to help. Doing nothing is not an option, and it can lead to late fees, a damaged credit score and possibly cause you to lose your home to foreclosure.
Related: AMS Helps Resolve Credit Problems to Qualify Ex-Navy Homebuyers
What to Do When You Miss a Payment
If you have missed a mortgage payment, it’s important to call your mortgage servicer (the company that collects your payments). If you originated your mortgage with AAFMAA Mortgage Services LLC (AMS), it’s likely your servicer is Servbank (formerly TMS Mortgage). They can be reached by phone at (866) 867-0330.
When you call your servicer, be prepared to explain why you missed your payment and whether the problem will be temporary or permanent, along with details about your income, expenses, and other assets. Some servicers will ask you to fill out a mortgage-assistance application to collect this information in a less intrusive way.
Your servicer will need to offer you a series of loss mitigation options based on the type of loan you have. For instance, if your loan is a VA Loan, the servicer will follow VA’s loss mitigation guidelines. If your loan is a conventional mortgage owned by Fannie Mae or Freddie Mac, the servicer will follow their respective guidelines.
Related: Saving $250 a Month with a VA IRRRL Streamlined Refinance
Understanding Your Options
Loss mitigation options are divided into home retention options and alternatives to foreclosure that will help you stay in your home. Home retention options include repayment plans, special forbearances, and loan modifications. Homeowners with current VA Loans may be eligible for an interest-rate-reducing refinancing loan (IRRRL, pronounced “Earl”) and may wish to consider these loans if mortgage interest rates are low. An IRRRL replaces your current VA Loan with a new loan at a lower interest rate as long as you currently live in or used to live in the home.
If you prefer to leave your home, there are alternatives to foreclosure, such as short sales and deeds-in-lieu (DIL) of foreclosure, both of which avoid damaging your credit.
“The most important thing to do [when you start getting behind in your mortgage payments] is to take action by contacting your servicer and telling them what’s going on,” explains Rob Greenbaum, Chief Marketing Officer with AAFMAA Mortgage Services LLC (AMS). “Depending on when you took out your loan — before or during your military service — there are many options available to you. The sooner you call, the better.”
Greenbaum points out that another option, regardless of your stage of delinquency, is to speak with a HUD-approved housing counseling agency.
Added Protection for Military Servicemembers
You may have heard of the Servicemembers Civil Relief Act (SCRA), which provides financial and legal protections for active-duty servicemembers and their families. Because the details of the SCRA are complicated, servicemembers should contact their nearest legal assistance office for help understanding its protections. For example, the SCRA frequently makes certain rights available depending on whether your ability to pay is “materially affected” by military service, and that can mean different things in different situations.
Here are the basics for military homeowners hoping to avoid foreclosure: 1) If you took out a mortgage loan before entering the military, SCRA requires your lender to get a court order before it can foreclose on your home; and 2) This protection applies while you are serving in the military and for one year after you have completed your service.
Additionally, if you took out a mortgage before your military service started, and your interest rate is higher than 6%, your interest rate will be capped at 6% during your military service and for one year after completing active service.
SCRA also offers renters protection against early lease termination if conditions are met. A landlord cannot evict a servicemember or dependent from a primary residence without a court order. In an eviction proceeding, the court may also adjust the lease obligations to protect the interests of the parties.
We’re Here to Help
Whether you’re thinking about buying, ready to start home-shopping in earnest, or considering a refinance, an AAFMAA Mortgage Services LLC (AMS) Military Mortgage Advisor will be happy to provide you with an honest and fair comparison of your mortgage options, including a wide range of affordable mortgages designed to meet your needs.
Ensuring AAFMAA Members obtain the best mortgage possible is our mission. Get your free mortgage assessment today or give us a call at 844-422-3622!