Lost your job? Here's what you need to do and who can help you keep your home
With an erratic stock market and little financial assistance, Long Islanders who lose their jobs need to strategize so they don't lose their homes too. Credit: Getty Images/iStockphoto/RedVector
Amid economic uncertainty and widespread federal layoffs, mortgage payment schedules remain a constant; but for a homeowner whose employment situation has changed, contacting the lender early can be the difference between keeping and losing the house.
The earlier a homeowner in trouble takes action, the better, experts said. This means reaching out to the mortgage servicer immediately upon job loss to find out whether there are ways if the loan provider can help.
Often, the bank will refer the client to a Department of Housing and Urban Development-certified counseling agency like the Hauppauge-based Long Island Housing Partnership, said their acting director of counseling Stacey Krumholz. From there, counselors can help callers determine which strategy would be most realistic for them.
Janet Hoda, a HUD-certified counselor, works directly with default and foreclosure applicants through LIHP. She advises callers explain the situation to the servicer to find out whether the loan provider will offer a forbearance — a pause or temporary reduction of payments. Though a servicer may not be receptive to helping when a homeowner has not yet fallen behind on payments, Hoda still advises calling right away to disclose job loss.
"And hopefully in the interim, while their payments are paused, they find a job," Hoda said. "If they don't have an income, once the forbearance period ends, then they have an issue."
At that point, what happens varies depending on the circumstances. A servicer will sometimes set the homeowner up with a trial payment period for several months before establishing a permanent repayment plan, Hoda said.
In addition to a forbearance, or instead of one, a homeowner can try to negotiate a loan modification — a move Hoda said can increase the payment amount if interest rates have risen.
When a homeowner is able to modify the mortgage, the terms of the mortgage change. This could mean a revised payment schedule and mortgage maturity date — the due date of the final payment — depending on the circumstances. When a mortgage is modified, the new terms are negotiated according to current interest rates and other financial circumstances.
Should you pay your mortgage or credit card bill first?
Many who are struggling financially avoid paying the mortgage in favor of paying off credit cards or other expenses, experts said; but the mortgage payment should be first, they advised.
"What you don't want to do is just not pay the mortgage and not communicate with them," said wealth adviser Larry Sprung, the founder of Hauppauge-based Mitlin Financial. "Many times if you do communicate with the lender and you get people who understand and have worked in that field for a long time, they can be super helpful in assisting you."
If necessary, Sprung suggests making lesser credit card payments over a longer period of time, for instance, in favor of paying the mortgage.
Sprung also recommends reviewing other expenses, as does Bryan Trugman, of Attitude Financial Advisors Inc., in Plainview.
"You can't cut your mortgage or your rent so quickly," Trugman said. "And you've got to eat, but you can certainly look to minimize going to restaurants or going on vacation, all that discretionary spending can be lowered or eliminated."
Sprung suggested revisiting subscriptions, as well as to call service providers — phone and cable companies, for example — to try to negotiate a better rate. If there is a special deal for new customers, a longtime client can ask the provider whether that pricing is an option for themselves, too. Sprung has done this himself and had some expenses halved, he said.
For someone who thinks they will likely lose their job, Sprung said, there is the option to contribute a bit less to the retirement account for the remainder of employment. However, he emphasized he does not recommend it in most situations.
If you lost your job a while ago and have fallen behind
The foreclosure process can be long, confusing and overwhelming. Homeowners facing foreclosure, or worried they might, can reach out to a contract recipient of the New York State Attorney General Office's Homeowner Protection Program (HOPP).
"We're one of the many contract recipients from the attorney general's office," said Madeline Mullane, an attorney and the director of the Mortgage Foreclosure Assistance Project for the Nassau County Bar Association. "There's 98 of these throughout the state that do this kind of work for free, to keep homeowners in their homes."
Mullane and her team, which includes volunteer attorneys in addition to staff members, consult with clients at every point in the foreclosure process. The organization's attorneys represent homeowners in court every day, she said, and also serve walk-in clients and those who reach out by phone or email.
The organization can provide free information and legal services, as well as refer Long Islanders to other local agencies. The Nassau County Bar Association serves residents Islandwide.
At what point in the process should a homeowner reach out?
"Anytime. Today, tomorrow, as soon as possible," Mullane said.
The earlier a homeowner contacts the agency, the more options they have.
"If they're concerned they're going to default, we may be able to help them," Mullane said. "If they have already defaulted one or two payments, there's still a distinction there between an active foreclosure case in the court, right, and just the first couple missed payments."
Gather the right info and numbers
As a first step, Mullane recommends a homeowner gather the information necessary to assess the situation. If the home is not yet in foreclosure, the homeowner can reach out to the mortgage lender.
If a homeowner is already in foreclosure, the lender will have a New York law firm representing them, Mullane said. The law firm becomes the best contact in this case, because the in-state firm is typically working for an out-of-state entity, she said.
"Get the numbers in front of you," she said. "How much do you owe to pay off the loan? How much do you owe to reinstate the loan? Which is, the missed payments, any taxes paid by the bank, that type of thing."
Often, Mullane and her colleagues speak with clients about the possibility of reinstatement. This means paying arrears in full to catch up. Though this is not always possible, Mullane said it can be a good strategy if the homeowner is able to draw upon various resources to keep the house and retain the interest rate from the default on the mortgage.
The foreclosure process is often protracted and emotional, she said. In hiring volunteers, Mullane chooses individuals who are empathetic and trauma-informed. Those interacting with clients work to manage expectations while hearing their concerns and understanding that the situation is "personal and upsetting," she said.
"You can't make everybody's fears subside, but we do try our best to try to manage emotions," she said.
The reality is often uncomfortable for clients, she said; but cultivating a realistic view of the circumstances is usually the best option.
"I think it's a lot about providing people with their own information and then letting them have the ability to process that in their own way," she said.
Support from the association is available throughout the foreclosure process. In some cases, this includes the point at which a client is facing eviction.
"Sometimes it's just listening to them on the phone for a little while and just hearing what's the new update on where they're looking to move next," Mullane said. "We support those clients through that process."
Because foreclosure can bring with it the gamut of emotions — denial, shame, anxiety — reaching out to an organization like the Nassau County Bar Association for help can be a means of preventing secondary feelings of isolation.
"That's our overall goal, is to make sure that nobody is feeling that they have to go through this process alone," Mullane said.
Arielle Dollinger joined Newsday as a staff reporter in 2022. Previously, she covered local and national news as a freelancer for The New York Times, Newsday and other outlets.
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