Disabled people can find themselves in the worst position of any demographic to obtain help on a defaulted mortgage. This is because the Social Security income they receive usually puts many mortgage hardship programs out of their reach. However, regardless of disability, you should find out what your options are as soon as you default on your mortgage.
Lenders, especially large ones, usually have mortgage relief programs for people that experience hardships, such as a disability. Certain lenders reduce interest rates for disabled veterans, and sometimes their survivors, by a preset percentage. In general, lenders are more apt to modify a loan for someone facing foreclosure if they have a long-term disability.
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The federal government has dozens of programs under the Making Home Affordable program to help homeowners facing foreclosure. For instance, if you are disabled and recently unemployed, you may qualify for partial payments under the Home Affordable Unemployment Program. You may even be able to have the lender forgive some of the balance on your mortgage or permanently lower your interest rate. However, all of these programs usually have limits on the value of your home and require that neither Fannie Mae nor Freddie Mac do not own your mortgage.
Contact your local Housing and Urban Development office to speak with a mortgage counselor. Even if your lender has started foreclosure proceedings, you might be able to save your home. For example, you may qualify for the Emergency Homeowners' Loan Program, which is designated specifically for the unemployed or people with a medical condition who are behind on their mortgage. Ideally, you want to talk to a counselor approved by HUD, because some mortgage scams ask for hundreds of dollars up front to stop a foreclosure, only run off with your money.
Look at your finances and determine whether you can afford the home in the future. If a loan or modification only provides temporary relief, consider selling your home or walking away. In some states, such as California, a homeowner can walk away from a mortgage without owing anything if a foreclosure sale does not pay off the mortgage. Foreclosure won't happen immediately, so you have time to look for more housing. If you have a moderate to low income, you may qualify for federal housing vouchers.
- Bankrate.com; Mortgage Help for Disabled Persons; Steve McLinden; October 2009
- ProPublica; Mortgage Hardship Applicants in Limbo; February 2010
- LoanSafe; Disabled Veterans Get Help From CitiMortgage to Reduce Mortgage Payments; Moe Bedard; May 2011
- Making Home Affordable: Lower Your Payments
- U.S. Department of Housing and Urband Development: Avoiding Foreclosure
- "Forbes Magazine"; How To Stop Foreclosure; Nicole Perlroth; March 2009
- HOPE Now
- Disability.gov: How Can I Save My Home from Foreclosure?