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Learn about loss mitigation

If you have long-term or permanent financial problems, contact your mortgage servicer about a loss-mitigation plan. Prepare a letter explaining your situation, the reason you are facing financial problems, and why you think it could improve. If your servicer allows it, make partial payments and maintain your records. This may help you reach a permanent agreement with your mortgage servicer.

With this option, you request to change some of the original terms of the loan. This may include extending the payments for a longer period of time, lowering the interest rate, or converting to a fixed rate. This can help lower and stabilize your mortgage payments.

You may have to complete a trial period before being permanently approved. If approved, carefully review the documents to make sure you understand and can meet the new terms.

If you are paying for private mortgage insurance, your loan insurer may consider lending you money to pay the late payments and late fees. Contact your servicer or insurer to ask if you qualify, and how it will be repaid. Federal Housing Administration (FHA) and the Veterans Administration (VA) have their own guidelines for help under this option.

If you owe more than the appraised value of the house, the servicer may allow you to sell it and accept an amount lower than what you owe. Short sales are completed before the house is foreclosed.

Ask the servicer if there will be a deficiency judgment – the amount you owed that is not covered by the sale of the house – filed against you for the difference. Ask for a written agreement clarifying the status of any deficiency.

For homeowners 62 years old or older, another option may be a reverse mortgage. The most common is the Home Equity Conversion Mortgage (HECM), administered by the Federal Housing Administration. Seek counseling from a government-approved housing counselor to decide if this is the right loan before talking to a reverse mortgage lender.

Oregon law requires a person or company offering short sales and other foreclosure avoidance solutions to be registered as a debt management services provider or as a licensed loan originator. While licensed real estate brokers do not need to be licensed as a debt management services provider to help homeowners with short sale transactions, Oregon law restricts fees and commissions when listing the house for sale.

Professionals and companies that offer to negotiate with servicers about possible solutions are limited in how much they can charge for these services and must meet other requirements. Learn more about the debt manager requirements.

​If you have exhausted all of the above options, you may give your house back to the servicer by surrendering the title and avoiding foreclosure. Some servicers may offer money to move out of the house, commonly known as cash for keys. The servicer will expect you to leave the house in good condition. Before you accept any money, ask for documentation about the conditions for accepting it.

A loan modification, or the other options to avoid foreclosure, may have a negative effect on your credit score. Speak with a housing counselor for more info. Talk to a tax adviser if your servicer agrees to settle the debt before foreclosure, or if the house is foreclosed upon, so you understand the tax liabilities that may result from the settlement.

If you are struggling with your mortgage, you may receive information by mail or telephone with promises of a quick-fix or easy solution to your mortgage problem. Scammers will even create letters or advertisements that look like they came from your mortgage company. If you receive a call, text, email, or offer in the mail, call your mortgage company using the phone number on your mortgage statement, and ask if the communication came from the mortgage company. Visit the division’s foreclosure scams page to learn more.

​​Discuss your options with a trusted family member or friend

Get free professional help from an Oregon certified housing counselor

ContactDFR staff for help

Learn more about the Oregon foreclosure avoidance program

Visit 995Hope to learn more about reverse mortgages