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Options for California homeowners falling behind on payments

On Behalf of | May 18, 2021 | Bankruptcy |

Relief may be available for California homeowners who can no longer make their mortgage payments. Whether affected by job loss, illness or simply insurmountable debt from the rising cost of living, individuals at risk for foreclosure have options.

Explore the possible avenues of relief if you face this situation.

Homeowner Relief Act

The state has asked mortgage companies and banks to work with homeowners financially affected by COVID-19 under the terms of the existing Homeowner Relief Act. Available solutions for distressed mortgage borrowers vary by lender and may include:

  • Loan modification to lower payments by extending the term of the loan or reducing the interest rate
  • Due date extensions
  • Deferred payments

You may be able to negotiate other accommodations with your bank or lender based on your situation.

Loan refinance

You could potentially lower your mortgage payments by refinancing your mortgage. However, you must have equity in the property and good enough credit to qualify for a refinance loan. Some lenders may refinance or modify your loan even without these factors if you can show hardship.

Private mortgage insurance claim

If you have private mortgage insurance on your loan, it may cover the cost of past-due payments and associated fees. Consult your PMI documents or talk to your lender to find out if this is an option for you if you have fallen behind on your mortgage.

While bankruptcy may sound like a last resort, it can be a smart option for homeowners who cannot afford their property or other bills. Some people who file for Chapter 13 bankruptcy even arrange to keep their homes in California.