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Not being able to pay your bills is stressful and exhausting. It's even more so when it's your mortgage, since keeping the roof over your head depends on those payments. If you've fallen behind on your mortgage, you could be at risk of foreclosure.

There were about 10,000 foreclosures in 2020 -- 40,000 fewer than in 2019. That's because borrowers can delay payments to avoid defaulting on their loans during the coronavirus pandemic. If you are struggling with mortgage payments, you have options. And you have even more if you act before the end of the year.

What is foreclosure?

When you stop making payments on your mortgage, your lender can repossess your home. This is called foreclosure. The process and rules depend on what state you live in and whether it's a judicial or nonjudicial foreclosure (essentially whether or not the lender needs to go to court to foreclose). 

There are several steps in the foreclosure process, so you won't be evicted from your home after missing just one mortgage payment. According to the Consumer Financial Protection Bureau, your lender is required to try to contact you by 36 days (and in writing by 45 days) after you miss a payment. It cannot file for foreclosure in court until the debt is over 120 days delinquent.

What can you do?

First and foremost, don't pretend this isn't happening. Foreclosure has serious consequences -- not only could you be evicted from your home, but you could also still wind up owing money to the mortgage company. Your credit score takes a serious hit, and you may not be able to take out another mortgage for some time. Even if you're behind on your payments, there are several steps you can take now.

1. Utilize existing COVID-19 protections

There are two important protections in place to stop homeowners from being evicted from their homes during the pandemic.

  • Forbearance: Forbearance allows you to hit pause on your mortgage payments. The current coronavirus protections entitle many borrowers to 180 days of forbearance, which they can then extend for another 180 days. You still have to catch up on those payments eventually, but at least you can delay them until you're in better financial shape. Forbearance is not automatic -- you need to request it. But until Dec. 31, if your loan is federally backed, your lender cannot say no.
  • Foreclosure protections: If you have a federally backed loan, your lender cannot begin foreclosure proceedings until after at least Jan. 31, 2021 -- even if there's already a court judgment against you. If you were already facing foreclosure at the start of the pandemic, you're still protected. Though it's also worth noting that putting your loan into forbearance effectively freezes the foreclosure process.

The majority of loans are federally backed. If you have an FHA, VA, USDA, Fannie Mae, or Freddie Mac mortgage, you're covered. And even if your loan is not federally backed, your lender may still be willing to consider forbearance.

2. Get professional help

Managing money problems can feel very lonely, but help is available. You don't have to carry this alone. Start by contacting a HUD-approved housing counseling agency. It's free, and HUD says two-thirds of people who've sought counseling found solutions. A counselor can help you understand your options and make a plan. Check out the Making Home Affordable program and see what legal aid is available in your state.

3. Talk to your lender

Even outside coronavirus times, talking to your mortgage lender is crucial. Foreclosure is a time-consuming and expensive process, so it may be in your lenders' interest to reach an agreement instead. Indeed, your lender is legally obligated to try to make contact with you before initiating foreclosure proceedings. Don't ignore those calls, and carefully read any documents you receive.

We've already discussed forbearance, which is one route your lender might offer. You can also see whether a loan modification might work. This is when the lender changes the terms of your mortgage to make it more affordable. For example, it might lengthen the term or temporarily lower the interest rate.

If you haven't already explored it, you might be able to reduce your monthly payments a little through refinancing. Refinancing involves replacing one loan with a new one, often at a lower rate. Today's record-low mortgage rates mean you could shave some of your costs, especially if your credit score is still in relatively good shape.

Most of the moves we've talked about so far are geared toward keeping you in your home. If you buy some time through forbearance, but still can't see how you're going to catch up on your payments, a short sale might help you avoid foreclosure. It's a tricky process that basically lets you sell your property for less than you owe. You then give the money directly to the lender, who forgives the rest of the debt. A lender can be reluctant to allow a short sale, especially if it thinks it could get more money from your property through a foreclosure.

There's also something called a mortgage release, which is when you agree to transfer the house back to the lender and it releases you from your obligations. If you owe more than your home is worth or know that you won't be able to afford to stay in your home, a mortgage release may minimize the damage to your credit. You might also be able to stay in your home for a while as you look for a new place.

4. File for bankruptcy

Bankruptcy is, rightly, a scary word. It should only be considered as a last resort because of the long-term consequences. However, if foreclosure is imminent, the minute you file for bankruptcy, something called an "immediate stay" is put in place. This temporarily halts the foreclosure process. The key word here is "temporary" -- you'll still have to deal with your mortgage debts, potentially as part of the bankruptcy. That said, in a pinch, it may buy you some time to find a place to rent or reach another solution.

You'll need to weigh up the pros and cons of filing for bankruptcy carefully, though. Speak to a debt counselor to make sure you understand what it entails.

No doubt you worked hard to buy your home and have built many happy memories there, too. Take advantage of the extra time forbearance can give, and talk to your lender as soon as possible. Foreclosure is not inevitable, but you do need to act now.