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Missed a Mortgage Payment During the Pandemic? Here's What to Do

By Maurie Backman - Dec 21, 2020 at 9:00AM

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Many people are struggling financially during the coronavirus outbreak. Here's what to do if you've missed a home loan payment.

A late payment notice and corner of a check overlapping it.

Image source: Getty Images.

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Many Americans are grappling with income loss during the coronavirus pandemic. If you're one of them, you may have missed a mortgage payment since the outbreak began. But if that's the case, it's important you contact your lender for relief. There is help available for struggling borrowers, but you need to reach out and ask for it.

What are the consequences of a missed mortgage payment?

Rest assured that your lender cannot start foreclosure proceedings based on a single skipped mortgage payment. And right now, there's actually a ban on foreclosures through January 2021. Even if your lender wanted to go that route, it's is off the table due to the pandemic.

But what a missed mortgage payment can do is cause your credit score to drop, just as any type of missed payment would. And right now, that's a dangerous thing. If your credit score declines to the point where it becomes poor, you'll risk being denied a loan in the future. 

A better bet is to reach out to your lender before you miss a mortgage payment and discuss your options. If that ship has sailed and you've already skipped a payment, reach out now. Your lender will walk you through the steps you can take to get current on your home loan. If you fear you're at risk of missing future payments, there's still time to put your mortgage into forbearance.

Under the CARES Act, which was signed into law in late March to provide pandemic-related relief, any homeowner who requests mortgage forbearance is entitled to up to 360 days of it. During forbearance, you're not required to make any mortgage payments, but those payments aren't forgiven -- they're simply deferred. You'll need to catch up on them once your forbearance period ends, though your lender can't demand you make one big lump-sum payment. 

The great thing about mortgage forbearance is that you can still make payments toward your home loan during that time if your situation allows for it. That way, you'll have fewer payments to catch up on later. However, if you can't make a payment, you won't be penalized from a credit score perspective.

That said, those protections are set to expire on Dec. 31, 2020, so if you're interested in forbearance, now's the time to contact your lender and set things up. Keep in mind that forbearance probably isn't the answer if you've only missed a single payment and have the means to make your payments going forward. In that scenario, you'll want to talk to your lender about catching up the one payment you skipped.

Always reach out for help

Even outside the pandemic, if you find yourself struggling to keep up with your mortgage, it's always wise to ask for assistance. Your lender's goal, at the end of the day, is to get paid on your loan. So chances are, your lender will be willing to work with you when issues arise. Keep that in mind the next time you run into difficulties. It doesn't only apply to your mortgage lender, but also to credit card companies and any other loan servicers you have. The more communicative you are, the more help you're likely to receive.

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