I can’t make my mortgage payments. Now what?

There are several options people in Nevada have when they are struggling to make their mortgage payments.

It was not too long ago that Nevada had the highest foreclosure rate in the country. A September 2015 report from Vegas Inc. states that in August of that year, one in 507 homes across the state entered into a filing related to foreclosure.

The threat of being unable to make a mortgage payment is frightening. A house is more than just a large asset; it is a home. Anyone in financial turmoil should have an idea of what to do when money gets tight.

Consequences to defaulting

Foreclosure is likely not the first move a lender will make in the event that a homeowner defaults on payments. Instead, there may be late fees applied to the account. Additionally, the consumer's credit score takes a hit, and the mortgage servicer could conduct property inspections and preservation services - such as mowing the lawn - and charge the consumer for it.

Learn about your options

To avoid additional costs, the first step people should take is to contact the lender. It is possible to work out a solution, such as a modification to the loan or a repayment plan. Each loan provider has its own policies and qualifications process for these options. Taking a proactive approach demonstrates to the lender that the consumer is willing to find a solution that keeps the homeowner in the house and keeps the loan as satisfied as possible.

Consider selling the home

Short-term solutions like a temporary reduction in payments may not be the best fit for every consumer. When there are significant financial concerns, selling the home may be the best option.

Short sales are those that result in net proceeds that fall short of the money that is owed on the home. The lender must agree to this in order to release the lien on the home. However, the lender still has the option to state that the sale does not satisfy the debt that is owed. Further, short sales have an impact on someone's credit score.

File for bankruptcy

While bankruptcy cannot eliminate a mortgage, it can put a stop to a foreclosure. Filing for bankruptcy creates an automatic stay on a consumer's debts. This could allow the person more time to get finances in order and start making payments.

Understanding foreclosures in Nevada

A foreclosure happens when all other options have been exhausted. Any mortgage provider must wait 120 days following delinquent payments in order to start the foreclosure process. In Nevada, there is a mediation program that anyone is the subject of a notice of default is automatically entered into. This program ensures that the homeowner has explored the alternatives. Other people may enter into the program, but it is not available to people who have an active bankruptcy.

If the foreclosure of the home goes through, the sale typically does not match the debt owed. This is known as the deficiency. In Nevada, lenders may obtain a deficiency judgment requesting that the borrower satisfy the debt. However, that judgment is limited to the lesser of either the difference between the total debt and the sale price, or the difference between the total debt and the home's fair market value.

The mere idea of foreclosure is frightening, but homeowners in these situations are not alone. People who have concerns about this topic should speak with a bankruptcy attorney in Nevada.