Distressed Mortgages FAQ: Questions New York Homeowners Ask
Hudson River Realtors | Referral Network Serving New York State
What should I do first if I can't make my mortgage payment?
Contact your loan servicer immediately. Explain your situation and ask about loss mitigation options. The earlier you reach out, the more options are available. Also contact a HUD-approved housing counselor for free guidance — call 1-855-HOME-456.
Will a loan modification hurt my credit?
A loan modification may be reported on your credit as a modified loan, which can have a minor negative impact. However, the impact is far less severe than missed payments, foreclosure, or bankruptcy. Most homeowners see their credit improve after a modification because they are making payments on time again.
How long does forbearance last?
Forbearance is typically granted for 3 to 6 months, with extensions possible up to 12 months or more depending on the program and servicer. At the end of forbearance, you will need a plan to resume payments — usually through a repayment plan, modification, or deferral.
Can I sell my home while in forbearance?
Yes. Selling while in forbearance is allowed and can be a smart strategy. The sale proceeds pay off your mortgage including any deferred amounts, and you keep any remaining equity. There is no penalty for selling during a forbearance period.
What is the difference between a short sale and a foreclosure?
In a short sale, you sell the property with the lender's approval for less than what is owed. In a foreclosure, the lender takes the property through court proceedings. Short sales give you more control, cause less credit damage, and allow you to transition on your own terms.
Do I need an attorney for a loan modification?
An attorney is not required but can be very helpful, especially if your case involves complex issues or if you are already in foreclosure. In New York, the mandatory settlement conference process benefits from legal representation. Many legal aid organizations offer free foreclosure defense.
What is a deed in lieu of foreclosure?
A deed in lieu is when you voluntarily transfer your property to the lender to satisfy the mortgage debt. It avoids the time and cost of foreclosure and is less damaging to your credit. Not all lenders accept deeds in lieu, and there may be tax implications.
Can I get a mortgage again after a distressed situation?
Yes, but there are waiting periods. After a foreclosure, the typical waiting period for a new FHA loan is 3 years. After a short sale, it is typically 2 years for FHA. After a modification with no missed payments, there is generally no waiting period. Rebuilding credit during the waiting period improves your future options.
What if I have a second mortgage or HELOC?
Second mortgages and HELOCs add complexity. In a modification, both lien holders may need to agree. In a short sale, the second lien holder must agree to release their lien, usually for a reduced payoff. An experienced agent and attorney can help navigate multi-lien situations.
How can Hudson River Realtors help with my mortgage situation?
If selling is the right option, we connect you with agents experienced in distressed sales — including short sales, pre-foreclosure sales, and sales during active loss mitigation. The referral is free and there is no obligation. Start with our intake form.