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How to Recover From Missed Mortgage Payments

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Can you bounce back from a missed mortgage payment or two? The answer is yes, but there’s work involved. After all, your payment history has the greatest impact in determining your credit score.

Falling behind on your mortgage payments can affect your credit and finances, and you could lose your home to foreclosure. It’s critical to be proactive and not wait until it’s too late to get help.

How missed mortgage payments affect your credit

In most cases, mortgage lenders give you a 15-day grace period before charging a fee — often around 5% of the principal and interest portion of your monthly payment — for late payments. But your credit history typically isn’t impacted until you’re at least 30 days behind on a mortgage payment. At this point, your mortgage servicer may report your late mortgage payment to the three major credit reporting bureaus: Equifax, Experian and TransUnion.

Your credit score could drop by 60 to 110 points after a late mortgage payment, depending on where your score started, according to FICO research. Being 90 days late on your loan could lower your score by another 20 points or more.

It can take up to three years to fully recover from a credit score drop after being a month behind on your mortgage, FICO’s research found. Once you’re three months behind on your mortgage, that time can increase to seven years.

Recovering from missed mortgage payments

Falling behind on your mortgage can be a frustrating and scary experience, particularly if you’re facing the threat of foreclosure. Here are some options to help you get back on track after missed mortgage payments:

  • Repayment plan. Your loan servicer agrees to let you spread out your late mortgage payments over the next several months to bring your loan current. When your upcoming payments are due, you’d also pay a portion of the past-due amount until you catch up.
  • Forbearance. Your servicer temporarily reduces or suspends your monthly mortgage payments for a set amount of time. Once the mortgage forbearance period ends, you’ll repay what’s owed by one of three ways: in a lump sum, a repayment plan or by modifying your loan.
  • Modification. A loan modification changes your loan’s original terms by extending your repayment term, lowering your mortgage interest rate or switching you from an adjustable-rate to a fixed-rate mortgage. The goal is to reduce your monthly payment to a more affordable amount.

Be proactive about getting back on track and reaching out to your lender for help instead of waiting until you get late payment notices. If you think you’ll be behind soon or are already a few days behind, make contact now and review your options.

Extra help for homeowners affected by COVID-19

If you’re behind on mortgage payments because of a financial hardship due to the coronavirus pandemic, you may qualify for a mortgage relief program through the Coronavirus Aid, Relief and Economic Security (CARES) Act.

Homeowners who have federally backed mortgages, and conventional loans owned by Fannie Mae or Freddie Mac, can request mortgage forbearance for up to 180 days. They can also request an extension for up to an additional 180 days.

Federally backed mortgages include loans insured by the:

  • Federal Housing Administration (FHA)
  • U.S. Department of Agriculture (USDA)
  • U.S. Department of Veterans Affairs (VA)

Reach out to your mortgage servicer to request forbearance. Even if your loan isn’t backed by a federal government entity, Fannie Mae or Freddie Mac, your servicer may offer payment relief options. You can find your servicer’s contact information on your most recent mortgage statement.

How many mortgage payments can you miss before foreclosure?

Your lender can begin the foreclosure process as soon as you’re two months behind on your mortgage, though it typically won’t start until you’re at least 120 days late, according to the Consumer Financial Protection Bureau. Still, it’s best to check your local foreclosure laws since they vary by state.

Here’s a timeline of how missed mortgage payments can lead to foreclosure.

30 days late

Your lender or servicer reports a late mortgage payment to the credit bureaus once you’re 30 days behind. Your servicer will also directly contact you no later than 36 days after you’re behind to discuss getting current.

45 days late

You’ll receive a notice of default that gives you a deadline — which must be at least 30 days after the notice date — to pay the past-due amount. If you miss that deadline, your servicer can demand that you repay your outstanding mortgage balance, plus interest, in full.

Your mortgage servicer will also assign a team member to work with you on foreclosure prevention options. This information will be communicated to you in writing.

60 days late

Once you’re 60 days late, expect more mortgage late fees, as you’ve missed two payments. Your servicer will send you another notice by the 36th day after the second missed payment. This same process applies for every month you’re behind.

90 days late

At 90 days late, your servicer may send you a letter telling you to bring your mortgage current within 30 days, or face foreclosure. You’ll likely be charged a third late fee.

120 days late

The foreclosure process typically begins after the 120th day you’re behind. If you live in a state with judicial foreclosures, your loan servicer’s attorney will file a foreclosure lawsuit with your county court to resell the home and recoup the money you owe. The process may speed up in nonjudicial foreclosure states, because your lender doesn’t have to sue to repossess your home.

You’re notified in writing about the sale and given a move-out deadline. There’s still a chance you can keep your home if you pay the amount owed, along with any applicable legal fees, before the foreclosure sale date.

Can you get late mortgage payment forgiveness?

If you’ve otherwise had a good payment history but now have one missed mortgage payment, you could try writing a goodwill adjustment letter to request that your servicer erase the late payment information from your credit reports.

Your letter should include:

  • Your name
  • Your account number
  • Your contact information
  • A callout of your good payment history prior to missing a payment
  • An explanation of what led to the late mortgage payment
  • The steps you’re taking to prevent late payments in the future

End the letter by requesting that your servicer remove the late payment from your credit reports, and thank your servicer for their consideration. Print, sign and mail your letter to your servicer’s address.

The letter is simply a request; your servicer isn’t required to grant late mortgage payment forgiveness. If your servicer agrees to remove the late payment info from your credit reports, your credit scores may eventually increase — so long as you continue to make on-time payments.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

By clicking “See Rates”, you will be directed to LendingTree. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

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Mortgage

Manufactured and Mobile Home Loans Explained

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Buying a mobile home is a more affordable alternative to a traditional site-built home, but mobile home loans can be confusing.

How you finance a mobile home (or manufactured home, as they’re more commonly called today) depends on whether you plan to own the land the home sits on.

Are you buying a manufactured, mobile or modular home?

The terms manufactured, modular and mobile home are often used interchangeably, but there are differences. All of them refer to a home built in a factory or controlled environment and moved to a location of your choice. Unless you’re buying a mobile home that was built before 1976, chances are that you’re actually buying a manufactured or modular home.

Manufactured homes must meet certain standards set by the U.S. Department of Housing and Urban Development (HUD) in 1976. Today, you have considerably more options for manufactured home loans than for mobile home loans.

The table below provides an overview of the construction differences, and manufactured and mobile home financing options for each type of structure.

Type of home

How it’s built

Foundation requirement

Financing options

Manufactured homeBuilt in a factory after June 15, 1976

Moved in sections

Affixed to a permanent chassis
Typically attached to a permanent foundationConventional loans
FHA loans
VA loans
USDA loans
Retail installment contracts
Mobile homeBuilt in a factory before June 15, 1976Not typically attached to a permanent foundationPersonal loans
Chattel loans
Modular homeBuilt in a controlled (factory-like) environment

Same building code standards as site-built homes
Usually attached to a permanent concrete foundationConventional loans
FHA loans
VA loans
USDA loans
Construction-to-permanent loans
Retail installment contracts

Types of manufactured home loans

Whether you need mobile home financing for bad credit or a loan with a low down payment, you have options. Most manufactured home loan programs require you to attach the home to land you own with a permanent foundation, however, some allow financing on rented or leased land.

Conventional manufactured home loan programs

Lenders now offer more manufactured home loan options because the lower cost of factory-made homes gain popularity amid a shortage of affordable housing. Fannie Mae and Freddie Mac created the following programs to help conventional lenders meet the growing demand for manufactured home loans.

Fannie Mae MH Advantage®. Borrowers can choose from a 30-year fixed and 7/1 or 10/1 adjustable-rate mortgages (ARMs) with a down payment as low as 3%.

Freddie Mac manufactured home loans. Similar to the Fannie Mae MH Advantage loan, you’ll have 7/1, 10/1 and 30-year fixed-rate options to choose from, but you’ll need at least a 5% down payment.

FHA manufactured home loans with owned land

Loans insured by the Federal Housing Administration (FHA) can be used to purchase a manufactured home affixed to a permanent foundation on land you own. The home must be at least 400 square feet and be a single-family property.

FHA Title 1 loans for manufactured homes on leased land

You may be able to qualify for a loan insured by the FHA’s Title 1 program if you want to buy a manufactured home and place it on leased land. You’ll need at least a 500 credit score for a 5% down payment. A credit score below 500 will require at least a 10% down payment.

USDA manufactured home loans

If you’re purchasing a home in a rural area, you may be able to buy a new manufactured home with land using a loan backed by the U.S. Department of Agriculture (USDA). In most cases, no down payment is required, but there are income restrictions.

VA manufactured home loans

The U.S. Department of Veterans Affairs (VA) guarantees manufactured home loans made to active-duty military service members, reservists, veterans and eligible spouses. You’ll need at least a 5% down payment to buy a manufactured home, and you’ll have to choose from a 15- to 25-year payoff term, depending on the land and home package you choose.

Chattel loan

You don’t need to own the land your home sits on to get a chattel loan. The word “chattel” refers to personal property you can move, and a chattel loan works much like a car loan. Many banks specialize in mobile home loans that are chattel mortgages.

Retail installment contract

Manufactured home retailers offer installment contracts that allow you to pay the retailer directly, rather than applying with a mortgage lender or a bank. Down payment and closing cost requirements vary depending on the retailer.

Construction-to-permanent loan

Some lenders may offer an option for a short-term construction loan that converts to a permanent loan after the home is assembled and attached to land. The USDA’s no-down-payment construction loan is one example of this type of mortgage.

Minimum requirements for a manufactured home loan

The minimum mortgage requirements for mobile and manufactured home loans vary from program to program. The table below breaks down the most important qualifying guidelines for each type of manufactured home loan.

 Conventional loanRegular FHA loanFHA Title 1 loanUSDA loanVA loanChattel loanRetail installment contract
Minimum credit score620500-579 with 10% down

580 and up with 3.5% down
500 with 5% down

<500 10% down
640No minimum500 with 5% down

< 500
10% down
Varies by retailer
Down payment3% Fannie Mae

5% Freddie Mac
3.5%-10%5%-10%0%0%5%-10%Varies by retailer
Do you need to own land?YesYesNoYesYesNoNo
Permanent foundationYesYesNoYesYesNoNo
Minimum size600 sq. ft.400 sq. ft.400 sq. ft.400 sq. ft.*None400 sq. ft.Depends on retailer
Can home be moved?YesNoYesNot after it’s affixedNot after it’s affixedYesYes
*The manufactured home must be less than a year old to be eligible for USDA financing

Manufactured home loans on owned vs. rented land

Pros of manufactured home loans on owned land

  • You’ll pay lower interest rates. Standard mortgage programs typically offer lower rates than chattel loans if the property is attached to land you own.
  • You can choose longer repayment terms. You’ll have up to 30 years to repay your loan in most cases.
  • You won’t make a separate payment for land rent or lease. Your monthly payment includes the cost of the home and land.
  • You’ll have more title rights as a real estate owner if you default. Manufactured home lenders must follow state foreclosure laws, with strict timelines that allow you to bring payments current and save your home. Personal property repossession laws may allow a creditor to take your home without a court process, similar to when a repossession agent takes back a car.
  • You own both the home and land it sits on. Owning a manufactured home and land means you won’t have to worry about rent increases. Land values typically increase with time, helping you build equity.

Cons of manufactured home loans on owned land

  • You may be required to choose a shorter term. Some loan programs require you to pay off a manufactured home loan faster. For example, if you want to buy land for a manufactured home you already own, the VA requires that you pay it off in 15 years and 32 days.
  • You’ll pay a higher property tax bill. Over time, property taxes usually rise, adding to your monthly payment. However, you may be able to write off the expense if you itemize your deductions.
  • You’ll borrow more. When you buy a manufactured home plus land, you’ll need more money than if you just bought the home. That means a higher payment and closing costs.

How to find manufactured home mortgage lenders

Not all mortgage lenders offer programs for manufactured homes, and manufactured home mortgage rates may vary widely between companies. Ask the mortgage broker or loan officers you speak with about any restrictions on the manufactured home loans they offer.

Here are options to help you find manufactured home financing companies:

  • Use the HUD lender list search page to find FHA-approved lenders in your area.
  • Use the Manufactured Housing Institute’s search tool for a list of lenders.
  • Check out Fannie Mae’s list of manufactured home lenders.

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By clicking “See Rates”, you will be directed to LendingTree. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.

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Mortgage Broker vs. Loan Officer: What’s the Difference?

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When you’re shopping for a home loan, you may wonder about using a mortgage broker versus a loan officer. While both ask the same questions about your financial situation and help you fill out a loan application, their roles are different.

A loan officer offers mortgage options only from the financial institution they work for, while a mortgage broker acts as a matchmaker between you and a number of different mortgage lenders. Learn the key differences and responsibilities of each type of mortgage professional so you can decide which one you want to work with.

What do mortgage brokers do?

The term “broker” refers to someone who negotiates on someone else’s behalf. A mortgage broker works with many lenders to find you loan programs with the best rates, terms and lowest closing costs for your situation, but the broker doesn’t actually lend you money.

The term mortgage broker is often used interchangeably with “loan officer,” but there are very important differences.

“A mortgage broker is a business entity that originates mortgage loans,” said Rocke Andrews, president of the National Association of Mortgage Brokers (NAMB).

In other words, a mortgage broker is a type of mortgage business, while a loan officer is a salesperson paid to give you the information needed to choose a mortgage that fits your needs. However, a loan officer is also licensed as a mortgage loan originator (MLO), which means they may also work for a mortgage broker, Andrews said.

What do loan officers do?

A loan officer (LO) is usually an employee of an institutional bank, credit union or mortgage lender. They review financial documents and can recommend a loan for preapproval to an underwriter who works for a mortgage bank or lender.

A loan officer originates mortgage loans and there are two types: a licensed professional loan originator and a registered loan originator, Andrews said.

Licensed professional loan originators must take extra education, pass a national test and meet the licensing requirements of the states they do business in. Registered loan originators typically work for federally chartered institutions like banks and don’t have to meet the same education and testing requirements as licensed MLOs.

Loan officers offer only the mortgage products of one financial institution. The lenders they work for lend the money, and you’ll typically make payments to the same company after closing.

Pros and cons of working with a mortgage broker vs. a loan officer

In many ways, a mortgage broker and mortgage loan officer perform the same tasks. They each review your loan application and financial paperwork to make sure you meet the minimum mortgage requirements. Here are benefits and drawbacks worth considering when deciding between a mortgage broker and a loan officer.

Pros and cons of working with a mortgage broker

Pros

Cons

You’ll get rates and fees from multiple lenders.

You have to wait for the lender to make the final approval decision.

You won’t have to do all the mortgage shopping yourself.

You may not be approved for special exceptions for a bad credit history.

You’ll have more loan products to choose from.

You may have limited access to down payment assistance (DPA) programs.

You can switch lenders if your loan is denied.

Your broker doesn’t control the approval process and doesn’t lend you money directly.

Pros and cons of working with a loan officer

Pros

Cons

You may get a break on rates and closing costs, depending on your relationship with your bank.

Your interest rate options are limited to the LO’s financial institution.

Your approval will be handled “in house,” meaning the lender can approve your loan and provide money to you directly.

You’ll have limited choices for loan products offered only by the loan officer’s company.

You may get an exception for unique income and financial situations.

You’ll need to start over with a new lender if you’re denied.

Your bank may be approved for more DPA programs.

You’ll contact several lenders on your own if you want to compare multiple offers.

Is it riskier using a mortgage broker vs. a loan officer?

No. Both mortgage brokers and loan officers are considered mortgage loan originators (MLOs), and have to meet strict federal requirements to be paid for helping negotiate mortgage loans.

To become a licensed MLO, a mortgage broker or loan officer must:

  • Pass an FBI criminal history background check.
  • Provide a credit report.
  • Provide proof of their mortgage loan activity to a national database, such as the Nationwide Multistate Licensing System (NMLS).
  • Pass a national mortgage test.
  • Take 20 hours of education courses.

Mortgage broker fees vs. loan officer fees

Mortgage brokers and mortgage loan officers have to follow strict compensation rules set by the federal Truth in Lending Act. Mortgage brokers can’t make more than 2.75% of the loan amount and must pay all of their costs and loan originator compensation out of that percentage, Andrews said.

Banks can make additional income because it’s not counted as part of the charge, but loan originators can’t make more than 2.75% of the loan amount, Andrews added.

Both mortgage brokers and mortgage banks pay loan officers a fixed percentage of the loan amount, although there may be variations, Andrews said.

To protect consumers, all mortgage loan originator compensation has to meet the following federal guidelines:

  • The pay must be based on a fixed percentage of the loan amount.
  • The compensation cannot be based on charging a higher interest rate or adjusting the terms of the loan.
  • Originators can’t receive a fee for referring a client to a business partner, such as a title company or real estate agent.
  • No mortgage originator may be paid by both the borrower and the lender. It must be one or the other.

Where to find a mortgage broker or loan officer

Ask friends or family who recently bought or refinanced their homes for a referral. Your real estate agent is also a good resource for mortgage broker or loan officer referrals. Use a comparison rate site and review offers from three to five mortgage companies.

You can research the background of a mortgage loan originator through these resources:

  • Nationwide Multistate Licensing System (NMLS). The loan estimates you receive within three business days of your application will include the NMLS “unique identifier” of each loan originator. This number is assigned so consumers, employers and regulators can track a mortgage broker’s or loan officer’s professional status online. Visit the NMLS Access Center to look up any licensed or registered MLO across 59 state and territorial agencies in the United States.
  • Consumer Financial Protection Bureau (CFPB). The CFPB publishes consumer complaints and the company’s response for consumers to review on its consumer complaint database.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

By clicking “See Rates”, you will be directed to LendingTree. Based on your creditworthiness, you may be matched with up to five different lenders in our partner network.