Behind on the mortgage: homeowner options and help

KW Default Solutions

By Heidi Skinner, co-founder of KW Default Solutions | Last updated: October 30, 2026

A homeowner who falls behind on the mortgage may ask, "Do I have to sell" Being behind doesn't answer that. Some owners catch up or change the loan and stay. Some choose to sell. Some learn that a sale won't cover everything they owe.

You don't pick between those paths for the owner. You do need to know what each one is, so you can ask better questions and send the owner to the people who can answer them.

One caution applies to everything below. What's available depends on your state, the type of loan and the company that owns the loan, called the investor. The servicer, which is the company that sends the mortgage statements and handles payments, decides what it can offer under that investor's rules.

Ways a homeowner may keep the home

The Consumer Financial Protection Bureau (CFPB) lists these among the options a servicer might make available. CFPB: If I can't pay my mortgage loan, what are my options? Each one works differently:

Reinstatement: The owner pays all the missed payments at once, plus any late fees and allowed costs the servicer states, by an agreed date, so the loan is current again. CFPB: Exit your forbearance carefully
Repayment plan: The owner makes up the missed payments over a set period by adding part of the past-due amount to each regular payment. Current payments have to continue too. CFPB: What is a repayment plan?
Forbearance: The servicer lets the owner pay less, or stop paying, for a limited time. Forbearance doesn't erase or reduce what's owed. The missed or reduced payments still have to be repaid, so the owner should ask the servicer how and when. CFPB: What is mortgage forbearance?
Loan modification: The loan terms change. The CFPB says that can mean a longer repayment period, a lower interest rate, a forborne or reduced principal balance, or a mix. The owner should ask how the change affects the payment and the total owed, now and later. CFPB: Mortgage answers

The main difference is what happens to the missed payments. Reinstatement pays them at once. A repayment plan spreads them out. Forbearance delays them. A modification changes the loan itself.

Ways a homeowner may sell or give up the home

Regular sale: The home sells for enough to pay off every amount owed against it and cover the costs of selling. The owner keeps whatever is left. The CFPB says the owner doesn't need the servicer's approval to sell, though it can help to tell the servicer. CFPB: Avoid foreclosure
Short sale: The sale won't bring in enough to cover what's owed, so the servicer and the owner of the loan have to approve it. Lenders on any other mortgages on the home may have to approve it too. A signed purchase contract isn't an approval. The owner leaves the home. In some states the owner can still be responsible for the shortfall, called a deficiency, so the owner should ask whether the lender will waive it and get any waiver in writing. CFPB: What is a short sale?
Deed in lieu of foreclosure: The owner voluntarily signs ownership of the home over to the lender to avoid foreclosure. No buyer is involved, so it isn't a listing. The owner applies through the servicer and must be approved, and the same deficiency question applies. CFPB: Mortgage answers

Wanting to sell isn't the same as needing a short sale. The question is whether the sale price will cover everything that has to be paid at closing. That's more than the first mortgage balance. It can include:

the payoff on the first mortgage, which is the exact amount needed to pay it off on a specific date and isn't always the balance on the last statement
a second mortgage or home equity line of credit
unpaid property taxes and homeowners association (HOA) dues
a judgment lien, which is a claim against the property that can result when a creditor wins a court case against the owner, and which a title search can show
closing costs and title charges

Here's a fictional example. The situation and the numbers are made up. An owner says, "I owe $300,000 and the house should sell for about $320,000, so I'm fine." Then the title search shows a $25,000 home equity line and $4,000 in unpaid HOA dues. Those two items alone bring the total to $329,000, before any closing costs. The agent now knows the debts already visible are more than the price estimate. The agent doesn't yet know the exact payoff amounts, whether other liens exist or what the servicer and other lienholders would approve. Payoff requests and a title search answer the first two. The approval question belongs to the servicer and the other lienholders, so the agent doesn't tell the owner that a short sale is needed or possible.

Who answers which question

The servicer explains what it can offer, what application and documents it needs, its deadlines and the payoff amount. The owner should use the phone number on the mortgage statement or the servicer's official website.
A HUD-approved housing counselor helps the owner understand the options and talk with the servicer. HUD is the U.S. Department of Housing and Urban Development. The CFPB says these agencies provide foreclosure prevention counseling free of charge, and that a counselor can't promise the owner will keep the home. CFPB: What is a HUD-approved housing counseling agency?
An attorney licensed in your state answers questions about legal papers, a scheduled sale date, foreclosure rights, bankruptcy, legal defenses and what a deficiency waiver means. The CFPB says an owner facing imminent foreclosure or holding legal papers may need an attorney. Bankruptcy and legal defenses aren't options you recommend.
A tax professional answers questions about the tax effect of a sale or of debt that's released.
A title or closing company shows what liens and charges are recorded against the property and what has to be paid at closing.
Your broker decides whether and how you take on this kind of work and which contact rules apply, such as do-not-call lists, consent for text messages and the brokerage's own policy.

Contacting a servicer, a counselor or an agent doesn't stop a foreclosure by itself, so never suggest it does. Be wary of anyone who asks for payment up front or guarantees a result. The CFPB says the help an owner needs may be available at no cost from the servicer or a HUD-approved housing counselor. CFPB: How to avoid foreclosure

What you can do

Ask what the owner wants: to stay, to sell or they don't know yet.
Ask to see any notices and write down the dates. A court paper or a sale date goes to an attorney or counselor right away. It doesn't wait for your research.
Help estimate what the home might sell for, using recent comparable sales.
If selling is on the table, gather the sale facts: the payoff request, other loans or liens, taxes, HOA dues and a title search.

A line you can use: "I can help you work out what the home might sell for and what would need to be paid at closing. Your servicer and a housing counselor can tell you what help your loan may allow."

Your next step

Open the CFPB's Find a Housing Counselor tool, enter the ZIP code where you work or where a homeowner you're helping lives and save the name and phone number of one HUD-approved agency. Not every counselor offers every service, so check what each agency lists. The CFPB also lists the HOPE Hotline, open 24 hours a day, at (888) 995-HOPE (4673). With a number ready, you can hand it to an owner when they ask.

KW Default Solutions is a resource for licensed agents who are new to distressed-property work.

Sources

Questions? Ask our team through the KWDS contact form.

This article is general education for real estate professionals. It isn't legal, tax or credit advice. State law, the type of loan and the servicer's rules decide what a homeowner can do. All examples are fictional.

Behind on the mortgage: homeowner options and who can help