Lost Your Job? Can't Pay Your Mortgage? Here's What to Do
Take a breath. Losing your job is terrifying, especially when you have a mortgage. But people get through this every day. There are programs designed exactly for this situation. You have more options than you think - and more time than you fear.
If you've lost your job and are worried about making your mortgage payment, you're not alone. Job loss is one of the most common reasons people fall behind on their mortgage - and lenders know this. That's why most have programs to help.
Here's what you need to know and exactly what to do.
Your First 48 Hours: Action Plan
- File for unemployment benefits TODAY - California EDD benefits provide income while you job search. Don't delay.
- Call your mortgage servicer - Tell them you've lost your job. Ask about forbearance or hardship programs. Do this BEFORE you miss a payment.
- Review your finances - How many months can you cover with savings? What expenses can you cut immediately?
- Check if you qualify for California Mortgage Relief - Up to $80,000 available for eligible homeowners.
- Don't panic-sell or make major decisions yet - You have time. Get information first.
What Is Forbearance (And Why You Need to Ask for It)
Forbearance is a temporary agreement with your lender to reduce or pause your mortgage payments while you're experiencing hardship. It's not forgiveness - you'll need to repay the missed amounts eventually - but it buys you crucial time.
How forbearance helps after job loss:
- Payments paused for 3-12 months while you find new work
- No foreclosure proceedings during forbearance
- Less credit damage than missed payments
- Once employed again, you can work out a repayment plan or modification
To get forbearance: Call your loan servicer (the company you make payments to) and ask for the "loss mitigation" or "hardship" department. Explain that you've lost your job and need temporary relief.
Help Available in California
California Mortgage Relief Program
If you experienced hardship due to COVID-19, you may qualify for up to $80,000 to cover past-due mortgage payments, property taxes, and other housing costs. This is grant money - you don't pay it back.
Apply at: CaMortgageRelief.org or call 1-888-840-2594
California Unemployment Insurance (EDD)
Provides weekly income while you search for work. Maximum benefit is $450/week for up to 26 weeks. File immediately - there's a waiting period.
Apply at: EDD.ca.gov
Free Housing Counseling
HUD-approved counselors can help you understand your options, apply for assistance, and communicate with your lender - all for free.
Call: 1-800-569-4287 or visit HUD.gov
What NOT to Do After Losing Your Job
Avoid These Mistakes
- Don't ignore your lender - They have programs to help, but only if you ask
- Don't drain retirement accounts - 401(k)s have legal protections; your house doesn't in bankruptcy
- Don't use credit cards to pay the mortgage - This creates more debt with high interest
- Don't wait until you're months behind - Early intervention = more options
- Don't assume you'll lose the house - Most people who act early keep their homes
Your Timeline: How Long Before Foreclosure?
Even if you miss payments, foreclosure doesn't happen overnight in California:
- Day 1-30: Grace period, then late fee
- Day 30+: Reported to credit bureaus
- Day 120+: Lender can file Notice of Default
- Day 210+: Notice of Sale can be recorded
- Day 230+: Earliest possible auction date
That's 7+ months from first missed payment to potential auction - and most take longer. You have time, but don't waste it.
When You Find a New Job
Once you're employed again, you have several options to address missed payments:
- Repayment plan: Pay extra each month until you're caught up
- Loan modification: Permanently lower your payment if the new job pays less
- Lump sum: Pay all missed amounts at once (rarely practical)
- Partial claim: Some loans allow missed payments to be added to end of loan
If You Can't Find Work / Can't Afford the House
Sometimes the math just doesn't work. If you genuinely can't afford your home anymore, it's better to make that decision proactively than to face foreclosure:
- Sell the house - If you have equity, selling lets you keep that equity and avoid foreclosure
- Short sale - If you owe more than it's worth, lender may accept less than owed
- Deed in lieu - Voluntarily transfer ownership to avoid foreclosure process
Any of these options is better for your credit and future than a completed foreclosure.
Lost Your Job and Worried About Your Home?
We help California homeowners navigate job loss and mortgage challenges. Free, confidential consultation.
Call (949) 565-5285We've helped hundreds of homeowners through this.