If you are struggling with unpaid debt and own a home, you have likely considered both mortgage modification and bankruptcy. In fact, individuals can file a bankruptcy case and apply for mortgage modification. 

These are the factors your home loan provider will review when deciding whether to modify your mortgage. 

Late payments 

In general, you must already have past-due mortgage payments to apply for a loan modification. If you are delinquent on your mortgage or in danger of falling behind, call your mortgage company and ask about options to make your loan more affordable. 

Change in life circumstances 

You may need to show that issues beyond your control caused your inability to pay your mortgage. This could include: 

  • Illness, injury, disability or other health problems 
  • Death of a family member 
  • Divorce 
  • Job loss 

Federal mortgage relief options 

Some mortgage companies may offer a modification plan under the CARES Act. This law, passed in March 2020, includes the following provisions: 

  • Delay on foreclosure proceedings for 60 days as of March 18, 2020 
  • Forbearance available for up to 180 days with a 180-day extension 

You can request this program directly from your mortgage company. The service may not charge additional fees, interest or penalties during this period. However, you will have to make up the skipped payments at a later date. This could be in graduated payments over time or as a balloon payment at the end of your mortgage. Make sure to read the loan agreement carefully for this type of modification. 

Federally backed mortgage companies must offer these options. Other home loan providers can opt to offer modification but are under no requirement to do so. 

When you receive a modification, the lender has discretion about how to adjust your loan to make it more affordable. This could include a lower monthly payment, a lower interest rate, a longer repayment term or a combination of those measures.