How Loan Modifications and HUD Partial Claims Can Help Homeowners Stay in Their Homes

Falling behind on your mortgage payments can feel overwhelming, but homeowners have options to get back on track and protect their most valuable asset—their home. Two powerful tools available to struggling borrowers are loan modifications and HUD partial claims. Both are designed to help homeowners catch up on past-due payments, make monthly payments more affordable, and avoid foreclosure.

What Is a Loan Modification?

A loan modification is a permanent change to your existing mortgage agreement that makes your monthly payments more manageable. Instead of refinancing into a new loan, your lender adjusts the terms of your current loan. Depending on your situation, a loan modification may include:

• Extending the loan term (spreading payments out over more years to reduce monthly costs).

• Reducing the interest rate (lowering what you owe in interest each month).

• Adding missed payments to the back of the loan (so you don’t have to pay them all at once).

By restructuring your mortgage this way, a loan modification gives you breathing room in your budget and helps prevent the risk of foreclosure.

What Is a HUD Partial Claim?

If you have an FHA-insured mortgage, you may qualify for a HUD partial claim. This is a special option offered by the U.S. Department of Housing and Urban Development (HUD) to help FHA borrowers bring their mortgage current. Here’s how it works:

• HUD provides funds (on your behalf) to pay the overdue amount on your mortgage.

• That amount is placed in an interest-free subordinate lien against your home.

• You don’t make monthly payments on this lien—it only becomes due when you sell your home, refinance, or pay off your mortgage.

This allows you to catch up immediately without having to come up with a lump sum, giving you a fresh start while keeping your current loan intact.

How These Options Help Homeowners

Both loan modifications and HUD partial claims are designed with the same goal: to help homeowners stay in their homes. Here’s how they make a difference:

• Avoid foreclosure – Protect your home and credit by resolving delinquency.

• Catch up on missed payments – Spread arrears over time or have them covered through assistance.

• Affordable monthly payments – Free up room in your budget and reduce financial stress.

• Stability for your family – Stay in your home, your community, and maintain peace of mind.

Taking the Next Step

If you’ve fallen behind on payments or are worried about keeping up, it’s important to contact your mortgage servicer right away. Ask about available loss mitigation options such as loan modifications or HUD partial claims. Each program has specific eligibility requirements, but many homeowners find these solutions provide exactly the relief they need.

Final Thoughts

Facing mortgage trouble is stressful, but you’re not alone—and you do have options. Loan modifications and HUD partial claims can be lifelines that give homeowners the chance to reset, recover, and keep their homes for the long term.