Lost Your Job and Can’t Pay Your Mortgage in New York? What to Do Now

Losing a job is stressful enough. When you also have a mortgage to pay, the worry can feel overwhelming. Many New York homeowners in this spot freeze up, stop opening mail, and hope things turn around before the bank acts. Unfortunately, waiting usually makes the problem harder to fix.

The good news is that a job loss does not automatically mean you will lose your home. New York has some of the strongest homeowner protections in the country, and there is free help available. This guide walks through what to do, step by step, if you lost your job and can’t pay your mortgage in New York.

Step 1: Take stock of your money right away

Before you call anyone, get a clear picture of where you stand. The Consumer Financial Protection Bureau (CFPB) suggests listing your debts, your savings, any severance pay, and the income of anyone else in the household who helps with bills. Then write down your monthly expenses and when each bill is due.

This simple exercise does two things. It shows you how many months you can realistically keep paying, and it gives you the numbers your mortgage servicer and a housing counselor will ask for later.

• List every source of income still coming in, including unemployment benefits once they start.
• List your mortgage, property taxes, insurance, utilities, car payment, credit cards and other bills.
• Look for subscriptions and extras you can pause or cancel.
• Put your housing costs near the top of the priority list.

Step 2: Apply for unemployment benefits

If you were laid off or your job was eliminated, you may qualify for unemployment insurance. In New York, you apply through the New York State Department of Labor. The CFPB notes that you should file in the state where you worked, even if you now live somewhere else. Benefits usually come as a weekly payment, they are taxable, and they typically won’t replace all of your old paycheck, but they can help keep you afloat while you look for work.

Proof of unemployment benefits is also one of the documents lenders often ask for when they review you for help, so keep copies of your approval letters and payment records.

Step 3: Call your mortgage servicer before you fall far behind

The CFPB’s advice is direct: if you can’t pay your mortgage, or you’re worried you will miss a payment, call your mortgage servicer right away. Your servicer is the company that sends your monthly statement. Tell them you lost your job and ask what hardship options are available. Depending on your loan, these may include:

• Forbearance: a temporary pause or reduction in payments. It is not forgiveness. The missed amount still has to be dealt with later.
• Repayment plan: a way to catch up on missed payments over several months once your income returns.
• Loan modification: a permanent change to your loan terms to make the payment more affordable.

Write down the date, the name of the person you spoke with and what they told you. Ask for anything important in writing. If you want to understand how a modification compares to selling, read our guide on loan modification vs. short sale in New York.

Step 4: Talk to a free housing counselor

HUD-approved housing counselors can review your situation and explain your options at little or no cost. In New York, a counselor can help you organize documents, figure out what you can afford and communicate with your servicer. Some homeowners also qualify for free legal help, which matters a lot if a foreclosure case has already been filed.

Abraxas Foundation can refer you to free housing counselors and free legal assistance in New York. You never have to pay a company to “save” your home. Be wary of anyone who asks for upfront fees, asks you to sign over your deed or tells you to stop talking to your lender.

What happens if you miss payments in New York

If payments stop, you won’t lose your home overnight. New York law sets out several steps the lender has to follow first. For a full overview, see our post on what to do if you’re behind on mortgage payments in New York. In short:

• 90-Day Pre-Foreclosure Notice: Under New York law, the lender must send this notice by regular and certified mail at least 90 days before starting a foreclosure case. According to the New York State courts, it lists how far behind you are, the amount needed to catch up, the lender’s phone number, at least five nonprofit counseling agencies in your area, and the Department of Financial Services helpline. Do not ignore it.
• Foreclosure case filed in court: New York is a judicial foreclosure state, so the lender has to go through the court system.
• Mandatory settlement conference: In residential foreclosure cases, the court schedules a settlement conference, and New York DFS explains that both sides must negotiate in good faith. You should bring financial records such as pay stubs or benefit letters, a list of monthly expenses, your mortgage statement and tax documents. Learn more in our guide to the New York foreclosure settlement conference.

Every case is different and timelines vary by county, so talk with a lawyer or housing counselor about your specific situation.

When a short sale makes sense after a job loss

Sometimes the honest answer is that the house is no longer affordable, even with help. Maybe the new job pays less, or the job search is taking longer than expected. If you owe more on the mortgage than the home is worth, a short sale may be an option. In a short sale, the bank agrees to let the home sell for less than what is owed.

For many families, a short sale can be a calmer, more controlled exit than a foreclosure auction. It can give you more say over your move-out timing and help you avoid having a completed foreclosure. How a short sale affects your credit or taxes depends on your situation, so check with a tax professional or attorney about the details, including whether any forgiven debt could be taxable.

Through Abraxas Foundation’s short sale program, our team works directly with your bank on the short sale. We do not buy homes, we do not list homes, and we do not take a cut.

Help with moving costs: the Short Sale Relocation Grant

After a job loss, even the cost of moving can feel out of reach. That’s why Abraxas Foundation offers the Short Sale Relocation Grant. Everyone in our short sale program is eligible to apply. It is a grant, not a loan, so it never has to be paid back. Depending on eligibility and available funding, it can help with:

• Movers or a moving truck
• A security deposit or first month’s rent
• Short-term storage
• Utility connection fees
• Temporary housing

The grant is only available when Abraxas handles the short sale directly with the bank. Applying does not guarantee approval.

Quick checklist if you just lost your job

• Apply for unemployment benefits as soon as possible.
• Make a simple budget and list all your bills.
• Call your mortgage servicer and ask about hardship options.
• Open every letter from your lender, especially a 90-Day Pre-Foreclosure Notice.
• Gather pay stubs, benefit letters, bank statements, tax returns and your mortgage statement.
• Get free help from a housing counselor or legal services provider.
• Avoid anyone who charges upfront fees or asks you to sign over your deed.

Lost your job and can’t pay your mortgage? Get free help

Abraxas Foundation helps New York homeowners facing foreclosure at no cost. We never charge homeowners fees. We can refer you to free legal assistance and housing counselors, and if a short sale is the right path, our short sale program works directly with your bank for you. Homeowners in the program can also apply for our Short Sale Relocation Grant to help with moving costs.

We don’t have a physical office. Our team meets homeowners at their homes. Call us at (929) 346-5734 or reach out through our contact page to get started.

Helpful official resources: NY Courts CourtHelp: Foreclosure and NY DFS Foreclosure Consumer Bill of Rights.

Abraxas Foundation Inc is a nonprofit organization. We are not a lender, real estate broker, home buyer or law firm, and this article is general information, not legal or tax advice. Relocation grants depend on eligibility and available funding, and applying does not guarantee approval.