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Behind on an FHA, VA, USDA or Conventional Loan: What Each Offers
Your options depend on who owns or insures your loan, and several programs changed in 2025 and 2026. Here is what each loan type offers as of October 2026 and what to ask your servicer.
Reviewed October 31, 2026 by George Lensch, broker, Wyze Realty. General information about Alabama, not legal, tax or financial advice.
Compare a Program With a Sale
Your servicer and a housing counselor handle loan programs. We can show you, in writing, what selling or a short sale listing would likely look like so you can compare.
This Guide Is General Information, Not Legal or Tax Advice
Wyze Realty is a real estate brokerage. We are not a law firm, CPA, lender or housing counselor, and we cannot tell you what to do about your specific legal, tax or financial situation. A free HUD-approved housing counselor can walk you through your loan type's options with the servicer; an Alabama attorney can advise if a sale date is close.
Laws, deadlines and programs change, and the right answer depends on your documents and facts. Nothing here guarantees a result, a price or a timeline. We cite our sources at the bottom so you can check them.
Two homeowners can be the same number of payments behind and have very different options, simply because their loans are owned or insured by different entities. Your servicer, the company that sends your statement, follows the rules of whoever owns or insures the loan: Fannie Mae, Freddie Mac, the FHA, the VA, USDA, or a private investor or bank. Those rules changed a great deal in 2025 and 2026, and many articles online still describe programs that have ended.
This guide summarizes what each loan type offers as of October 2026, what has changed, and what to ask. Program details change often, so treat it as a map for your conversation with the servicer and a HUD-approved housing counselor, not a final answer.
Step One: Find Out What Kind of Loan You Have
- Look at your closing documents. FHA, VA and USDA loans usually say so on the note, the mortgage or the closing disclosure.
- Read your monthly statement. It names the servicer, and sometimes the investor.
- Ask the servicer in writing. "Who is the owner or investor on my loan, and is it insured or guaranteed by FHA, VA or USDA?" A servicer should be able to tell you.
- Ask whether it is a USDA guaranteed or USDA Direct loan. They are handled under different rules.
Side-by-Side Summary
| Loan type | Keep-the-home options | Exit options | What changed recently |
|---|---|---|---|
| Fannie Mae | Forbearance, repayment plan, payment deferral, Flex Modification (targets about a 20% principal and interest reduction). | Short sale; Mortgage Release (deed in lieu). | Flex Modification paperwork depends on delinquency: a complete Borrower Response Package is needed if you are current or under 90 days behind, but not at 90 or more days. |
| Freddie Mac | Forbearance (1 to 6 months at a time, no more than 12 total), reinstatement, repayment plan (1 to 12 months), payment deferral, Flex Modification with a 3-month trial. | Standard Short Sale; deed in lieu. | Payment deferral is for loans 30 or 60 days delinquent with at least two consecutive payments made and a loan at least 12 months old. |
| FHA | New permanent loss mitigation waterfall, including partial claim and modification options and a payment supplement. | Pre-foreclosure sale (FHA's short sale); deed in lieu. | FHA-HAMP and Special Forbearance removed; COVID-19 recovery options expired September 30, 2025; one permanent retention option per 24 months; $3,000 borrower payment for PFS, deed in lieu and cash for keys. |
| VA | Repayment plans, traditional and extended modifications (up to 40 years), disaster options, and the new VA Partial Claim Program. | Compromise sale (VA's short sale); deed in lieu. | VASP ended May 1, 2025. VA Partial Claim launched for servicers June 15, 2026; full compliance required by November 28, 2026. |
| USDA guaranteed | Modification MRA plan for loans whose last paid installment is on or after May 1, 2025. | "Final Offer" foreclosure alternative once other options are exhausted. | A final rule on special servicing options took effect April 14, 2025. |
| Private or portfolio | Whatever the investor allows. Regulation X review timelines still generally apply to covered servicers. | Short sale or deed in lieu if the investor agrees. | Ask for the investor's guidelines in writing. |
Sources for each row are listed at the end of this page. Where a point came from an industry summary rather than the agency itself, we say so below.
Fannie Mae and Freddie Mac Loans
Most conventional mortgages are owned by Fannie Mae or Freddie Mac. Their options are the most standardized.
Freddie Mac
- Forbearance: for a primary residence that is current or less than 360 days delinquent, with terms of 1 to 6 months and total extensions of no more than 12 months.
- Reinstatement and repayment plans of 1 to 12 months.
- Payment deferral: for loans 30 or 60 days delinquent, with at least two consecutive payments made and a loan originated 12 or more months ago. Up to two months of principal and interest move to a non-interest-bearing balance.
- Flex Modification: for loans 60 or more days delinquent, or current or under 60 days with imminent default on a primary residence, originated 12 or more months ago, with a three-month trial.
- Standard Short Sale: must be arm's-length and listed with a licensed broker on Valley MLS, with no new mortgage in the six months before the delinquency.
- Deed in lieu: requires the ability to convey clear and marketable title.
Fannie Mae
- Forbearance and payment deferral, which moves missed principal and interest to a non-interest-bearing balance due at payoff, sale, refinance or maturity.
- Flex Modification, which targets about a 20% reduction in principal and interest.
- Short sale, with list price guidance through Fannie Mae's HomePath system, and Mortgage Release, its deed in lieu. Fannie Mae says relocation assistance of up to $7,500 may be available in some short sales, and the borrower is released from the remaining balance once the short sale closes.
Thinking about a short sale on a Fannie Mae, Freddie Mac, FHA or VA loan? Call (256) 808-6861 or schedule a confidential call. There is no cost and no obligation.
FHA Loans
FHA-insured loans went through the biggest change. HUD's Mortgagee Letter 2025-06, issued January 16, 2025, rewrote FHA default servicing and loss mitigation. It deleted FHA-HAMP and Special Forbearance and added a new permanent waterfall, a new partial claim section, a payment supplement, an affordability attestation and a trial plan.
A follow-up letter, Mortgagee Letter 2025-12 (April 15, 2025), changed the timing. According to summaries published by housing industry groups:
- The COVID-19 recovery options, the COVID advance loan modification and FHA-HAMP expired September 30, 2025.
- Servicers had to use the new permanent waterfall by October 1, 2025.
- Borrowers are limited to one permanent home retention option every 24 months, up from 18, with an exception for disasters.
- A new "outside of the waterfall" modification is available for borrowers who have not responded to the servicer.
- The borrower payment for an FHA pre-foreclosure sale, cash for keys or deed in lieu dropped to $3,000.
The current FHA waterfall includes a standalone partial claim, a payment supplement and a loan modification combined with a partial claim. Eligibility limits, caps and occupancy rules are set in HUD Handbook 4000.1, so ask your servicer how they apply to you.
If You Had an FHA Modification Recently
Because of the 24-month limit on permanent retention options, an FHA borrower who received a modification or partial claim in the last two years may not qualify for another one unless a disaster exception applies. Ask the servicer directly when your last permanent option was completed.
VA Loans
VA-guaranteed loans also changed twice. As reported by Military.com and the National Association of REALTORS:
- The VA Servicing Purchase program (VASP) ended May 1, 2025.
- The VA Home Loan Program Reform Act, signed July 30, 2025, authorized a VA partial claim program for five years. Reports describe it as covering up to 25% of the loan balance (30% if a COVID-era partial claim was used), held as a subordinate lien with no monthly payment and repaid at sale, refinance or payoff.
- Servicers could begin offering the VA Partial Claim Program on June 15, 2026, and must be fully compliant by November 28, 2026. It uses a three-month trial. VA also issued a streamlined waterfall that includes repayment plans, traditional and extended modifications up to 40 years, and disaster options.
Because the mandatory date has not passed as of October 2026, your servicer may not offer the partial claim yet. Ask directly. VA's Regional Loan Center, at 877-827-3702, has loan technicians who can talk with VA borrowers in default. Exit options include a compromise sale, VA's version of a short sale, and a deed in lieu. A VA foreclosure can also affect your VA entitlement for a future loan; see buying again after foreclosure.
If you are on active duty and moving, our military PCS guide covers selling with orders in hand.
USDA Loans
USDA guaranteed loans. A final rule on special servicing options for non-performing loans took effect April 14, 2025. According to a February 2026 USDA servicing notice, for loans whose last paid installment is on or after May 1, 2025, servicers use a "Modification MRA" plan, which replaced the earlier special servicing modification. There is also a "Final Offer" foreclosure alternative that requires no financial documentation and is used after other options are exhausted.
USDA Direct (Section 502) loans are handled under different rules than guaranteed loans. Contact the servicer named on your statement and ask what options and payoff terms apply before you list.
Private, Bank and Portfolio Loans
If your loan is held by a bank or private investor, its options are whatever that investor allows. Federal Regulation X timelines, including the 120-day rule and the 37-day rule, generally still apply to covered mortgage servicers. Ask for the investor's requirements in writing, and keep the same discipline: complete application, early, with copies of everything.
Gather Your Application Documents
Whatever the loan type, the application is the gateway. Use this checklist, and compare it against your servicer's own list.
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Questions to Ask Your Servicer
- Who owns or insures my loan?
- Which home retention and exit options does that investor offer, and which am I likely eligible for?
- Is my application complete? If not, exactly what is missing?
- Is a foreclosure sale scheduled? If so, what is the date?
- If I accept a trial plan, what happens to the foreclosure while I am in it?
- If I sell or do a short sale, what is the payoff and what deficiency terms apply?
Ask a HUD-approved housing counselor to sit in on the call or review offers with you. Find one at consumerfinance.gov/find-a-housing-counselor.
Want to see what selling would net before you choose a program? Call (256) 808-6861 or schedule a confidential call. There is no cost and no obligation.
Common Questions
How do I know if my loan is FHA, VA, USDA or conventional?
Check your closing documents and monthly statement, and ask your servicer in writing who owns or insures the loan. FHA, VA and USDA loans are usually identified on the note, mortgage or closing disclosure.
Is FHA-HAMP still available?
No. HUD's Mortgagee Letter 2025-06 removed FHA-HAMP and Special Forbearance, and summaries of the follow-up letter report that the COVID-19 recovery options and FHA-HAMP expired September 30, 2025. FHA now uses a new permanent loss mitigation waterfall.
Can I get another FHA modification if I had one before?
Industry summaries of Mortgagee Letter 2025-12 report that FHA borrowers are limited to one permanent home retention option every 24 months, with a disaster exception. Ask your servicer when your last option was completed.
What replaced VASP for VA loans?
VASP ended May 1, 2025. A VA Partial Claim Program, authorized by a law signed July 30, 2025, launched for servicers June 15, 2026, with full compliance required by November 28, 2026. Ask your servicer whether it is offering it yet.
What is a VA compromise sale?
It is VA's version of a short sale, where the home is sold for less than the loan balance with VA and servicer approval. Ask your servicer and VA's loan technicians about current terms.
What options do USDA guaranteed loans have?
For loans whose last paid installment is on or after May 1, 2025, USDA guaranteed servicers use a Modification MRA plan, and there is a Final Offer foreclosure alternative after other options are exhausted. Your servicer can explain eligibility.
What is the difference between Fannie Mae and Freddie Mac options?
They are similar: forbearance, repayment plans, payment deferral, Flex Modification, short sale and deed in lieu. Details differ, such as Freddie Mac's 1 to 6 month forbearance terms and Fannie Mae's Flex Modification paperwork rules. Your servicer applies the right set.
Do federal timelines apply to every loan type?
Regulation X loss mitigation procedures, including the 120-day and 37-day rules, generally apply to covered mortgage servicers regardless of loan type. A housing counselor or attorney can confirm how they apply to your loan.
Talk It Through, Confidentially
Big decisions are easier with someone in your corner. Whether you are ready to sell, still deciding, or just need to understand your options, call or schedule a time to talk. The first conversation is free, private and comes with no obligation. If what you really need is an attorney, a CPA or a housing counselor, we will tell you that and point you in the right direction.
Schedule a Confidential Call Call or Text (256) 808-6861
Sources
- Fannie Mae, home retention options for servicers
- Freddie Mac, servicing loss mitigation options
- Fannie Mae fact sheet: what is a short sale
- HUD Mortgagee Letter 2025-06, FHA default servicing and loss mitigation
- 12 CFR 1024.41, Regulation X loss mitigation procedures (CFPB, current regulation)
- CFPB, find a HUD-approved housing counselor
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Wyze Realty LLC, Huntsville, Alabama. Information on this page is general and educational, is not legal, tax, financial or credit advice, and may not reflect the most current law. Consult an Alabama attorney, CPA or HUD-approved housing counselor about your situation. All real estate services are provided in accordance with the Fair Housing Act.