The Crucial First Moves When You’re Struggling to Keep Your Home

When your mortgage payment starts to feel heavier every month, the scariest part is not knowing which “help” is real and which options quietly make things worse. I’m joined by longtime Colorado Springs realtor and broker Lori Thompson, a certified distressed property expert, to lay out a calm, step-by-step way to respond to financial hardship before it turns into foreclosure.

We talk through the first decision that changes everything: is this a short-term hit like unexpected expenses, or a long-term disruption like job loss, divorce, or death? From there, we unpack the real-world pros and cons of mortgage forbearance agreements, what you should demand in writing, and why “catch-up” payments can boomerang. We also cover foreclosure alternatives that homeowners search for every day, including refinancing, loan modification conversations, HELOCs used carefully, and short sales when you’re upside down.

Because this show is rooted in Colorado Springs real estate, we also share local resources that can ease the pressure fast, including LEAP utility assistance, low-barrier food pantries, and support options for military families and veterans. Lori explains why selling earlier can protect your long-term financial health, preserve home equity, and even help you avoid nasty surprises like a 1099 tax form tied to foreclosure losses.

If you’ve been putting off the call, let this be the nudge. Subscribe for more practical home and money guidance, share this with someone who needs it, and leave a review. What’s the one question about your mortgage or home equity you want answered next?

To learn more about RE/MAX Properties Inc. visit:
https://www.LoriThompson.REMAX.com
RE/MAX Properties Inc. 
Colorado Springs 
719-332-1807 

Transcript

Show Intro and Meet Lori

SPEAKER_01 0:03

Welcome to your Colorado Springs Life Hall, where real estate means real time. Maybe a little too much cover. Hosted by Remax Properties licensed realtor broker and cup producer Lori Thompson, a local legend who's been helping military families and civilians buy himself for over 40 years. Whether you're PCSing, upsizing, downsizing, or just a dream, Lori's got you covered. Why? Because she's your lifetime realtor. And she actually answers her phone. Imagine that.

SPEAKER_02 0:45

When money gets tight, your home can feel like both your biggest asset and your biggest stressor. Here's how to take control before things spiral. Welcome back, everyone. I'm Frederick, co-host and producer in the studio here with Remax Properties licensed realtor and broker, Lori Thompson. Lori, great to be back with you. How's your afternoon going?

SPEAKER_00 1:06

Not too bad. I hope you're having a great day.

SPEAKER_02 1:10

I am, I am. You look great as well. I hope your day is going wonderfully. So shall we get into it?

First Steps Before You Fall Behind

SPEAKER_02 1:17

Lori, can you tell us what should homeowners facing financial difficulty do first?

SPEAKER_00 1:23

You know, this is such an important and serious topic. This is one of the reasons why I became a certified distressed property expert. I can tell you what not to do. And it's really natural for people to want to kind of pretend like it's not happening. And that can really lead to a downward spiral of difficulties. So the most important thing is if you are facing financial difficulties, actually be a little cautious over what the lender might offer you. They have plans that are called forbearance agreements where they'll say, hey, we'll let you miss a few payments or we'll move it to the end of the loan. But then what I have seen happening is that same lender comes back and says, Okay, now you need to pay us one and a half payments at a time to catch up, or they might diverge unless it's in writing, they can diverge on what they have offered it. And I've seen that type of boomerang happen to where people end up losing their homes. And it was supposedly from a program that was going to help them. So be very cautious anytime you are offered a forbearance agreement. So the question is: is this a short-term difficulty or is this a long-term difficulty? Because there's two different solutions that'll be available. I'll give you an example of some short-term versus long-term. Short-term is you've run into some expenses you weren't planning on. And in that case, I would advise you to do everything you can to make your mortgage payment. Make that your top priority, pay that first, and be cautious on some of the rest. A long-term situation could be a job loss, a divorce, or a death. And when those happen, you have compounding situations that are facing you. The first thing you should do is call your realtor. Please call your realtor first. Because if you wait three, four, five months down the road, it just gets worse. So if you're working with a qualified realtor, that realtor should have solutions for you. Okay, what can we do here? Have the interest rates changed? If you're still current on your mortgage, sometimes the refinance is available, sometimes not. If you're upside down in your equity, you may have to look into something called a short sale where you're selling it for less than what you currently owe. So each different set of circumstances can require a different solution. But the most important thing is reach out. Reach out and talk to your realtor. They have a fiduciary obligation to keep your information private. The worst thing you can do is put your head in the sand and hope that it'll all somehow go away or work out because you could end up losing your home. And if you have a foreclosure on your record, it takes a huge chunk on your credit report. It makes it more difficult to rent a place. And so reaching out for help immediately is so important just so they can know hey, there are options available. Let's figure out the best way to do this.

SPEAKER_02 4:39

Gotcha, gotcha. Yeah. So you talked about reasons, for example, like divorce or job loss or unexpected expenses.

Warning Signs and Cash Reserves

SPEAKER_02 4:48

What are some early warning signs that people should pay attention to before things get too serious? Say, are there any early warning signs that come or lead up to, say, a job loss or anything like that?

SPEAKER_00 5:00

Boy, those can come like for instance, Colorado is an at-will state, except for a few industries. So in Colorado, you don't necessarily get a lot of notice. And but the other thing that we have here is we have a lot of government contract positions. And that's where let's say you have a contractor that is doing something military related. And usually they can be a two to three-year contract. So it's good to watch for the end of that contract because it may or may not be renewed depending on what's happening in Washington, DC. So that would be a good indication, or to see if there is other indications of stress within a company. It's just kind of keeping an eye out, trust your intuition, pay attention. That that's just really important because you never know when. I mean, I have faced crises I didn't anticipate in my life. When my daughter was two years old, she was burned in a freak accident. And I'm self-employed, I'm straight commissioned. And I was really blessed that a lot of people stepped up to help me back then, or I came this close to filing bankruptcy. Now, this was 28 years ago, and since that time I've put safeguards in place that I'll never be in that position again. But it can happen to anyone without warning. And so that's the key. You can't always see what's coming. I always recommend, if possible, that people have three to six months' worth of living expenses saved up. Because if it is a short-term crisis, that will usually carry you through it. But not everybody has the ability to save up three to six months' worth of living expenses. There's ways to do it. You can cut that dinner out, you can trim this. And it really is just taking a step back and saying, hey, what can we do to protect our family from some type of crisis that could come along? So one of the best things you can do is build up three to six months' worth of living expenses for the day when the rain clouds roll in.

SPEAKER_02 7:11

That's true, that's true. Thank you so much for that. So I'm wondering if you can tell us uh how can homeowners evaluate whether refinancing, loan modification, or forbearance is the right move for them.

Refinance Options and Forbearance Risks

SPEAKER_00 7:27

If you are offered a forbearance agreement, I would strongly recommend you consult with your realtor just to look over what are the details of the program, what are they putting in writing? Do you have the same contact? That's really, really important. So I don't mean to sound like all forbearance agreements are bad, but enough of them are. Enough of them have raised red flags in my industry that I like to keep an eye on them. It's a case of pride can really hold you back from a simpler solution. Not everyone has Uncle Henry, they can pick up the phone and say, or Aunt Dora, hey, could you help us out short term? It's just a case of knowing what is the potential pitfall on whatever decision you're making. Some people pull out a home equity line of credit if they have equity built up where they can get some money to short term help them out. It's really interesting because a lot of people will be serial refinancers to take equity out of their home. I do not advise that unless it's absolutely necessary for an improvement or something else. But taking out either a home equity or a home equity line of credit or refinancing, be judicious. Don't use it like this is your automatic teller if you want to build up equity and long-term value in your home.

SPEAKER_02 8:59

Thank you so much for that. I understand the value that working with a realtor plays in helping us all understand our options. And that being said, are there any programs or resources in the local market in Colorado Springs that homeowners often don't know about that you, you know, introduce them to, and it just changes a dire situation and may brings hope to a uh dire situation?

Local Help Programs That Matter

SPEAKER_00 9:23

There are different organizations that can help out with a short-term financial crisis. We have a wonderful program called LEAP with Colorado Springs Utilities, and that is uh utility assistance. So if you've hit upon a hardship, you could apply for the LEAP program and get some temporary assistance with your utility bills. Um, if it's been a rather major crisis, we have incredible food organizations that will step in to help. And some of them are very what they call low barrier food pantries, because that's always a really tough situation for some people to reach out for help. But there's low barriers for our military families or for other people where they're not going to make you fill out an application to prove that you need this. I toured a low barrier food pantry the other day, which reminds me I have to give a donation to them because they were really, really amazing. And so the key is just knowing we have different veterans organizations that can help. And so, depending on what it is that you need, there are so many wonderful people here that are willing to help.

SPEAKER_02 10:33

Wonderful, wonderful. And I guess my last question for you is you know, at what point should someone consider

When Selling Protects Your Future

SPEAKER_02 10:40

selling? And and how can that actually protect their long-term financial health?

SPEAKER_00 10:44

Well, if you have equity in the home, don't let it get into a crisis situation. You could be walking away from a substantial amount of money. So now I'm going to the job loss, death, divorce, something major has happened. Talk to your realtor, see how much equity you have in your home. Because if you can get your home sold while your credit is still stable, you could have that buffer if you have built up your home equity, and that can make a difference. Now, here's something a lot of people don't know. If you don't take that option or if you let the house go into foreclosure, and if the lender sells it for less than what you owed, they will issue you a 1099 tax form. So let's say your house is now sold, and because of foreclosure fees and everything else, the cost to the lender was $50,000, $70,000. You will get a $1099 form and you will owe taxes on money you never touched. You will owe taxes on the loss. And that's why it's so important to work right away with a knowledgeable realtor because I've seen people walk away from actual equity because they're depressed or they're discouraged or there's a hardship in getting it ready. But when you have someone who is intelligent and compassionate and knowledgeable, that can turn that whole bad situation into a very good launch pad, into a different situation, because things do tend to get better with enough time.

SPEAKER_02 12:19

Thank you so much for that, Lori. And thank you for sharing such practical and compassionate guidance and for your uplifting note at the very end. Uh, I appreciate it, and I'm sure everyone listening does as well. Uh, for everyone at home tuning in, thank you so much for joining the journey, and we will see you all again next episode.

SPEAKER_00 12:37

Thank you.

Final Takeaways and Contact Info

SPEAKER_01 12:42

That's a wrap for this episode of Your Colorado Springs Life and Home. Got questions? Need advice? Just want to talk about interest rates and granted countertops? Call or text Laurie at 719-332-1807. Yes, she'll really respond. Or visit Laurie Thompson.reemax.com to get started with your lifetime realtor. Because when it comes to Colorado real estate, Laurie doesn't just know the market, she is the market.