Behind on the mortgage in Puerto Rico: your options
Short answer
You can sell while the house is yours: the mortgage is paid at closing from the sale money. If the bank sued you over your main home, the law requires mediation before a judgment, unless you failed to respond to the lawsuit (for example, by not answering on time). We can't promise a sale ends the case; see a lawyer.
Step by step
Each step says when it happens.
Read the papers and write down the dates
First
Gather the letters from the bank and, if there's already a case, the papers from it. Write down every date they mention. Don't set them aside: mediation doesn't apply if you failed to respond to the lawsuit (for example, by not answering on time).
Talk to a lawyer
As soon as you can
A lawyer tells you where your case stands and which deadlines are running. If you can't afford one, ask about free legal aid services.
Ask for the payoff letter
Before you compare options
The bank issues a payoff letter: it says how much it takes to pay off the whole mortgage as of a given date. With that number, you know whether a sale covers what you owe.
Compare your options
Before you sign anything
Catching up with the bank; selling the house and paying the mortgage from the sale; or, if you owe more than the house is worth, asking the bank about a short sale. Each path has different consequences, so go over them with your lawyer.
If you decide to sell: the offer and the closing
Written offer within 48 hours after we see the house; closing in 7 days once the paperwork is ready
The mortgage is paid at closing from the sale money, and our goal is to close in under 30 days. How late a private sale can close before the judicial sale depends on your case: confirm it with your lawyer before you sign.
Who pays what at closing
What gets paid in this situation, and where the money comes from.
| Cost | Who pays | Note |
|---|---|---|
| Mortgage balance | You, from the sale money | The bank issues a payoff letter, and the mortgage is paid at closing from the sale money. |
| CRIM property tax debt, if any | You, from the sale money | CRIM is the agency that collects property tax for Puerto Rico's towns. The debt is normally paid at closing, with a check made out to CRIM. More in our guide on CRIM debt. |
| If you owe more than the house is worth | The bank decides | The sale closes only if the bank agrees to take less than what's owed (a short sale). |
| Deed of sale, stamps and Property Registry fees | Spelled out in your written offer | In Puerto Rico, the sale is settled on a sheet called the hoja de liquidación, which lists each cost and who pays it. |
| Commission | None | When we buy directly, we don't charge you a commission. |
An example with numbers
Made-up numbers, so you can see how the math works.
An owner is several months behind. She asks the bank for the payoff letter, compares her options with her lawyer and decides to sell. The numbers are made up.
| Agreed sale price | $140,000 |
|---|---|
| Mortgage balance per the payoff letter, paid at closingWhat the bank says is owed as of the closing date. | $118,500 |
| CRIM debt, paid at closing | $2,300 |
| Deed, stamps and Registry feesWho pays each cost is in the offer. | Spelled out in the written offer |
| What the owner receives, before closing costs | $19,200 |
First: where you stand
Being behind isn't the same as having a case filed against you. Knowing where you stand tells you which options are left.
- Behind, with no case filed. You can still talk to the bank about catching up (for example, a payment plan or a loan modification), or sell.
- The bank has sued you (a foreclosure). Don't set the papers aside: take them to a lawyer and answer the lawsuit on time. If the house is your main home, the law requires a mediation meeting before the judge issues a judgment or the judicial sale takes place, but it doesn't apply if you failed to respond to the lawsuit (for example, by not answering on time) or if the judge has struck out your pleadings.
- There's already a date for the judicial sale. How late a private sale can close before the judicial sale depends on your case; your lawyer can tell you.
Your options
- Catch up with the bank. Ask the bank what options it has for your loan. If you want to keep the house, this is the first path.
- Sell and pay the mortgage from the sale. The bank issues a payoff letter, and the mortgage is paid at closing from the sale money. If the house is worth more than you owe, what's left is yours.
- A short sale, if you owe more than the house is worth. That decision is the bank's.
- Legal advice. A lawyer tells you which deadlines are running in your case. If you can't afford one, ask about free legal aid services.
What mediation does and doesn't do
Mediation is a step within the case: it doesn't force an agreement and doesn't stop the case. Go prepared: bring the payoff letter and, if you're thinking about selling, a written offer. That way you can talk about real numbers.
How selling works when you owe the mortgage
The payoff letter comes first: with that number, you know how much it takes to pay off the whole mortgage. The house's debts (mortgage, CRIM) are normally paid at closing from the sale money, with checks made out to the bank and to CRIM; you don't have to pay them first. The sale is settled on a sheet called the hoja de liquidación, with each payment and who received it. The example in this guide shows the math with made-up numbers.
If you owe more than the house is worth, the sale closes only if the bank agrees to take less. That's called a short sale, and it's the bank's decision.
What we do, and what we don't promise
We won't promise that a sale ends the foreclosure case or prevents the judicial sale. What we do:
- The offer. We send a written offer within 48 hours after we see the house, so you decide with a real number and with your lawyer beside you.
- The closing. We can close in 7 days once the paperwork is ready.
- The move. You choose the moving date, and it's set in the agreement. In some cases we help with moving costs, agreed case by case in writing.
- What you leave behind. You can leave behind what you don't want; we clear it out.
If the house also owes CRIM
Both debts are paid from the same sale. Our guide Selling a house that owes CRIM property tax explains how that debt is confirmed.
Common questions
I'm about to lose my house. What do I do first?
Gather the papers and write down the dates. Find a lawyer (if you can't afford one, ask about free legal aid) and ask the bank for the payoff letter. If you've already been sued, don't let the deadline to answer go by: if you fail to respond to the lawsuit, mediation doesn't apply. Then you know where you stand and what your options are: catching up, selling, or talking to the bank about a short sale.
What is a foreclosure (ejecución de hipoteca)?
It's the lawsuit a bank files to collect a mortgage with the house. It can end in a judicial sale (an auction). If the house is your main home, the law requires a mediation meeting before the judge issues a judgment or the judicial sale takes place, unless you failed to respond to the lawsuit or the judge has struck out your pleadings.
I'm behind on my mortgage. Can I sell?
Yes, while the house is yours. The bank issues a payoff letter, and the mortgage is paid at closing from the sale money. If the house is worth more than you owe, what's left after paying the bank and any other debts is yours.
Will selling the house end the foreclosure case?
We can't promise that. When the sale closes, the mortgage is paid from the sale money. What happens with the case, and how late a private sale can close before the judicial sale, depends on your case: ask your lawyer.
Is mediation mandatory?
In a foreclosure on a main home, the law requires a mediation meeting (Act 184-2012) before the judge issues a judgment or the judicial sale takes place. It's a step within the case: it doesn't force an agreement and doesn't stop the case. It doesn't apply if the borrower is in default, meaning they failed to respond to the lawsuit (for example, by not answering on time), or if the judge has struck out the borrower's pleadings. Here, default (rebeldía, in Spanish) is about the case, not the payments. Your lawyer tells you how it applies to you.
What is a short sale?
It's a sale in which the bank agrees to take less than what's owed, because the house is worth less than the debt. The decision is the bank's, and it can have consequences for you; ask your lawyer before you ask for one.
How late can I sell before the judicial sale?
How late a private sale can close before the judicial sale depends on your case. Ask your lawyer, and don't leave the decision for the last minute.
I live on the mainland, and my house in Puerto Rico is behind on the mortgage. Can I sell it from here?
Yes. You can sell without flying back: you sign a power of attorney in your state, and someone you trust signs for you in Puerto Rico once it's protocolized there (entered into a Puerto Rico notary's official records). If the bank's letters go to the house, ask whoever picks up the mail to send you copies, and talk to a lawyer in Puerto Rico early. The steps for selling from far away are in our guide Selling a Puerto Rico house from the mainland.
Next step
If you're thinking about selling, send us the address of the house. We send a written offer within 48 hours after we see the house, so you can compare it with your other options and go over it with your lawyer before you decide.
Sources
Where this guide's facts come from.
- Mediation in mortgage foreclosures checked on
- Settlement sheet (hoja de liquidación) checked on
- Selling without traveling, with a power of attorney checked on
General information; not legal or tax advice. For your situation, talk to a lawyer or a CPA.