When banks halt mortgage loans, borrowers must immediately assess alternatives. First, explore government-backed programs like FHA or VA loans, which often have relaxed eligibility. Second, contact private lenders, credit unions, or online mortgage platforms for non-bank financing. Third, consider refinancing existing loans if rates drop or terms worsen. Finally, seek legal or financial counseling to navigate default risks or debt restructuring. Proactive communication with lenders is critical to avoid penalties or loss of property.

Banks may cease mortgage lending due to regulatory pressures, economic downturns, or risk aversion. For example, during the 2020 COVID-19 pandemic, many banks tightened mortgage criteria, with 35% of U.S. counties reporting reduced lending activity (Federal Housing Finance Agency, 2021). Government programs expanded to counter this, with FHA loans increasing by 24% year-over-year in 2022 (U.S. Department of Housing and Urban Development). Private lenders stepped in, filling gaps: online mortgage startups originations surged 18% in 2023 (MBA Research, 2024). Refinancing became a lifeline, with 4.1 million refinances in Q1 2024, driven by 0.6% rate drops (Federal Reserve, 2024). Legal counseling reduced foreclosure rates by 27% in states offering free housing aid (NeighborWorks America, 2023). These data underscore the importance of diversifying lenders and leveraging policy support to mitigate banking sector contractions.