If you are having difficulty paying your mortgage, act now!
The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.
NHS does not provide in person counseling for families facing foreclosure. However, the following are common loss mitigation strategies employed by lenders/mortgage insurers.
- Reinstatement or Repayment Plan: A reinstatement or repayment plan might be used for borrowers who have fallen behind on their mortgage payments but are able to subsequently resume making their monthly payments. Under this arrangement, the lender increases the regular monthly payment until the delinquency is repaid.
- Partial Mortgage Insurance Advance Claim Payment: This approach might be used if a mortgage insurer is involved (either the Federal Housing Administration or a private mortgage insurer). Under this approach, a one-time payment is made by the mortgage insurer to the lender to cover all or a portion of the default. In these cases the borrower is required to sign an interest free note for the amount of the advance claim payment payable to the insurer of the mortgage. The repayment of the note is scheduled to coincide with the borrower’s ability to pay when they get back on their feet and structured to the individual’s circumstance. At the latest, the note is usually due on the sale or transfer of the property. The details on this program may vary among mortgage insurers.
- Forbearance Agreement: A repayment plan based on the borrower’s financial situation that may include a temporary reduction or suspension of payments for a specific length of time. Often used when the borrower has a reduction in income or increase in expenses that is not expected to be permanent.
- Mortgage Modification: A refinancing of the debt and/or extension in the term of the mortgage loan that allows the borrower to catch up by reducing the monthly payments to a more affordable level. Used for borrowers who have recovered from a financial problem and can afford the new payment amount. Modifications could include lowering interest rates, adding payments to the end of the loan term, paying off small amounts of arrearages each month, adding a lump sum payment due at pay-off, or simply lowering payments for a set period of time.
- Loan Assumption: An arrangement where a qualified borrower agrees to assume responsibility for repayment of the mortgage.
- Pre-foreclosure or Short Sale: This is where a lender can agree to accept the proceeds of a pre- foreclosure sale in satisfaction of the loan even though the proceeds may be less than the amount owned on the mortgage.
- Deed-in-Lieu of Foreclosure: The borrower voluntarily deeds the property to the lender in order to avoid a lengthy foreclosure, additional accrued interest, and expenses. Typically used when attempts fail to sell the house prior to foreclosure.
Loan modifications scams are changing every day. It’s a growing problem across the country: Homeowners facing foreclosure are losing their money – and their homes – to loan modification scams.
If you are an at-risk homeowner here are some “red flags” you should watch out for when seeking foreclosure help. Avoid any business that:
- guarantees to stop the foreclosure process – no matter what your circumstances.
- instructs you not to contact your lender, lawyer, or credit or housing counselor.
- collects a fee before providing you with any services.
- accepts payment only by cashier’s check or wire transfer.
- encourages you to lease your home so you can buy it back over time.
- tells you to make your mortgage payments directly to it, rather than your lender.
- tells you to transfer your property deed or title to it.
- offers to buy your house for cash at a fixed price that is not set by the housing market at the time of sale.
- offers to fill out paperwork for you.
- pressures you to sign paperwork you haven’t had a chance to read thoroughly or that you don’t understand