How To Avoid Home Foreclosure |
NOTE: The following
information is provided by the U.S. Department of Housing and Urban Development. EP has
re-published this information to help answer some of your questions regarding home or
property foreclosure. We believe an important tip is to keep in touch with your loan
officer and let him/her know about your financial situation before you miss any payment on
any type of home or property loan. This is definitely worth a read for tips on how to stop
foreclosure from happening, and precautions to take.
How To Avoid Foreclosure
The guidance below is applicable to homeowners
with FHA Insured loans. While a good deal of this information may apply to all homeowners
in danger of losing their homes, not all of the foreclosure avoidance tools mentioned may
be available to you if you have a VA or conventional loan. Additionally, HUD/FHA does not
have any Loss Mitigation oversight over VA or conventional loans. Please contact your
lender or a housing counseling agency.
Q: What Happens When I Miss My
Mortgage Payments?
Foreclosure may occur. This is the legal means that your
lender can use to repossess (take over) your home. When this happens, you must move out of
your house. If your property is worth less than the total amount you owe on your mortgage
loan, a deficiency judgment could be pursued. If that happens, you not only lose your
home, you also would owe HUD an additional amount.
Both foreclosures and deficiency judgments could seriously
affect your ability to qualify for credit in the future. So you should avoid foreclosure
if possible.
Q: What Should I Do?
- DO NOT IGNORE THE LETTERS FROM YOUR LENDER. If you are
having problems making your payments, call or write to your lender's Loss Mitigation
Department without delay. Explain your situation. Be prepared to provide them with
financial information, such as your monthly income and expenses. Without this information,
they may not be able to help.
- Stay in your home for now. You may not qualify for
assistance if you abandon your property.
- Contact a HUD-approved housing counseling agency. Call (800)
569-4287 or TDD (800) 877-8339 for the housing counseling agency nearest you.
These agencies are valuable resources. They frequently have information on services and
programs offered by Government agencies as well as private and community organizations
that could help you. The housing counseling agency may also offer credit counseling. These
services are usually free of charge.
Q: What Are My Alternatives?
You may be considered for the following:
Special Forbearance. Your lender may be able to
arrange a repayment plan based on your financial situation and may even provide for a
temporary reduction or suspension of your payments. You may qualify for this if you have
recently experienced a reduction in income or an increase in living expenses. You must
furnish information to your lender to show that you would be able to meet the requirements
of the new payment plan.
Mortgage Modification. You may be able to refinance
the debt and/or extend the term of your mortgage loan. This may help you catch up by
reducing the monthly payments to a more affordable level. You may qualify if you have
recovered from a financial problem and can afford the new payment amount.
Partial Claim. Your lender may be able to work with
you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage
current.
You may qualify if:
- your loan is at least 4 months delinquent but no more than
12 months delinquent;
- you are able to begin making full mortgage payments.
When your lender files a Partial Claim, the U.S. Department
of Housing and Urban Development will pay your lender the amount necessary to bring your
mortgage current. You must execute a Promissory Note, and a Lien will be placed on your
property until the Promissory Note is paid in full.
The Promissory Note is interest-free and is due when you
pay off the first mortgage or when you sell the property.
Pre-foreclosure sale. This will allow you to avoid
foreclosure by selling your property for an amount less than the amount necessary to pay
off your mortgage loan.
You may qualify if:
- the loan is at least 2 months delinquent;
- you are able to sell your house within 3 to 5 months; and
- a new appraisal (that your lender will obtain) shows that
the value of your home meets HUD program guidelines.
Deed-in-lieu of foreclosure. As a last resort, you
may be able to voluntarily "give back" your property to the lender. This won't
save your house, but it is not as damaging to your credit rating as a foreclosure.
You may qualify if:
- you are in default and don't qualify for any of the other
options;
- your attempts at selling the house before foreclosure were
unsuccessful; and
- you don't have another FHA mortgage in default.
Q: How Do I Know if I Qualify for Any of These
Alternatives?
Your lender will determine if you qualify for any of the
alternatives. A housing counseling agency can also help you determine which, if any, of
these options may meet your needs and also assist you in interacting with your lender.
Call (800) 569-4287 or TDD (800) 877-8339.
Q: Should I Be Aware of Anything Else?
Yes. Beware of scams! Solutions that sound too simple or
too good to be true usually are. If you're selling your home without professional
guidance, beware of buyers who try to rush you through the process. Unfortunately, there
are people who may try to take advantage of your financial difficulty. Be especially alert
to the following:
Equity skimming. In this type of scam, a
"buyer" approaches you, offering to get you out of financial trouble by
promising to pay off your mortgage or give you a sum of money when the property is sold.
The "buyer" may suggest that you move out quickly and deed the property to him
or her. The "buyer" then collects rent for a time, does not make any mortgage
payments, and allows the lender to foreclose. Remember, signing over your deed to someone
else does not necessarily relieve you of your obligation on your loan.
Phony counseling agencies. Some groups calling
themselves "counseling agencies" may approach you and offer to perform certain
services for a fee. These could well be services you could do for yourself for free, such
as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If
you have any doubt about paying for such services, call a HUD-approved housing counseling agency at
(800) 569-4287 or TDD (800) 877-8339. Do this before you pay anyone or sign
anything.
Q: Are There Any Precautions I Can Take?
Here are several precautions that should help you avoid
being "taken" by a scam artist:
- Don't sign any papers you don't fully understand.
- Make sure you get all "promises" in writing.
- Beware of any contract of sale of loan assumption where you
are not formally released from liability for your mortgage debt.
- Check with a lawyer or your mortgage company before entering
into any deal involving your home.
- If you're selling the house yourself to avoid foreclosure,
check to see if there are any complaints against the prospective buyer. You can contact
your state's Attorney General, the State Real Estate Commission, or the local District
Attorney's Consumer Fraud Unit for this type of information.
Q: What Are the Main Points I Should Remember?
- Don't lose your home and damage your credit history.
- Call or write your mortgage lender immediately and be honest
about your financial situation.
- Stay in your home to make sure you qualify for assistance.
- Arrange an appointment with a HUD-approved housing counselor
to explore your options at (800) 569-4287 or TDD (800) 877-8339.
- Cooperate with the counselor or lender trying to help you.
- Explore every alternative to keep your home.
- Beware of scams.
- Do not sign anything you don't understand. And remember that
signing over the deed to someone else does not necessarily relieve you of your loan
obligation.
Act now. Delaying can't help. If you do nothing, YOU WILL
LOSE YOUR HOME and your good credit rating.
Source: U.S. Department of Housing and Urban
Development
451 7th Street S.W., Washington, DC 20410
Telephone: (202) 708-1112 TTY: (202) 708-1455
Print
FREE Photo Calendars Online
or
Add Your Own Photos for FREE!
For Individuals, Photographers, Artists and Webmasters
Personalize calendars with your photos and print as many as
you desire! For example, a wedding photo, a newly born baby announcement, a pet, an
anniversary, an engagement, grandchildren, a vehicle, home, vacation and more. Once a
Photo Calendar is listed, your friends or relatives can print it from anywhere in the
world, too! NO purchase is necessary.
Free Photo Calendar Section on
EastmanPublishing.com |
 |
Return To: How To Do It > Home > Finances
|
