You Can Avoid Foreclosure and Keep Your Home

Losing a home can be financially and personally devastating. It also affects your credit and the chances of being a Homeowner again. Fortunately relief could be available.

The information that we have here is official FHA information to help you keep your home.

• People facing money problems:

If you are facing unemployment or have money problems, you may be able to keep your home if you know the right steps to take. Government organizations and the mortgage industry worked together to provide this information to help you keep your home.

• Disaster area victims:

If you live or work in an area declared a disaster by the President and the hurricane, tornado, flood, wildfire, or other natural or man-made event damaged your home or reduced your income, your lender will provide disaster relief:

o For 90 days on an FHA-insured loan.
o In most cases for other loans.

• Military personnel and spouses:

If you or your spouse are on active military duty, you may qualify for a reduction in your interest rate resulting in lower payments. You have the Servicemembers Civil Relief Act of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) that involves military homeowners.

Facing Money Problems:

Financial problems are most often associated with major life changes like:

• Job loss
• Cuts in work hours or overtime
• Retirement
• Illness, injury, or death of a family member
• Divorce or separation

If you or your family is facing any of these issues eliminate unnecessary spending and reach out for help. Taking action right away can help you protect your family from the loss of your home.

Steps to take when you can't pay your mortgage:

1. Contact your lender as soon as you have a problem.

Many people avoid calling lenders about money troubles because we:

• Feel embarrassed discussing money problems with others.
• Believe that if lenders know we are in trouble, they will automatically rush to a collection agency or foreclosure (seize property for failure to pay a mortgage debt).

Lenders want to help borrowers keep their homes because:

• Foreclosure is expensive for lenders, mortgage insurers and investors.
• HUD and private mortgage insurance companies, plus investors like Freddie Mac and Fannie Mae, require lenders to work aggressively to help borrowers facing money problems.

Lenders have workout options (choices) to help you and:

• These options work best when your loan is only one or two payments behind.
• The farther behind you are on your payments, the fewer your options.

Don't assume that your problems will quickly correct themselves:

• Don't lose valuable time being overly optimistic.
• Contact your mortgage lender to discuss your circumstances as soon as you realize that you're unable to make your payments.
• Expect your lender to explore many possible solutions for you, without guaranteeing any one particular solution.

Find your lender looking in one of the following documents (Click here to see a list of Mortgage Lenders) :

o Your monthly mortgage billing statement
o Your payment coupon book

Have ready the following documents when you are ready to call

o Your loan account number
o A brief explanation of your circumstances
o Your recent income documents:

 Pay stubs
 Benefit statements from Social Security, disability, unemployment, retirement, or public assistance
 Tax returns or a year-to-date profit and loss statement, if self-employed
 A list of household expenses

Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully, then return them to your lender quickly. Your lender will review the complete package before talking with you about a solution.

Don't ignore mail from your lender

If you don't get in touch with your lender, your lender will try to contact you by mail and phone soon after you stop making payments. If your lender doesn't hear from you, they will have to start legal action leading to foreclosure. This will greatly increase the cost to bring your loan current.

2. Talk to a housing counselor.

If you don't feel comfortable talking with your lender, you should immediately contact an approved housing counseling agency and make an appointment with a counselor (if you fill out the form you will se the list of counselors in your area). Most approved counselor sessions are free or cost very little and your counselor can help you:

• Review your financial situation, determine what options are available to you, and negotiate with your lender.
• Learn which of the various workout arrangements the lender believes makes the most sense for you and your family, based on your circumstances.
• Contact the lender to discuss a workout plan.
• Avoid future credit problems before you get too far behind on mortgage payments.
• Find information on services and programs in your area that provide financial, legal, medical or other assistance.

You should contact one the private agency too (We will contact you with one if you fill out the form). Private agencies unlike public ones have programs from many banks and lenders that can if not cheaper , faster and easier to qualify than the ones that your bank or the government has. Make sure that you have a couple of option before selecting one but act quickly or you won’t have any. The sooner you act the more options you will have.

A good counselor will help you create a monthly budget plan to ensure you meet all your monthly expenses, including your mortgage payment. Your personal financial plan will help you and your lender determine whether a reduced or delayed payment schedule could help you.

To find out the list of approve Agencies fill out the form and you will see the list immediately. Remember we will contact too with a private agency.

3. Prioritize your debts (rank them by importance).

You will need a new, tightened budget if you lose a job. Prioritize your bills and pay those most necessary for your family: food, utilities and shelter.

Failing to pay any of your debts can seriously affect your credit rating, but if you stop making your mortgage payments you could lose your house. Try these suggestions to keep your home:

• Whenever possible, use any income available after paying for food and utilities to pay your monthly mortgage payments.
• If your income has dropped, consider getting rid of or cutting back on other expenses (such as dining out, entertainment, cable, or telephone services).
• If you still do not have enough income, consider cashing out other resources like stocks, savings accounts, or personal property like a boat or a second car.
• Take any responsible action that will save cash.

4. Explore loan workout solutions with your lender.

First and foremost, if you can keep your mortgage current, do so.

But if you find you are unable to make your payments, you might qualify for a loan workout option. Check with your lender as some options may not apply to your loan if it is not insured by FHA.

If your problem is temporary - call your lender to discuss these possibilities:

• Reinstatement: Your lender is always willing to discuss accepting the total amount owed in a lump sum by a specific date.
• Forbearance: Your lender may allow you to reduce or suspend payments for a short period of time and then agree to another option to bring your loan current. A forbearance option is often combined with a reinstatement when you know you will have enough money to bring the account current at a specific time. The money might come from a hiring bonus, investment, insurance settlement, or tax refund.
• Repayment plan: You may be able to get an agreement to resume making your regular monthly payments, plus a portion of the past due payments until you are caught up.
If it appears that your situation is long-term or will permanently affect your ability to bring your account current - call your lender to discuss options:
• Mortgage modification: If you can make payments on your loan, but don't have enough money to bring your account current or you can't afford your current payment, your lender may be able to change the terms of your original loan to make the payments more affordable. Your loan could be permanently changed in one or more of the following ways:

o Adding the missed payments to the existing loan balance.
o Changing the interest rate, including making an adjustable rate into a fixed rate.
o Extending the number of years you have to repay.

• Partial Claim: If your mortgage is insured, your lender might help you get a one-time interest-free loan from your mortgage guarantor to bring your loan current over several years. You qualify for an FHA partial claim if:

o Your loan is between 4 and 12 months delinquent.
o You are able to begin making full mortgage payments again.

When your lender files a partial claim, HUD will pay your lender the amount necessary to bring your mortgage current. You must sign 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.

Discuss with your lender the new government programs that are being released. FHA Secure, Hope for Homeowners, Project Life Line, etc. Many lenders don’t know about the programs or don’t work will them. If you qualify for one of the program you can find a lender that accept to refinance your mortgage with the program. A counselor or agency will let you know which lenders are working with the government programs.

If keeping your home is not an option - call your lender to discuss these possibilities:

• Sale: If you can no longer afford your home, your lender will usually give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to use the services of a real estate professional who can aggressively market the property.
• Pre-foreclosure sale or short payoff: If you can't sell the property for the full amount of the loan, your lender may accept less than the amount owed. Financial help may also be available to pay other lien holders and/or help towards some moving costs. You may qualify if:

o The loan is at least 2 months delinquent.
o You (or your real estate professional) can sell the house within 3 to 5 months.
o A new appraisal (obtained by your lender) shows that the value of your home meets HUD program guidelines.

• Assumption: A qualified buyer may be allowed to take over your mortgage, even if your original loan documents state that it is non-assumable.
• Deed-in-lieu of foreclosure: As a last resort, you "give back" your property and the debt is forgiven. This will not save your house, but it is less damaging to your credit rating. This option might sound like the easiest way out, but it has limitations:

o You usually have to try to sell the home for its fair market value for at least 90 days before the lender will consider this option.
o This option may not be available if you have other liens, such as other creditor judgments, second mortgages, and IRS or state tax liens.

See here a list of Words that you need to know when you are dealing with real estate ( getting a mortgage, facing foreclosure, Loan modification, Loss Mitigation , getting an FHA Loan, Etc) Mortgage Information Glosary