Foreclosure Assistance
Foreclosure Assistance
- Contact Your Lender To Stop Foreclosure
- H.O.P.E. Program Offers Help To Avoid Foreclosure
- Foreclosure Help Offered By Housing Counselor
- Beware Of Predatory Lending Schemes
- Beware of Scams
1. Contact Your Lender to Stop Foreclosure
People avoid calling their lenders when they fall behind on their mortgage. Many are embarrassed to discuss money problems, or believe if lenders know they’re in trouble, they will rush to collection or foreclosure.
Lenders want to help borrowers keep their homes. Foreclosure is expensive for lenders, mortgage insurers and investors. HUD, FHA, Freddie Mac, Fannie Mae, and private mortgage insurance companies require lenders to work aggressively with borrowers to stop a foreclosure.
Lenders have workout options to help you avoid foreclosure. However, these options work best when your loan is only one or two payments behind. The farther behind you are on your payments, the fewer options are available. Learn about foreclosure timeline in your state.
Do not assume that your problems will correct themselves. Don’t lose valuable time by being overly optimistic. Contact your mortgage lender to discuss your circumstances as soon as you realize that you are unable to make your payments. While there is no guarantee that you can avoid foreclosure, most lenders are willing to explore every possible option.
2. H.O.P.E. Offers Help For Some Homeowners To Avoid Foreclosure
The HOPE for Homeowners program will help to refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD’s Federal Housing Administration (FHA).
“For families struggling to keep up with their mortgage payments, this program will be another resource to refinance into a loan they can afford,” said HUD Secretary Steve Preston. “FHA remains a safe and affordable alternative to the high-priced mortgage loans that threaten homeowners’ ability to retain their homes. We strongly encourage borrowers to work with their lenders to determine if HOPE for Homeowners is the right program for them.”
This program is available only to owner occupants and offers 30-year fixed rate mortgages. In many cases, to avoid foreclosure, banks will have to write down the existing mortgage to 90 percent of the new appraised value of the home.
Borrowers are eligible if, among other factors:
- The home is their primary residence, and they have no ownership interest in any other residential property, such as second homes.
- Their existing mortgage was originated on or before January 1, 2008, and they have made at least six payments.
- They are not able to pay their existing mortgage without help.
- As of March 2008, their total monthly mortgage payments due were more than 31 percent of their gross monthly income.
Homeowner facing foreclosure may participate in the program by working with their current lender. The program will serve as another loss mitigation tool available to distressed borrowers.
The lender will disclose the benefits of the program including home retention and a new affordable mortgage. The lender will also explain the prohibition against new junior liens against the property unless directly related to property maintenance, and a minimum of 50 percent equity and appreciation sharing with the Federal government.
The costs to the homeowner include the upfront and annual insurance premiums, as well as a share of the equity created by the write-down associated with the HOPE for Homeowners mortgage and any future appreciation in the value of the home. At settlement, subordinate lien holders will receive a certificate that evidences their interest as an obligation backed by HUD, with payment conditional on the value of HUD’s appreciation share.
3. Foreclosure Help Offered By Housing Counselor
A counselor will help you assess your finances, determine available options, and help you negotiate with your lender. Counselors are familiar with the various foreclosure prevention arrangements that lenders will consider. They know what course of action makes the most sense for you and your family, based on the circumstances. Working to prevent a foreclosure, the counselor and your lender can work out a plan. Meet with the counselor before your mortgage payments are too far behind. You can protect yourself from future credit problems.
A good counselor will help you establish a monthly budget to address all of your monthly expenses, including your mortgage payment. This analysis will help you and your lender determine a payment schedule that will work for you. Your counselor may advise on services and local programs that may provide you with additional financial, legal, medical or other help that you may need.
4. Beware Of Predatory Lending Schemes
Most mortgage lenders are reputable and provide a valuable service by allowing families to own a home without saving the thousands or hundreds of thousands of dollars necessary to buy it outright. However, a few, unscrupulous lenders, especially those who make high risk second mortgages, engage in predatory lending practices that can increase the likelihood that a borrower will lose his or her home to foreclosure. These abusive practices include making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees or repeatedly refinancing a loan without providing any real value to the borrower.
Borrowers facing unemployment or foreclosure are frequent targets of predatory lenders because they are desperate to find any “solution” to their default.
Homeowners frequently receive refinance offers in the mail telling them that they have been “pre-approved” for credit based on the equity in their home. When you are wondering how you are going to pay your mortgage and other bills, it may appear very attractive to borrow against your house. But consider this, if you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.
5. Beware of Scams!
- Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out.
- Phony counseling agencies: offer counseling for a fee when it is often given at no charge.
- Do not sign anything you do not understand. It is your right and duty to ask questions.
- Information is your best defense against becoming a victim of predatory lending especially for a desperate homeowner!
Report Suspected Predatory Lending! Homeowners can either visit the Stop Mortgage Fraud web site or call (800) 348-3931 to get information on what steps to take to file a complaint. Homeowners who call will receive a brochure that contains information also found on the Web site.
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