Your lender – also known as a servicer – has a number of options to help you stay in or sell your home. These options include forbearance, repayment plans and loan modifications – as well as relief under the new Federal housing plan. You can find their contact information on your mortgage statement or coupon book. 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. 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:
1. your loan is at least 4 months delinquent but no more than 12 months delinquent;
2. 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:
1. the loan is at least 2 months delinquent;
2. you are able to sell your house within 3 to 5 months; and
3. 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 can qualify if:
1. you are in default and don't qualify for any of the other options;
2. your attempts at selling the house before foreclosure were unsuccessful; and
3. you don't have another FHA mortgage in default.
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