Project Sentinel HUD Housing Counseling Services Presents: Copyright    Project Sentinel
This Program <ul><li>Overview of the foreclosure process </li></ul><ul><li>Short-term and long-term workout options </li><...
DELINQUENCY
What to do when your payment is late: <ul><li>Contact your lender immediately  </li></ul><ul><ul><ul><li>New Requirements ...
Whatever you do: <ul><li>Do not make promises you can’t keep! </li></ul><ul><li>Do not sign anything you do not understand...
Beware of Foreclosure  Rescue Scams  <ul><li>Offers to buy your house – equity skimming/stripping </li></ul><ul><li>Phony ...
DEFAULT
Formal Foreclosure Process <ul><ul><li>Notice of Intent to Foreclose – After it’s filed, the homeowner has 30 days to nego...
SHORT TERM WORKOUT OPTIONS
Reinstatement <ul><ul><li>A lump sum payment of the amount owed, paid by a specific date your mortgage lender agrees to. <...
Forbearance Agreement <ul><li>A formal written repayment agreement between the borrower and the mortgage lender.  </li></ul>
<ul><li>Under the terms of a Forbearance Agreement, monthly payments are reduced or suspended for a specific period of tim...
Repayment Plan <ul><li>Is a temporary increase in monthly payments until the loan is brought current.  </li></ul>
<ul><li>The lender calculates the additional payment required and determines the number of months needed to cure the delin...
LONG TERM  WORKOUT OPTIONS
Loan Modification <ul><li>One or more terms of the loan may be permanently changed to bring the loan current.   </li></ul>
A Loan Modification  May Include: <ul><ul><ul><li>Extending the term of the loan </li></ul></ul></ul><ul><ul><ul><li>Addin...
New Modification Programs <ul><ul><ul><li>New Programs </li></ul></ul></ul><ul><ul><ul><ul><ul><li>FHA Secure </li></ul></...
Re-financing With a New Lender <ul><li>Will require that you financially qualify, with: </li></ul><ul><li>Positive equity ...
Reverse Mortgage <ul><ul><li>Also known as a “HECM” </li></ul></ul><ul><ul><li>A loan against the equity in a home that pr...
Pre-foreclosure Sale <ul><li>The lender may agree to allow the borrower a specific period of  time to sell the home and sa...
Short Sale  <ul><li>The borrower sells the property for less than the balance owed on the loan. </li></ul>
<ul><li>The lender agrees to accept the proceeds of the sales as a full settlement of the loan </li></ul><ul><li>The lende...
Assumption <ul><li>The property is transferred to a new buyer who assumes the loan and takes responsibility for the mortga...
Deed-in-lieu of Foreclosure <ul><li>The borrower agrees to deed the property to the lender in exchange for a release from ...
<ul><li>The property must be vacant at the time the deed is executed </li></ul><ul><li>No additional loans or liens on the...
Bankruptcy <ul><li>Law requires pre-filing counseling </li></ul><ul><li>Homeowner should consult an attorney about the con...
Be Proactive <ul><li>Consider your options </li></ul><ul><li>Discuss with your family </li></ul><ul><li>Be prepared to con...
Borrowers Must Consider: <ul><li>Their ability to make future loan payments, along with other payments like taxes and insu...
Borrower  Should  Consider: <ul><li>Eliminating unnecessary expenses or selling assets  </li></ul><ul><li>Looking into add...
How Should You Approach a Workout? <ul><li>Contact your lender’s Loss Mitigation Department directly </li></ul><ul><li>or ...
Regardless of who contacts the lender, you will need: <ul><li>Hardship Letter  </li></ul><ul><li>Financial Statement </li>...
Project Sentinel  Housing Counseling and Mediation Services <ul><li>1055 Sunnyvale-Saratoga Road Suite 3 </li></ul><ul><li...
Other Resources <ul><li>www.hud.gov  :  Lists other HUD counseling agencies and a wide range of information on foreclosure...
In Cases of Predatory Lending  or Fraud <ul><li>Department of Fair Employment & Housing – 800-233-3212 </li></ul><ul><li>U...
Conclusion <ul><li>Thank you for listening to our introductory presentation </li></ul><ul><li>For further information: </l...
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Foreclosure PreveSlide show: What you need to know about foreclosure prevention

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A detailed explanation of the foreclosure process with examples of the short–term and long-term options available to avoid foreclosure.

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Foreclosure PreveSlide show: What you need to know about foreclosure prevention

  1. 1. Project Sentinel HUD Housing Counseling Services Presents: Copyright  Project Sentinel
  2. 2. This Program <ul><li>Overview of the foreclosure process </li></ul><ul><li>Short-term and long-term workout options </li></ul><ul><li>Resources for more information and counseling help </li></ul>
  3. 3. DELINQUENCY
  4. 4. What to do when your payment is late: <ul><li>Contact your lender immediately </li></ul><ul><ul><ul><li>New Requirements under SB 1137 </li></ul></ul></ul><ul><li>Do not avoid phone calls or ignore correspondence </li></ul><ul><li>Provide complete disclosure of the circumstances </li></ul><ul><li>Maintain HO insurance and property taxes </li></ul>
  5. 5. Whatever you do: <ul><li>Do not make promises you can’t keep! </li></ul><ul><li>Do not sign anything you do not understand! </li></ul>
  6. 6. Beware of Foreclosure Rescue Scams <ul><li>Offers to buy your house – equity skimming/stripping </li></ul><ul><li>Phony counseling agencies that require upfront fees for promised modifications or credit repair </li></ul>
  7. 7. DEFAULT
  8. 8. Formal Foreclosure Process <ul><ul><li>Notice of Intent to Foreclose – After it’s filed, the homeowner has 30 days to negotiate alternative arrangements with the lender </li></ul></ul><ul><ul><ul><li>SB 1137 Requirements </li></ul></ul></ul><ul><ul><li>Notice of Default – Once filed, the homeowner has 90 days to bring loan current or come to an agreement with a lender to avoid the next notice </li></ul></ul><ul><ul><li>Notice of Sale – Homeowner has a final 20 days to bring loan current or negotiate an agreement </li></ul></ul>
  9. 9. SHORT TERM WORKOUT OPTIONS
  10. 10. Reinstatement <ul><ul><li>A lump sum payment of the amount owed, paid by a specific date your mortgage lender agrees to. </li></ul></ul>
  11. 11. Forbearance Agreement <ul><li>A formal written repayment agreement between the borrower and the mortgage lender. </li></ul>
  12. 12. <ul><li>Under the terms of a Forbearance Agreement, monthly payments are reduced or suspended for a specific period of time. </li></ul><ul><li>In order to qualify, the borrower must show that they have the financial ability to make the repayment installments </li></ul>Forbearance Agreement (cont.)
  13. 13. Repayment Plan <ul><li>Is a temporary increase in monthly payments until the loan is brought current. </li></ul>
  14. 14. <ul><li>The lender calculates the additional payment required and determines the number of months needed to cure the delinquency </li></ul><ul><li>A down payment of between 25% and 50% will typically be required by the lender, in order to qualify for a repayment plan </li></ul>Repayment Plan (cont.)
  15. 15. LONG TERM WORKOUT OPTIONS
  16. 16. Loan Modification <ul><li>One or more terms of the loan may be permanently changed to bring the loan current. </li></ul>
  17. 17. A Loan Modification May Include: <ul><ul><ul><li>Extending the term of the loan </li></ul></ul></ul><ul><ul><ul><li>Adding the missed payment to the loan balance </li></ul></ul></ul><ul><ul><ul><li>Converting from ARM to fixed </li></ul></ul></ul><ul><ul><ul><li>Changing the interest rate </li></ul></ul></ul>
  18. 18. New Modification Programs <ul><ul><ul><li>New Programs </li></ul></ul></ul><ul><ul><ul><ul><ul><li>FHA Secure </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Help for Homeowners (H4H) </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>Settlements </li></ul></ul></ul></ul></ul><ul><ul><ul><li>Sources of Information </li></ul></ul></ul><ul><ul><ul><ul><ul><li>Housing Counseling Agencies </li></ul></ul></ul></ul></ul><ul><ul><ul><ul><ul><li>www.hud.gov </li></ul></ul></ul></ul></ul>
  19. 19. Re-financing With a New Lender <ul><li>Will require that you financially qualify, with: </li></ul><ul><li>Positive equity </li></ul><ul><li>Acceptable FICO score and debt to income ratio with backup documentation </li></ul><ul><li>New loan fees </li></ul>
  20. 20. Reverse Mortgage <ul><ul><li>Also known as a “HECM” </li></ul></ul><ul><ul><li>A loan against the equity in a home that provides tax-free cash advances </li></ul></ul><ul><ul><li>Seniors 62 and older can convert the equity in their home to cash, while retaining homeownership </li></ul></ul><ul><ul><li>No repayment is required while the homeowner lives in the home </li></ul></ul>
  21. 21. Pre-foreclosure Sale <ul><li>The lender may agree to allow the borrower a specific period of time to sell the home and save the accumulated equity. </li></ul>
  22. 22. Short Sale <ul><li>The borrower sells the property for less than the balance owed on the loan. </li></ul>
  23. 23. <ul><li>The lender agrees to accept the proceeds of the sales as a full settlement of the loan </li></ul><ul><li>The lender must approve the proposed sale amount </li></ul><ul><li>The borrower may face tax consequences </li></ul><ul><li>The lender may require the borrower to make a cash contribution or sign an interest-free promissory note for all or part of the shortage </li></ul>Short Sale (cont.)
  24. 24. Assumption <ul><li>The property is transferred to a new buyer who assumes the loan and takes responsibility for the mortgage. </li></ul><ul><ul><ul><li>The new buyer must meet lender’s credit requirements </li></ul></ul></ul><ul><ul><ul><li>The current homeowner should make sure the offer is genuine, and not an equity stripping scam </li></ul></ul></ul>
  25. 25. Deed-in-lieu of Foreclosure <ul><li>The borrower agrees to deed the property to the lender in exchange for a release from all mortgage obligations. </li></ul>
  26. 26. <ul><li>The property must be vacant at the time the deed is executed </li></ul><ul><li>No additional loans or liens on the property are typically allowed </li></ul><ul><li>The borrower may face income tax consequences </li></ul>Deed-in-lieu (cont.)
  27. 27. Bankruptcy <ul><li>Law requires pre-filing counseling </li></ul><ul><li>Homeowner should consult an attorney about the consequences </li></ul><ul><li>Usually worthwhile only if you have other debts to include </li></ul><ul><li>May not be a long-term solution to foreclosure </li></ul>
  28. 28. Be Proactive <ul><li>Consider your options </li></ul><ul><li>Discuss with your family </li></ul><ul><li>Be prepared to consider the components relevant to the decision </li></ul>
  29. 29. Borrowers Must Consider: <ul><li>Their ability to make future loan payments, along with other payments like taxes and insurance </li></ul><ul><li>The potential impact on their credit </li></ul><ul><li>The affect on their long term goals/needs </li></ul><ul><li>The importance of keeping the home – is it worth the stress and financial drain? </li></ul>
  30. 30. Borrower Should Consider: <ul><li>Eliminating unnecessary expenses or selling assets </li></ul><ul><li>Looking into additional sources of income </li></ul><ul><ul><li>Cashing in retirement accounts </li></ul></ul><ul><ul><li>Borrowing from family or friends </li></ul></ul><ul><li>Seeking legal advice – at the right stage </li></ul>
  31. 31. How Should You Approach a Workout? <ul><li>Contact your lender’s Loss Mitigation Department directly </li></ul><ul><li>or </li></ul><ul><li>Chose to have Project Sentinel or another HUD counseling agency contact the lender’s Loss Mitigation Department on your behalf </li></ul>
  32. 32. Regardless of who contacts the lender, you will need: <ul><li>Hardship Letter </li></ul><ul><li>Financial Statement </li></ul><ul><li>Current Pay Stub or other proof of income </li></ul><ul><li>Current Bank Statement </li></ul><ul><li>Most recent Tax Return </li></ul>
  33. 33. Project Sentinel Housing Counseling and Mediation Services <ul><li>1055 Sunnyvale-Saratoga Road Suite 3 </li></ul><ul><li>Sunnyvale, CA 94087 </li></ul><ul><li>(408)720-9888 </li></ul><ul><li>www.housing.org </li></ul>
  34. 34. Other Resources <ul><li>www.hud.gov : Lists other HUD counseling agencies and a wide range of information on foreclosure programs </li></ul><ul><li>www.fha.gov: Information on loans and links to Hope for Homeowners (H4H) </li></ul><ul><li>http://www.foreclosureinfoca.org : Public Interest Clearinghouse website which provides legal Information   </li></ul>
  35. 35. In Cases of Predatory Lending or Fraud <ul><li>Department of Fair Employment & Housing – 800-233-3212 </li></ul><ul><li>US Dept of Housing & Urban Development – 800-669-9777 </li></ul><ul><li>Fair Housing Law Project – 408-280-2435 </li></ul><ul><li>San Mateo or Santa Clara District Attorney, Real Estate Fraud Units – 650-363-4636 [SM]; 408-792-2639 [SC] </li></ul>
  36. 36. Conclusion <ul><li>Thank you for listening to our introductory presentation </li></ul><ul><li>For further information: </li></ul><ul><ul><ul><li>Contact Project Sentinel </li></ul></ul></ul><ul><ul><ul><li>Visit www.hud.gov </li></ul></ul></ul>

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