Project Sentinel HUD Housing Counseling Services Presents: Copyright  Project Sentinel

This Program Overview of the foreclosure process Short-term and long-term workout options Resources for more information and counseling help

Overview of the foreclosure process

Short-term and long-term workout options

Resources for more information and counseling help

DELINQUENCY

What to do when your payment is late: Contact your lender immediately New Requirements under SB 1137 Do not avoid phone calls or ignore correspondence Provide complete disclosure of the circumstances Maintain HO insurance and property taxes

Contact your lender immediately

New Requirements under SB 1137

Do not avoid phone calls or ignore correspondence

Provide complete disclosure of the circumstances

Maintain HO insurance and property taxes

Whatever you do: Do not make promises you can’t keep! Do not sign anything you do not understand!

Do not make promises you can’t keep!

Do not sign anything you do not understand!

Beware of Foreclosure Rescue Scams Offers to buy your house – equity skimming/stripping Phony counseling agencies that require upfront fees for promised modifications or credit repair

Offers to buy your house – equity skimming/stripping

Phony counseling agencies that require upfront fees for promised modifications or credit repair

DEFAULT

Formal Foreclosure Process Notice of Intent to Foreclose – After it’s filed, the homeowner has 30 days to negotiate alternative arrangements with the lender SB 1137 Requirements 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 Notice of Sale – Homeowner has a final 20 days to bring loan current or negotiate an agreement

Notice of Intent to Foreclose – After it’s filed, the homeowner has 30 days to negotiate alternative arrangements with the lender

SB 1137 Requirements

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

Notice of Sale – Homeowner has a final 20 days to bring loan current or negotiate an agreement

SHORT TERM WORKOUT OPTIONS

Reinstatement A lump sum payment of the amount owed, paid by a specific date your mortgage lender agrees to.

A lump sum payment of the amount owed, paid by a specific date your mortgage lender agrees to.

Forbearance Agreement A formal written repayment agreement between the borrower and the mortgage lender.

A formal written repayment agreement between the borrower and the mortgage lender.

Under the terms of a Forbearance Agreement, monthly payments are reduced or suspended for a specific period of time. In order to qualify, the borrower must show that they have the financial ability to make the repayment installments Forbearance Agreement (cont.)

Under the terms of a Forbearance Agreement, monthly payments are reduced or suspended for a specific period of time.

In order to qualify, the borrower must show that they have the financial ability to make the repayment installments

Repayment Plan Is a temporary increase in monthly payments until the loan is brought current.

Is a temporary increase in monthly payments until the loan is brought current.

The lender calculates the additional payment required and determines the number of months needed to cure the delinquency A down payment of between 25% and 50% will typically be required by the lender, in order to qualify for a repayment plan Repayment Plan (cont.)

The lender calculates the additional payment required and determines the number of months needed to cure the delinquency

A down payment of between 25% and 50% will typically be required by the lender, in order to qualify for a repayment plan

LONG TERM WORKOUT OPTIONS

Loan Modification One or more terms of the loan may be permanently changed to bring the loan current.

One or more terms of the loan may be permanently changed to bring the loan current.

A Loan Modification May Include: Extending the term of the loan Adding the missed payment to the loan balance Converting from ARM to fixed Changing the interest rate

Extending the term of the loan

Adding the missed payment to the loan balance

Converting from ARM to fixed

Changing the interest rate

New Modification Programs New Programs FHA Secure Help for Homeowners (H4H) Settlements Sources of Information Housing Counseling Agencies www.hud.gov

New Programs

FHA Secure

Help for Homeowners (H4H)

Settlements

Sources of Information

Housing Counseling Agencies

www.hud.gov

Re-financing With a New Lender Will require that you financially qualify, with: Positive equity Acceptable FICO score and debt to income ratio with backup documentation New loan fees

Will require that you financially qualify, with:

Positive equity

Acceptable FICO score and debt to income ratio with backup documentation

New loan fees

Reverse Mortgage Also known as a “HECM” A loan against the equity in a home that provides tax-free cash advances Seniors 62 and older can convert the equity in their home to cash, while retaining homeownership No repayment is required while the homeowner lives in the home

Also known as a “HECM”

A loan against the equity in a home that provides tax-free cash advances

Seniors 62 and older can convert the equity in their home to cash, while retaining homeownership

No repayment is required while the homeowner lives in the home

Pre-foreclosure Sale The lender may agree to allow the borrower a specific period of time to sell the home and save the accumulated equity.

The lender may agree to allow the borrower a specific period of time to sell the home and save the accumulated equity.

Short Sale The borrower sells the property for less than the balance owed on the loan.

The borrower sells the property for less than the balance owed on the loan.

The lender agrees to accept the proceeds of the sales as a full settlement of the loan The lender must approve the proposed sale amount The borrower may face tax consequences 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 Short Sale (cont.)

The lender agrees to accept the proceeds of the sales as a full settlement of the loan

The lender must approve the proposed sale amount

The borrower may face tax consequences

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

Assumption The property is transferred to a new buyer who assumes the loan and takes responsibility for the mortgage. The new buyer must meet lender’s credit requirements The current homeowner should make sure the offer is genuine, and not an equity stripping scam

The property is transferred to a new buyer who assumes the loan and takes responsibility for the mortgage.

The new buyer must meet lender’s credit requirements

The current homeowner should make sure the offer is genuine, and not an equity stripping scam

Deed-in-lieu of Foreclosure The borrower agrees to deed the property to the lender in exchange for a release from all mortgage obligations.

The borrower agrees to deed the property to the lender in exchange for a release from all mortgage obligations.

The property must be vacant at the time the deed is executed No additional loans or liens on the property are typically allowed The borrower may face income tax consequences Deed-in-lieu (cont.)

The property must be vacant at the time the deed is executed

No additional loans or liens on the property are typically allowed

The borrower may face income tax consequences

Bankruptcy Law requires pre-filing counseling Homeowner should consult an attorney about the consequences Usually worthwhile only if you have other debts to include May not be a long-term solution to foreclosure

Law requires pre-filing counseling

Homeowner should consult an attorney about the consequences

Usually worthwhile only if you have other debts to include

May not be a long-term solution to foreclosure

Be Proactive Consider your options Discuss with your family Be prepared to consider the components relevant to the decision

Consider your options

Discuss with your family

Be prepared to consider the components relevant to the decision

Borrowers Must Consider: Their ability to make future loan payments, along with other payments like taxes and insurance The potential impact on their credit The affect on their long term goals/needs The importance of keeping the home – is it worth the stress and financial drain?

Their ability to make future loan payments, along with other payments like taxes and insurance

The potential impact on their credit

The affect on their long term goals/needs

The importance of keeping the home – is it worth the stress and financial drain?

Borrower Should Consider: Eliminating unnecessary expenses or selling assets Looking into additional sources of income Cashing in retirement accounts Borrowing from family or friends Seeking legal advice – at the right stage

Eliminating unnecessary expenses or selling assets

Looking into additional sources of income

Cashing in retirement accounts

Borrowing from family or friends

Seeking legal advice – at the right stage

How Should You Approach a Workout? Contact your lender’s Loss Mitigation Department directly or Chose to have Project Sentinel or another HUD counseling agency contact the lender’s Loss Mitigation Department on your behalf

Contact your lender’s Loss Mitigation Department directly

or

Chose to have Project Sentinel or another HUD counseling agency contact the lender’s Loss Mitigation Department on your behalf

Regardless of who contacts the lender, you will need: Hardship Letter Financial Statement Current Pay Stub or other proof of income Current Bank Statement Most recent Tax Return

Hardship Letter

Financial Statement

Current Pay Stub or other proof of income

Current Bank Statement

Most recent Tax Return

Project Sentinel Housing Counseling and Mediation Services 1055 Sunnyvale-Saratoga Road Suite 3 Sunnyvale, CA 94087 (408)720-9888 www.housing.org

1055 Sunnyvale-Saratoga Road Suite 3

Sunnyvale, CA 94087

(408)720-9888

www.housing.org

Other Resources www.hud.gov : Lists other HUD counseling agencies and a wide range of information on foreclosure programs www.fha.gov: Information on loans and links to Hope for Homeowners (H4H) http://www.foreclosureinfoca.org : Public Interest Clearinghouse website which provides legal Information

www.hud.gov : Lists other HUD counseling agencies and a wide range of information on foreclosure programs

www.fha.gov: Information on loans and links to Hope for Homeowners (H4H)

http://www.foreclosureinfoca.org : Public Interest Clearinghouse website which provides legal Information

In Cases of Predatory Lending or Fraud Department of Fair Employment & Housing – 800-233-3212 US Dept of Housing & Urban Development – 800-669-9777 Fair Housing Law Project – 408-280-2435 San Mateo or Santa Clara District Attorney, Real Estate Fraud Units – 650-363-4636 [SM]; 408-792-2639 [SC]

Department of Fair Employment & Housing – 800-233-3212

US Dept of Housing & Urban Development – 800-669-9777

Fair Housing Law Project – 408-280-2435

San Mateo or Santa Clara District Attorney, Real Estate Fraud Units – 650-363-4636 [SM]; 408-792-2639 [SC]

Conclusion Thank you for listening to our introductory presentation For further information: Contact Project Sentinel Visit www.hud.gov

Thank you for listening to our introductory presentation

For further information:

Contact Project Sentinel

Visit www.hud.gov