Foreclosure alternatives


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Foreclosure alternatives

  1. 1. Option How Does the Option Work? Key BenefitsRepayment Plan Distributes your delinquent payments over a period of time, » Brings your account up to date usually no more than 10 months. A portion of the deferred within a specified time-frame. delinquent amount is added to the normal monthly » With a goal in sight, you can mortgage payment. move forward knowing that your mortgage loan is secure.Loan Modification A permanent change in one or more of the terms of the » Changes the mortgage note mortgage loan, allowing the loan to be reinstated to a itself, giving you a "fresh" start "current" status, and resulting in a more affordable monthly on managing your mortgage mortgage loan payment. Past due interest and escrow are loan. added to the new unpaid principal balance and re-amortized » Brings your account up to date over the remaining life of the loan. immediately once the loan modification is executed.Partial Claim A second mortgage, interest free, that is paid off at the time(only for FHA loans) » HUD loan is interest-free. when the homeowners loan is paid off. This option allows » Brings your account up to date up to 12 months of past due accrued mortgage payments to immediately. be included in the second mortgage. Available only on FHA loans.Fannie Mae A low interest rate loan provided by the first lien loanHomeSaver Advance™ » Brings your account up to date(FNMA Only) servicer to bring current a customers delinquent first lien immediately. loan. The loan repaid over a 15 year term, with payment » Second mortgage is secured and interest accrual deferral during the first 6 months after at a low interest rate. the advance. Available only on most Fannie Mae loans.Home Affordable Goal of HMP: Help the most at-risk borrowers in default andModification Program » Changes the mortgage note(HMP) those that are at risk of imminent default stay in their homes itself, giving you a "fresh" start through a modification process to establish an affordable on managing your mortgage monthly housing payment. The goal is to reach a monthly loan. housing payment (which includes capitalized past due » Brings your account up to date payments, principal, interest, taxes, insurance and immediately once the loan HOA/condo fees) that is no more than 31% of the modification is executed. borrower(s) total monthly gross household income. How HMP Works: Participating servicers and investors will work with eligible qualified borrowers to reach a more affordable mortgage payment through extending the term of the loan, lowering the interest rate, capitalizing delinquent mortgage payments, and/or forbearing principal. All outstanding late fees are waived. Eligible Borrowers: Borrowers that are past due on first mortgage or are in imminent default, can be in foreclosure, own and occupy the property, and the property
  2. 2. is a single family residence (1 -4 unit property, one unit ofwhich is the borrower’s principle residence). Cooperativeshare mortgages and mortgage loans secured bycondominiums and manufactured homes are eligible forHMP. First mortgages are only eligible for this program. Theprogram will sunset on December 31, 2012, and firstmortgage loans must have been originated prior to January1, 2009. Borrower(s) may only modify one (1) time underthe HMP program. First Mortgage Loan Limits: First lienmortgage loans must have an unpaid principle balance(prior to capitalization for arrearages) equal to or less thanthe following: • 1 unit property will be $729,750 regardless of property location • 2 units: $934,200 regardless of property location • 3 units: $1,129,250 regardless of property location • 4 units: $1,403,400 regardless of property locationLTV: N/A to HMP qualification process. Mandatory Escrow:Escrows for real estate taxes and homeowners’ insurancemust be set up under this program if they are not currentlyescrowed. Required Documentation for QualificationReview: A signed hardship statement, verification ofmonthly gross household income (2 most recent pay stubs,most recent tax return, and signed IRS form 4506-T), andexpense documentation as needed. 3 - 4 Month TrialModification Requirement: For modification to be complete,if borrower is delinquent prior to modification, they mustmake 3 payments within 90 days at the new modifiedpayment level and be current at day 90. If the borrower iscurrent at the time of modification, the borrower must make4 payments within 120 days at the new modified paymentlevel and be current at 120 days. Borrower Incentive:Borrower(s) are eligible to receivePay-for-Performance Success that goes towards reducingprincipal of $1,000 each year for (5) five years if they staycurrent on their mortgage loan. Counseling Requirement: Ifthe borrower has a back-end ratio (borrower total monthlydebt ratio) equal to or greater than 55%, HUD approvedhousing counseling is required. Servicers are required tosend a letter to applicable borrowers regarding the
  3. 3. counseling requirement. The borrower must acknowledge in writing that s(he) will obtain such counseling at HUD- approved housing counseling agencies. Borrowers can receive free counseling by calling the Homeowners HOPE Hotline™, 888-995-HOPE™ or visit to find a housing counselor in their area. For more information about the Home Affordable Modification Program, please visit Note: The Streamlined Modification Program (SMP) and the Early Workout™ Program expired in March 2009.Short Sale Allows you to sell your home and use the proceeds to pay » Avoids the lengthy legal off the mortgage if you are unable to maintain payments, process involved in even if the homes market value is less than the total foreclosure. amount owed. » Typically less damaging to your credit rating than foreclosure.Deed in Lieu Allows you to voluntarily transfer legal ownership of yourof Foreclosure » Avoids the lengthy legal property to your investor if you are unable to maintain process involved in mortgage payments and cannot sell the home at current foreclosure. market value. » May be less damaging to your credit rating than foreclosure.This information obtained from Hope Now. 888-995-HOPE™ KerryAnn Douglas, ABR, CDPE RE/MAX Realty 100 414-525-2981