Foreclosure Prevention Course


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This course will help you learn:
You will know what to do if your mortgage becomes delinquent or if you are facing foreclosure
You will know the options that are available to you
Get involved…take action

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  • This course is designed to help you avoid foreclosure and keep your home if you run into trouble. If it is your intention to stay in your home, this is the right course for you.
  • Please be aware that Springboard does not provide legal or tax advice. This program does not provide legal , tax or accounting advice . Consult a qualified attorney or certified accounting professional if you need legal or tax advice.
  • Springboard is a 501(c)3 nonprofit organization that has helped thousands of consumers pay off their debts, achieve and preserve homeownership, and become better educated about their personal finances.
  • Our housing counseling services are approved by the US Department of Housing and Urban Development, and we are a proud partner in the Homeownership Preservation Foundation.
  • This course will teach you about the options available to you if you are delinquent in your mortgage. We ’ll show you how to take action to avoid foreclosure and keep your home.
  • Unfortunately, many homeowners still don ’t know that they can contact their lender or a certified housing counselor for help if they are facing foreclosure. The sooner one reaches out for help the easier it is for a housing counselor to help find a workable solution to avoid losing their home.
  • Some people don ’t reach out for help because they are ashamed or don’t understand how serious the problem is. These days, with millions of people facing financial difficulties and foreclosure on the rise, there is no shame in asking for help. Know that you are not alone if you are facing a financial hardship that threaten your home. We’re doing our part to spread awareness of the options available to help individuals and families facing foreclosure. The government has also responded by creating programs to address the housing crisis.
  • There are many reasons for foreclosure, including sudden illness, unemployment, or divorce. Whatever the reasons for a homeowner ’s financial difficulties, housing counselors never pass judgment or assess blame; they only want to help, and the earlier a homeowner seeks their assistance, the better.
  • Foreclosure prevention counseling from a HUD-certified housing counselor is free of charge, so there ’s no reason to wait. Act right away if you think you might have problems paying your mortgage now or in the future.
  • Before you start to find a workable solution to your problem, you have to understand your situation. We ’ll talk about some of the terminology involved in the foreclosure process; remember, a housing counselor is available to you free of charge if you have any confusion.
  • Foreclosure means your home will be repossessed by your lender. The lender will then be able to auction off the house to pay for the mortgage. Before they can foreclose, your lender must send letters notifying you of your default, and of their intent to foreclose. A notice of sale establishes the date that the foreclosure sale will take place.
  • Some of the parties involved in the foreclosure process include the servicer, investor, and insurer. The lender ’s loss mitigation department will work to avoid financial losses on behalf of the lender, and this may include avoiding foreclosure if another solution can be found.
  • A housing counselor can help you understand all of the relevant terminology as they prepare to negotiate with you and your mortgage lender. Other terms you should familiarize yourself with are collections, delinquency, and hardships.
  • The timeline for foreclosure proceedings varies by state, but generally, if you go 90 days without making a payment or seeking counseling, your loan will be referred to foreclosure. A housing counselor can tell you more specifically what your timeline would be, depending on local laws. Get help as soon as possible and you ’ll have more options to remedy your situation.
  • Start by doing some quick budgeting. Figure out how much money you ’d need to be able to make your mortgage payment successfully. Make sure your calculations are accurate, because you’ll be using these numbers to propose a future payment plan or other workout with your lender.
  • You won ’t be able to come up with a solution to your situation if you cannot create a budget that allows you to meet all of your financial obligations going forward. Consider increasing your income with a second job, part-time employment, adding work hours, or have a family member contribute to the income pool. Be realistic with what you can and can ’ t do.
  • Talk to your lender and be honest with them. They might be able to make an adjustment to your mortgage agreement that allows you to make your payments going forward. Remember when communicating with your lender to never make promises you cannot keep.
  • Consider the full range of options available to you; these options will vary depending on how early you seek help, how much you owe on your mortgage, and your specific financial situation.
  • Commit to the course of action you take to save your home. If the situation changes, react quickly to come up with a different plan for success. It ’s important to keep your homeowners’ insurance policy paid up, and if it’s clear that you won’t be able to save your home, act quickly to sell it or surrender it to your lender before it enters foreclosure.
  • Always respond when your lender reaches out to you. The best people to talk to are in the Loss Mitigation Department. They ’re used to dealing with borrowers in your situation. Keep detailed records of every communication you have with your mortgage lender, whether that communication is in writing or over the phone..
  • Be prepared to explain your situation and provide your lender with your financial information, such as your monthly income and expenses. Without this information, they may not be able to help. Stay in your home during the process -- you may not qualify for assistance if you “ walk-away ” from your property. If you choose to rent out your home, it will change it from a primary residence to an investment property. This will most likely disqualify you for any additional “ workout ” assistance from the lender, so be sure that the rental income is enough to help you get your loan current and keep it that way.
  • Sadly, there are scam artists who take advantage of homeowners facing foreclosure.
  • A first step toward avoiding scams is to “opt out” of unwanted credit offers and put your phone number on the national Do Not Call list.
  • HUD-certified housing counselors help you when you reach out to them . Beware of anyone who comes to you offering to help; they could be a scam artist who found out about your foreclosure from public records. Never surrender the title to your home to a third party; always talk to a HUD-certified counselor from a HUD-approved housing counseling agency before agreeing to any plan to avoid foreclosure.
  • Any documents you are asked to sign should be thoroughly read and fully understood. Ask to show the documents to your housing counselor before you sign. Sometimes a scammer will appear to lend you the money you ’re delinquent, but they’re really purchasing the home for that amount. If you are careless, you might end up signing away your property to a scam artist.
  • To protect yourself from scams, consult your lender and a housing counselor. They won ’t let you sign away your rights if you involve them in your mortgage workout.
  • Don ’t assume that your lender is against you; they want to avoid foreclosure as much as you do, because they lose an average of forty to fifty thousand dollars when they foreclose. Contact them as early as possible—even before you miss a mortgage payment—and they will be grateful that you let them help you avoid foreclosure.
  • Some shady negotiators tell borrowers to deliberately miss payments to make the mortgage negotiation easier. The fact is, you hurt your negotiating position if you make yourself appear to be worse off than you are. If you can set aside some money to put toward your delinquent mortgage, your lender will understand that you are serious about finding a solution to your situation, and they ’ll be more likely to help you.
  • When you contact a HUD-approved housing counseling agency, you ’ll be able to speak to a qualified counselor who will work directly with you. They will help you review your budget and create an action plan to keep your home, and will even work with you and your lender if necessary. Beware of any housing counselor who tries to charge you a fee for foreclosure prevention assistance. HUD-approved housing counseling of this type should always be available to you free of charge.
  • Your housing counselor can talk with you about what kind of mortgage you have, and help you document the reasons you fell behind on your mortgage. This information will be needed by your lender before you can come up with a solution.
  • Talk with a counselor about the causes of your situation, and be honest. The solutions your counselor will propose will change depending on what your situation is. Remember, this process isn ’t about assessing blame or passing judgment. Your counselor needs to know this information so they can help you come up with the best possible solution for you.
  • While there are many different reasons a borrower defaults on mortgage payments, the important thing is that you made a commitment to saving your home when you reached out for counseling.
  • Welcome to lesson 2 of our Foreclosure Prevention and Preserving Homeownership course. In the first course, we talked about different causes for loan defaults and the importance of reaching out for help as soon as possible. In this second part, we ’re going to talk about some of the solutions available to you. There are many solutions that may help you avoid foreclosure, and this course is not all-inclusive. Programs may change over time, and new programs are offered throughout the year. We recommend contacting a HUD-approved housing counseling agency such as Springboard for more information on current government and lender sponsored programs.
  • Some options for saving your home include loan modification, forbearance plans, and other programs that may be offered by your lender or government agencies.
  • Before you can figure out which possible solution would be best for you, you should begin to create a hardship statement. This statement explains your financial circumstances. A housing counselor can help you write an effective statement or letter. You’ll need to be prepared to share all of your personal financial information with your lender if you expect them to help you. The point of the hardship letter isn’t to point the finger or be defensive. Simply be honest about your situation, how you fell behind, and how you expect to be able to catch up, possibly with the lender’s assistance. Keep the letter itself brief and to the point; lenders are dealing with thousands of homeowners in similar situations, so an overly long hardship letter is not necessary and may hurt your chances of achieving a successful workout. Other documentation to have ready are paystubs, tax returns, bank statements, a breakdown of your debts and obligations, and a list of your assets.
  • One possible solution to foreclosure is a loan modification. Your lender will agree to change the terms of the original mortgage, which may include reducing your interest rate or principal owed, extending the length of your payment period, and adjusting the amount you owe to include any missed payments. You might find the assistance of a housing counselor helpful when going through the loan modification process, and a good counselor will be able to give you a idea in advance if you are a good candidate for a loan modification.
  • Your hardship letter should not only include an explanation of your circumstances, but also discuss how you plan to remedy the situation going forward. You need to demonstrate that you understand your situation and are prepared to avoid falling into similar circumstances in the future. Talk about changes you ’ve made to your finances that will make it possible for you to make your new loan payments.
  • A different option is a Special forbearance, where your lender will agree to suspend or reduce your payments for a set amount of time, after which you ’ll resume regular monthly payments. You may have to make extra payments to make up for the ones you missed, or your loan term may be extended. The specific terms of the forbearance will be made clear to you.
  • When creating a repayment plan with your lender, you will most likely have to make extra payments in order to make up any delinquent amounts you still owe. Different lenders offer different solutions, so work with a nonprofit housing counselor to find out what options are available to you.
  • If you are able to refinance your mortgage, you may be able to pay off your delinquent amount and even get lower monthly payments with a lower interest rate. There may be fees and closing costs associated with a mortgage refinance, and if your home ’s value has declined, you may lose some equity. Before agreeing to any refi that is designed to help you avoid foreclosure, be sure to discuss the situation fully with someone at a HUD-approved housing counseling agency.
  • Private lenders may also have a solution for you. For loans or homeowners not eligible for HASP/HAMP there may be in-house proprietary modifications. These modifications often reflect standards developed in the HASP/HAMP program.
  • The government offers various mortgage recovery and homeownership programs, but these change frequently and have very specific conditions for eligibility. Mortgage lenders also have their own plans and programs, and these vary from lender to lender. A housing counselor can help you determine which programs you qualify for. Visit to learn more about the programs that are currently available.
  • In some cases, saving the home may not be possible. A housing counselor can still help you in this situation, though, since there are ways to give up your property that are less damaging to your personal finances and your credit.
  • A pre-foreclosure or short sale might help you divest yourself of the property before the foreclosure happens. A short sale involves selling your house for less than what it is worth, so your lender must approve of any short sale in advance. There may be legal or tax implications from short sales that should be discussed with your tax or legal adviser before proceeding with a short sale.
  • A deed-in-lieu of foreclosure is a last resort where you sign the property over to your lender before it is foreclosed on. You usually have to try to sell your home for 90 days before your lender will consider this option. This is slightly less harmful to your credit rating than a “ foreclosure ” , but it does result in a negative mark on the credit report as do any late or missed mortgage payments.
  • Another last resort for saving your home is a bankruptcy filing. You can exclude your home from the bankruptcy while wiping out other debts. The income you free up can then be used to make your full mortgage payments. You ’ll need to seek out qualified legal services before proceeding with bankruptcy. If all other options fail, you may find yourself evicted from your property after the foreclosure sale. If you had an FHA loan, ask about the “cash for keys” program, which could provide you with some funds that can help you get into another place to live. This type of program may also be available from private lenders, so contact your lender for more information.
  • We hope that you enjoyed this course, and we invite you to try our other courses. Springboard is a partner in the homeownership preservation foundation, and is a HUD-approved regional intermediary agency. Visit our web site for more information.
  • We have housing counselors standing by to help anyone who has questions about their mortgage situation.
  • Foreclosure Prevention Course

    1. 1. Preserving Homeownership Through Foreclosure Prevention Provided by Springboard and
    2. 2. Legal Disclosure <ul><li>This course is not intended to provide legal, tax, or financial advice or opinions and should not be treated as such </li></ul><ul><li>This course is for general informational purposes only and applies to homeowner-occupied residential property </li></ul>
    3. 3. About Us <ul><li>Certified by the U.S. Department of Housing and Urban Development (HUD) as a comprehensive housing counseling agency </li></ul><ul><li>Homeownership Preservation Foundation (HPF) partner </li></ul><ul><li>Housing Opportunity Collaborative (HOC) partner </li></ul><ul><li>Accredited by the Council on Accreditation (COA) </li></ul><ul><li>National Foundation for Credit Counseling (NFCC) member </li></ul><ul><li>Pre-bankruptcy counseling & debtor education per BAPCPA </li></ul><ul><li> </li></ul><ul><li>(800) 896-0030 </li></ul><ul><li>Springboard is a non-profit agency formed in 1974 by business leaders and credit grantors. </li></ul><ul><li>Our mission is simple, yet vital: Our people improve the lives and financial well-being of individuals and families by providing quality financial education and counseling. </li></ul>
    4. 4. Springboard and Partners <ul><li>Springboard is one of the nonprofit agency partners of the Homeownership Preservation Foundation (HPF), providing foreclosure prevention counseling to homeowners . </li></ul>
    5. 5. Purpose and Goals <ul><li>You will know what to do if your mortgage becomes delinquent or if you are facing foreclosure </li></ul><ul><li>You will know the options that are available to you </li></ul><ul><li>Get involved…take action </li></ul>
    6. 6. Early Intervention is Key <ul><li>2005 Freddie Mac / Roper study indicates over 50% the borrowers in foreclosure proceedings did not return contact from their lender </li></ul><ul><li>Of those 61% were unaware of the variety of workout options that could help them overcome short-term financial difficulties </li></ul><ul><li>Of those 92% said they would have talked to their servicers had they known these options were available to them </li></ul>
    7. 7. Early Intervention is Key <ul><li>Many people lose their homes because they are too </li></ul><ul><li>ashamed or fearful to act, or are in denial about the </li></ul><ul><li>seriousness of the problem </li></ul>
    8. 8. Life ’ s Challenges… <ul><li>Divorce </li></ul><ul><li>Life Changing Events </li></ul><ul><li>Bills </li></ul><ul><li>Adjustable Rate Mortgage (ARM) Reset </li></ul><ul><li>Job Loss </li></ul><ul><li>Illness </li></ul><ul><li>Self-Awareness </li></ul><ul><li>Admit there is a problem </li></ul><ul><li>Define the scope of the problem </li></ul><ul><li>Be realistic about your ability and willingness to resolve the problem </li></ul><ul><li>Find a workable solution </li></ul>
    9. 9. Early Intervention is Key <ul><li>Not being able to make your home payment is scary </li></ul><ul><li>However, approaching the problem quickly and knowledgeably, you may be able to turn a negative situation into a positive one </li></ul>
    10. 10. Self – Awareness <ul><li>Admit there is a problem </li></ul><ul><li>Define the scope of the problem </li></ul><ul><li>Be realistic about your ability and willingness to resolve the problem </li></ul><ul><li>Find a workable solution </li></ul>(Acknowledgment: adapted from HOPENOW Alliance)
    11. 11. Define terminology <ul><li>Foreclosure: is the legal action and repossession of your home by your lender. You will lose your property and any equity you had. The property is sold by your lender to pay off a mortgage in default </li></ul><ul><li>Notice of default (NOD) / Notice of intent (NOI): are demand letters that notify the need to bring your mortgage current to stop a foreclosure. This letter may be referred to as a breach letter or demand letter. This notice is recorded after the default, or multiple missed loan payments outlining the mortgage servicers plan to begin the foreclosure process </li></ul><ul><li>Notice of Sale (NOS): This establishes the foreclosure sale date </li></ul>
    12. 12. More terminology … <ul><li>Servicer: responsible for customer service, processing payments, and working with delinquent customers </li></ul><ul><li>Investor: the owner of the loan </li></ul><ul><li>Insurer: insures the lender/investor in case the loan becomes delinquent </li></ul><ul><li>Loss Mitigation: working with the homeowner to find a permanent solution to resolve the delinquency and mitigate the loss </li></ul>
    13. 13. More terminology … <ul><li>Collections: the process of contacting you for and receiving delinquent amounts which are owed </li></ul><ul><li>Delinquency: failing to make your payment timely to avoid payment being received on or after the due date </li></ul><ul><li>Hardships: circumstances often beyond your control which have temporarily or permanently rendered you unable to meet mortgage obligations </li></ul>
    14. 14. Possible Delinquency Cycle Days <ul><li>Timelines vary by your lender, your state ’s laws, and regulations </li></ul><ul><li>More options may be available when you ask for assistance early ! </li></ul>(Acknowledgment: adapted from HOPENOW Alliance) Current on Due Date 30 Days 60 Days 90+ Days Refer to Foreclosure Collections Loss Mitigation
    15. 15. <ul><li>Step 1: Know your shortfall </li></ul><ul><li>Identify how close or far you are from being able to meet your mortgage payment </li></ul><ul><li>Subtract the total of your monthly expenses from your monthly income – the final number represents the amount of money you ’ ll need to make-up so you can pay your mortgage as agreed </li></ul><ul><li>Accuracy is key avoid overestimating income or undercounting expenses </li></ul>Acknowledgment: Adapted from CCCS of San Francisco Five-Step Assessment
    16. 16. <ul><li>Step 2: Explore changes to your budget </li></ul><ul><li>Identify ways to close the deficit </li></ul><ul><li>Carefully review your expenses and pinpoint areas where you can cut down to free up cash </li></ul><ul><li>Are you able to sell some assets to meet next month ’ s shortfall or live frugally for a couple of weeks, but what about after that? </li></ul>Five-Step Assessment Acknowledgment: Adapted from CCCS of San Francisco
    17. 17. <ul><li>Step 3: Contact your lender </li></ul><ul><li>If you are unable to make your normal mortgage payment on a regular basis by adjusting your cash flow, contact your lender </li></ul><ul><li>Be ready to discuss your financial situation in detail </li></ul><ul><li>When speaking with your lender, be honest and clear about your desires and abilities </li></ul>Five-Step Assessment Acknowledgment: Adapted from CCCS of San Francisco
    18. 18. <ul><li>Step 4: Be open to options </li></ul><ul><li>You and your lender will discuss ways you may keep the home, which may include modifying the terms of the existing loan, making lower or no payments for a period of time, or refinancing the loan </li></ul><ul><li>None of those solutions work? Consider selling the home or deeding it back to the lender. If it is worth less than the loan balance, you may be able to sell it for its current market value </li></ul><ul><li>Ask about the benefits and drawbacks of each option before making a decision </li></ul>Five-Step Assessment Acknowledgment: Adapted from CCCS of San Francisco
    19. 19. <ul><li>Step 5: Know your shortfall </li></ul><ul><li>Whatever you decide, don’ t wait with what you need to do. For example, if you gave your word that you will be back on track in three months by getting a second job, make sure you do so </li></ul><ul><li>If you know that it will be impossible to afford your mortgage payment, find another living situation now and put the home up for sale or deed it back to the lender before the foreclosure process begins </li></ul><ul><li>Delaying action wastes precious time and money </li></ul><ul><li>Don’ t let homeowner insurance coverage lapse – take action </li></ul><ul><li>Contact your insurance agent to see if coverage can be reduced or if payment plans are available </li></ul><ul><li>Advise your mortgage servicer they need to impose coverage </li></ul>Five-Step Assessment Acknowledgment: Adapted from CCCS of San Francisco
    20. 20. When You Are Delinquent <ul><li>Do not ignore the communications from your lender / loan servicer </li></ul><ul><li>If you are having problems making your payments, call or write to your lender's Loss Mitigation Department without delay. Keep a folder with detailed notes of your communications (date, time, names, ph/ext#) and copies of all correspondence received and documents you mail. Send certified mail/return receipt requested </li></ul>
    21. 21. When You Are Delinquent <ul><li>Be prepared to explain your situation and provide your lender with your financial information, without this information, they may not be able to help </li></ul><ul><li>Stay in your home during the process -- you may not qualify for assistance if you “ walk-away ” from your property </li></ul><ul><li>Be wary of foreclosure rescue scam artists that claim to be helping you save your home </li></ul>
    22. 22. Beware of Foreclosure Rescue Scams Acknowledgment: Adapted from HOPENOW Alliance
    23. 23. Prevent Unwanted Credit offers and Unwanted Phone Solicitations <ul><li>Sign up for the national Do Not Call list </li></ul><ul><li>1-888-382-1222 </li></ul><ul><li>Call 1-888-5 OPT OUT or online: </li></ul>
    24. 24. Common Scam Types <ul><li>Phantom Help – NOD and foreclosure filings are public record. Therefore, be suspect of new “ acquaintances ” or “ rescuers ” that may arrive to “ help ” you </li></ul><ul><li>Bailout – includes various schemes where homeowners surrender their title to the house “ thinking ” they will be able to remain as renters and buy the house back </li></ul>
    25. 25. More Common Scam Types <ul><li>Bait and Switch – homeowners think they are signing documents for a new loan to make the mortgage current, but sign away the home and are left holding the mortgage on a home they no longer own </li></ul><ul><li>Equity Stripping – a buyer purchases the home for the amount of the arrearage and flips the home for a quick profit </li></ul>
    26. 26. Protect yourself from scams <ul><li>Don ’ t panic </li></ul><ul><li>Talk to your lender </li></ul><ul><li>Find out the rules in your state – how much time do you have </li></ul><ul><li>Never sign a contract under pressure </li></ul><ul><li>Never sign away ownership of your property </li></ul><ul><li>Don ’ t make payments to anyone other than your lender </li></ul><ul><li>Beware of a home-sale contract where you aren ’ t formally released from your mortgage </li></ul><ul><li>Don ’ t sign anything with blank lines or spaces </li></ul><ul><li>If you don ’ t speak English, and a translator is needed, bring your own translator also </li></ul><ul><li>Beware of those offering to pay your arrearage and take the house off of your hands (equity stripping) </li></ul>
    27. 27. Mortgage Myths <ul><li>Myth – Mortgage companies make money by foreclosing on properties </li></ul><ul><li>Fact – Legitimate mortgage lenders prefer to receive your loan </li></ul><ul><li>payments, and will foreclose only as a last resort. The average </li></ul><ul><li>foreclosure sale results in a $40,000 - $50,000 loss to the investor </li></ul><ul><li>Myth – A mortgage must be delinquent before assistance can be </li></ul><ul><li>Provided </li></ul><ul><li>Fact – Options are available to borrowers who are anticipating a </li></ul><ul><li>hardship, contacting the servicer as early as possible is the key </li></ul>
    28. 28. Mortgage Myths <ul><li>Myth – The worse a borrower ’ s financial picture appears, the more likely they are to receive assistance from the mortgage company </li></ul><ul><li>Fact – A borrower must be able to demonstrate long term ability to afford the mortgage payment, along with their other obligations, to receive assistance in keeping the home </li></ul><ul><li>Myth – Since I am unable to make up the full mortgage </li></ul><ul><li>payment(s) I missed -- it ’ s okay to spend the money elsewhere </li></ul><ul><li>Fact – It ’ s important to maintain those funds as your lender may require you to place an amount towards your arrearage as part of your “ work out ” </li></ul>
    29. 29. How Can Foreclosure Prevention Counseling Help Consumers? <ul><li>HUD approved housing counseling agencies have counselors that provide one on one counseling to the borrower, taking into consideration individual personal financial situations </li></ul><ul><li>Counseling provides you with a budgetary review and action plan and may include working with both you and your lender to review options and work out a solution </li></ul><ul><li>The most important decision you can make is deciding if you want to keep your home </li></ul>
    30. 30. Mortgage Default <ul><li>Clients who are in default need to find out what type of mortgage they have: FHA, VA, or conventional mortgage </li></ul><ul><li>Identify what has happened to cause you to miss your mortgage payment(s). I.E. Increase in payment amount for Adjustable Rate Mortgage? Events beyond your control (spouse illness/job loss)? Lenders will want documented evidence </li></ul>
    31. 31. Reasons for Default <ul><li>Increase in payment amount for Adjustable Rate Mortgage (ARMs) </li></ul><ul><li>Layoff: With termination notice as documentation </li></ul><ul><li>Involuntary Termination: Non-criminal </li></ul><ul><li>Salary Reduction: In lieu of being laid-off off or receiving a demotion </li></ul><ul><li>Medical Expenses or Illness: Costs beyond insurance, can ’ t work </li></ul><ul><li>Death: Income lost, burial expenses </li></ul><ul><li>Employment relocation </li></ul>
    32. 32. More Reasons for Default <ul><li>Temporary Loss of Wages: Lost part-time job, garnishment </li></ul><ul><li>Workers Compensation Claim: Loss of full income, disability </li></ul><ul><li>Necessary Repairs to Property: Essential only, leaks, damages </li></ul><ul><li>Divorce/Separation: Reduction of income when one spouse moves </li></ul><ul><li>Temporary loss of Spousal or Child Support: Former Spouse lost job </li></ul>
    33. 33. What Are Your Options?
    34. 34. Options For Keeping Your Home <ul><li>Loan Modification </li></ul><ul><li>Special Forbearance Plan </li></ul><ul><li>Government and Private Lender Programs </li></ul><ul><li>Other Programs </li></ul>
    35. 35. Lender – Required Documentation <ul><li>Letter or statement explaining your circumstances </li></ul><ul><li>Disclosure of financial information: </li></ul><ul><ul><li>Pay stubs </li></ul></ul><ul><ul><li>Tax returns and W-2 forms </li></ul></ul><ul><ul><li>Bank Statements </li></ul></ul><ul><ul><li>Debts and obligations </li></ul></ul><ul><ul><li>Assets </li></ul></ul><ul><ul><li>Other Documentation as requested </li></ul></ul>
    36. 36. Loan Modification <ul><li>Involves modifying one or more of the loan terms. </li></ul><ul><li>Loan modification is also referred to as a workout or restructure . </li></ul><ul><li>Involves changing one or more terms of the original </li></ul><ul><li>mortgage agreement, usually: </li></ul><ul><li>Delinquent payments and other costs may be added to the loan balance </li></ul><ul><li>Reducing the interest rate, or reducing the principal portion of the payment </li></ul><ul><li>Extending the repayment period by adding the number of years you have repay the loan may result in a lower payment amount </li></ul>
    37. 37. More on Loan Modification: <ul><li>When requesting a loan modification you will be required to provide financial documentation along with a hardship letter stating the cause of your short-term financial difficulties and how those circumstances have now changed, such as a new form of income, etc </li></ul>
    38. 38. Special Forbearance <ul><li>A formal written signed agreement with your lender under which your mortgage payments are reduced or suspended for an agreed upon period of time. </li></ul><ul><li>At the end of that period, you resume regular monthly payments, and bring the loan current through a lump sum payment or additional partial payments over a number of necessary months (unless the loan has been modified to make this unnecessary) </li></ul>
    39. 39. Repayment Plan <ul><li>Regular monthly payments plus additional amounts as agreed </li></ul><ul><li>Payments are made until the loan is current </li></ul><ul><li>Programs will vary by lender </li></ul>
    40. 40. Refinancing: <ul><li>Refinancing : may help you keep your home </li></ul><ul><li>There are various fees and closing costs, and your home may have lost value </li></ul><ul><li>You may want to participate in a homebuyer education course by a HUD-approved housing counseling agency </li></ul>
    41. 41. Proprietary Modifications <ul><li>For loans or homeowners not eligible for HASP/HAMP there may be in-house proprietary modifications. </li></ul><ul><li>These modifications often reflect standards developed in the HASP/HAMP program. </li></ul>
    42. 42. Other options: <ul><li>Government plans: </li></ul><ul><ul><li>Frequently change due to new legislation and budget changes </li></ul></ul><ul><ul><li>Have various terms and conditions that must be met to qualify </li></ul></ul><ul><li>Lender programs: </li></ul><ul><ul><li>Each lender offers different programs </li></ul></ul><ul><ul><li>A HUD-approved housing counselor will have some idea what your lender may offer </li></ul></ul><ul><li>Visit for all the latest </li></ul>
    43. 43. Homeowners who are experiencing long-term delinquency may need to consider the following: Not Keeping Your Home What Options Do You Have? Acknowledgment: Adapted from HOPENOW Alliance
    44. 44. Pre-Foreclosure or Short Sale <ul><li>Sale of the property at fair market value </li></ul><ul><li>Lender-approved pre-foreclosure sale, short payoff or short sale : selling the house, sometimes for less than what it may be worth, in order to satisfy the bulk of the mortgage. Lender agrees to accept the proceeds of the sale even though it is less than the full payoff amount in order to avoid foreclosure </li></ul><ul><li>A qualified buyer may be permitted an assumption of your loan, even if your original loan documents state otherwise. You must communicate with your lender/servicer on their requirements for these options </li></ul>
    45. 45. More Alternatives to Foreclosure <ul><li>Deed-In-Lieu of Foreclosure: As a last resort you may be able to arrange a voluntary surrender of your property to your lender/servicer </li></ul><ul><li>The lender must agree that the homeowner can voluntarily sign the deed over to the lender to avoid the foreclosure process </li></ul><ul><li>The Homeowner is required to vacate the property at the time the documents are signed or other negotiated date </li></ul>
    46. 46. Foreclosure <ul><li>Chapter 13 bankruptcy: If you and your lender cannot agree on a feasible repayment plan or other remedy, and you want to help save your home, you may want to review this remedy. Bankruptcy is a last-resort and a public record entry and it will damage your credit rating </li></ul><ul><li>Foreclosure: A legal process in which the homeowner is evicted from the property and the lender/servicer arranges for the home to be sold to pay the loan of the defaulting borrower. Foreclosure rules vary according to your state ’ s laws. Foreclosure is public record entry on your credit report. </li></ul>
    47. 47. Resources: <ul><li>1-888-995-HOPE (4673) </li></ul><ul><li> </li></ul><ul><li>Contact a HUD approved counseling agency, the toll-free number is 1-800-569-4287 or </li></ul><ul><li>User friendly mortgage calculator to compare fixed rate mortgage </li></ul><ul><li>with an adjustable rate mortgage and compare offers. </li></ul><ul><li> Also, includes a mortgage shopping </li></ul><ul><li>worksheet to compare price and terms (that may be negotiable) to </li></ul><ul><li>help you get the best financing. </li></ul><ul><li>Free publications from Springboard to download: </li></ul><ul><li> , select Resource Center, or call (800) 896-0030 </li></ul>
    48. 48. Thank You <ul><li>Springboard Nonprofit Consumer </li></ul><ul><li>Credit Management </li></ul><ul><li> </li></ul><ul><li>(800) 896-0030 </li></ul>4351 Latham St. Riverside CA. 92501