This document summarizes several options for homeowners who are behind on their mortgage payments or at risk of default. It describes repayment plans, loan modifications, partial claims, advances, the Home Affordable Modification Program, short sales, and deeds in lieu of foreclosure. The key benefits are that these options can bring the account up to date, provide a fresh start, and avoid the damaging effects of foreclosure in some cases.

1. Option How Does the Option Work? Key Benefits
Repayment 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 homeowner's 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 loan
HomeSaver Advance™ » Brings your account up to date
(FNMA Only) servicer to bring current a customer's 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 and
Modification 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. is a single family residence (1 -4 unit property, one unit of
which is the borrower’s principle residence). Cooperative
share mortgages and mortgage loans secured by
condominiums and manufactured homes are eligible for
HMP. First mortgages are only eligible for this program. The
program will sunset on December 31, 2012, and first
mortgage loans must have been originated prior to January
1, 2009. Borrower(s) may only modify one (1) time under
the HMP program. First Mortgage Loan Limits: First lien
mortgage loans must have an unpaid principle balance
(prior to capitalization for arrearages) equal to or less than
the 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 location
LTV: N/A to HMP qualification process. Mandatory Escrow:
Escrows for real estate taxes and homeowners’ insurance
must be set up under this program if they are not currently
escrowed. Required Documentation for Qualification
Review: A signed hardship statement, verification of
monthly gross household income (2 most recent pay stubs,
most recent tax return, and signed IRS form 4506-T), and
expense documentation as needed. 3 - 4 Month Trial
Modification Requirement: For modification to be complete,
if borrower is delinquent prior to modification, they must
make 3 payments within 90 days at the new modified
payment level and be current at day 90. If the borrower is
current at the time of modification, the borrower must make
4 payments within 120 days at the new modified payment
level and be current at 120 days. Borrower Incentive:
Borrower(s) are eligible to receive
Pay-for-Performance Success that goes towards reducing
principal of $1,000 each year for (5) five years if they stay
current on their mortgage loan. Counseling Requirement: If
the borrower has a back-end ratio (borrower total monthly
debt ratio) equal to or greater than 55%, HUD approved
housing counseling is required. Servicers are required to
send a letter to applicable borrowers regarding the

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 Homeowner's HOPE
Hotline™, 888-995-HOPE™ or visit www.hud.gov to find a
housing counselor in their area. For more information about
the Home Affordable Modification Program, please visit
www.financialstability.gov. 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 home's 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 your
of 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