The document provides information on options for homeowners who are facing foreclosure or are at risk of defaulting on their mortgage. It outlines steps homeowners should take if they are behind on payments but not in default, including reducing expenses, liquidating assets, or refinancing. If in default, homeowners should contact their lender's loss mitigation department and provide documentation of their hardship. The document describes options to keep the home such as repayment plans, loan modifications, or partial claims. If unable to keep the home, options include short sales or deeds in lieu of foreclosure. It provides resources for assistance and prevention programs in Arizona.

1. Foreclosure Options and Alternatives Crisis Budget Workshop resources compiled by Arizona Saves

2. IF you are not in default yet… Default = late on payments If homeowner is in danger of becoming delinquent because of financial hardship or impending interest rate adjustment… Determine objective – does the homeowner want to keep the home? Reduce expenses & prioritize debts Liquidate assets Refinance to lower rate (if eligible)

3. IF you are in default If homeowner is 30, 60 or 90 days late = in default Contact lender’s Loss Mitigation Department (not the collection dept.) as soon as possible Respond to communications from the lender Provide complete disclosure of your circumstances Contact a HUD Certified housing counseling agency who offers foreclosure prevention services ( www.hud.gov to find counselor)

4. Documents to have ready: Hardship Letter: The circumstances that led to delinquency, (why you’re late or unable to pay) What foreclosure prevention option the homeowner is seeking, An overview of income & expenses, State whether homeowner has a lump sum saved to offset any delinquency, Describe proposed plan.

5. Documents to have ready… Disclosure of financial information: Budget Worksheet Loan Documents (copies of Promissory Note & Deed of Trust, and other loan docs) Income Verification (recent pay stubs or other documentation for all household members) Tax returns and W-2 forms Bank statements (most recent 3 months) Copies of bills (for any loans, credit cards, other debts and obligations) List of Assets and documentation of same Hardship verification (medical documents, divorce papers, court documents, job loss information, etc.) Verification for anticipated changes to income and expenses Other documentation as requested

6. Options to KEEP Your Home Repayment plans/special forbearance Available for short-term financial hardship Suspends or reduces monthly payments for short period of time After the agreed time period, homeowners must pay regular monthly payments plus additional amounts until the deficiency is repaid

7. Options to KEEP Your Home Loan modification – changes the terms of the original mortgage agreement Reduction of the interest rate Extension of the loan payment period Reamortization with capitalization of arrears Reduction of the principal balance May result in lower payment amount

8. Options to KEEP Your Home Partial claims – FHA loans only Interest-free loan from HUD/Insurer to bring the loan current The homeowner signs a promissory note Results in a lien filed against the property HUD/Insurer is responsible to collect the partial claim amount

9. If you are not able to keep your home Pre-foreclosure sale Quick Sell - sell home to avoid foreclosure Appraised value must be more than loan balance Sell home quickly at a reduced price Lender may freeze foreclosure proceedings to allow time to sell Short Sale – sale may be approved by lender even if home is worth less than is owed Some homeowners prefer a short sale to foreclosure because the consequences to credit record are less damaging. Lender may or may not waive deficiency.

10. If you are not able to keep your home Deed-in-Lieu of foreclosure Transfer of property directly to the mortgage holder to satisfy the mortgage (only possible when there are no junior liens on the property) Avoid foreclosure sale Less cost then foreclosure Less damaging to credit than foreclosure Lender may offer “cash for keys”

11. Other Options Refinance if eligible (depends on equity) FHA Secure or FHA HOPE loans Some lenders may have their own special programs. See www.hopenow.com for a list of participating HOPE Alliance lenders For active duty military personnel: Service Members Civil Relief Act Reduced home loan interest rate Suspension of monthly payments while on active duty

12. Arizona Foreclosure Prevention Taskforce Established to reduce residential foreclosures in Arizona and the impact of foreclosures on families and communities Members include non-profit housing counseling agencies, financial institutions, community development organizations helping to reduce and prevent residential foreclosures in Arizona www.arizonaforeclosuretaskforce.com 1-877-448-1211 (Calls taken by “Don’t Borrow Trouble” program)