You Can Avoid Foreclosure and Keep Your Home
General Information
Losing a home can be financially and personally devastating.
Here's information to help you keep your home. Relief may be available.
·
People
facing money problems:
If you are facing unemployment or have money problems, you may be able to keep
your home if you know the right steps to take. Read on for important
information and links to local organizations that can help you get through
difficult times without losing your home. Government organizations and the
mortgage industry worked together to provide this information to help you keep
your home.
·
Disaster
area victims:
If you live or work in an area declared a disaster by the President and the
hurricane, tornado, flood, wildfire, or other natural or man-made event damaged
your home or reduced your income, your lender will provide disaster relief:
·
For 90 days on an
FHA-insured loan. Go to the Disaster Help from the button on the left of this
page.
·
In most cases for other loans.
·
Military
personnel and spouses:
If you or your spouse is on active military duty, you may qualify for a
reduction in your interest rate resulting in lower payments. Read how the Servicemembers Civil Relief Act
of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) affects
military homeowners.
Financial problems are most often associated
with major life changes like:
·
Job loss
·
Cuts in work hours or
overtime
·
Retirement
·
Illness, injury, or
death of a family member
·
Divorce or separation
If your family is facing any of these issues
and you can't pay your bills, look closely at what you owe and what you earn.
Eliminate unnecessary spending and reach out for help if you still can't make
ends meet. Taking action right away can help you protect your family from the
loss of your home.
Steps to take when you can't pay your mortgage:
Contact
your lender as soon as you have a problem
Talk
to a housing counselor
Prioritize
your debts
Explore
loan workout solutions with your lender
If
keeping your home is not an option
Beware
of predatory lending schemes
1. Contact your lender as soon as you have a
problem
Many people avoid calling lenders about money troubles because we:
·
Feel embarrassed
discussing money problems with others
·
Believe that if
lenders know we are in trouble, they will automatically rush to a collection
agency or foreclosure (seize property for failure to pay a mortgage debt)
But lenders want to help borrowers keep their homes because:
·
Foreclosure is
expensive for lenders, mortgage insurers and investors
·
HUD and private
mortgage insurance companies and investors like Freddie Mac and Fannie Mae
require lenders to work aggressively to help borrowers facing money problems
Lenders have workout options (choices) to help you and:
·
These options work
best when your loan is only one or two payments behind
·
The farther behind you
are on your payments, the fewer options are available
Don't assume that your problems will quickly correct themselves:
·
Don't lose valuable
time being overly optimistic
·
Contact your mortgage
lender to discuss your circumstances as soon as you realize that you're unable
to make your payments
·
Look forward to your
lender being willing to explore many possible solutions, without guaranteeing
any one particular solution
Finding your lender
Check the following sources to contact your lender:
·
Your monthly mortgage
billing statement
·
Your payment coupon
book
Information to have ready when you call
To help you, lenders usually need:
·
Your loan account
number
·
A brief explanation of
your circumstances
·
Recent income
documents:
·
Pay stubs
·
Benefit statements
from Social Security, disability, unemployment, retirement, or public
assistance
·
Tax returns or a
year-to-date profit and loss statement, if self-employed
·
A list of household
expenses
Expect
to have more than one phone conversation with your lender. Typically, your
lender will mail you a "loan workout" package. This package contains
information, forms and instructions. If you want to be considered for
assistance you must complete the forms fully and truthfully and return them to
your lender quickly. Your lender will review the complete package before
talking about a solution with you.
CALL YOUR LENDER TODAY! The sooner you
call, the sooner help is available.
Don't ignore mail from your lender
If you don't get in touch with your lender, your lender will try
to contact you by mail and phone soon after you stop making payments. It is
very important that you respond to mail and phone calls offering help. If your
lender doesn't hear from you, they will have to start legal action leading to
foreclosure. This will greatly increase the cost to bring your loan current.
Information for families with FHA loans
The FHA provides many alternatives and ways for borrowers to get
help. These may include mortgage modifications (changes), special forbearances
(allowances), and other actions you can take to avoid foreclosure.
FHA works closely with customers who have FHA-insured loans. Do
you feel your lender is not responding to your questions? Do you need help
contacting your lender? We are ready to help! Contact us at (800) 206-3934 ext
9117.
2. Talk to a housing counselor
If you don't feel comfortable talking with your lender, you
should immediately contact a us
for a free consultation. We can help you:
·
Review your financial
situation, determine what options are available to you, and negotiate with your
lender
·
Learn which of the
various workout arrangements lenders consider makes the most sense for you and
your family, based on your circumstances
·
Call the lender with
you or on your behalf to discuss a workout plan
·
Protect you from
future credit problems before you get too far behind on mortgage payments
·
Give you information
on services and programs in your area that provide financial, legal, medical or
other assistance
We can help you to create a monthly budget plan to ensure
you meet all your monthly expenses, including your mortgage payment. Your
personal financial plan will clearly show how much money you have available to
make the mortgage payment. This analysis will help you and your lender
determine whether a reduced or delayed payment schedule could help you.
To find out more about our free consultation services, please
call toll free (800) 206-3934 ext 9117, 24 hours a day, 7 days a week to hear a
recorded message. We will return your call within 48 hours.
3. Prioritize your debts (rank them by
importance)
You will need a new, tightened budget if you lose a job.
Prioritize your bills and pay those most necessary for your family: food,
utilities and shelter.
Failing to pay any of your debts can seriously affect your
credit rating, but if you stop making your mortgage payments you could lose
your house. Try these suggestions to keep your home:
·
Whenever possible, use
any income available after paying for food and utilities to pay your monthly
mortgage payments.
·
If your employment
income has stopped or been reduced, first consider getting rid of or cutting
back on other expenses (such as dining out, entertainment, cable, or even
telephone services).
·
If you still do not
have enough income, consider cashing out other financial resources like stocks,
savings accounts, or personal property that may have value like a boat or a
second car.
·
Take any responsible
action that will save cash.
Besides speaking with your lender, you may want to contact a
nonprofit consumer credit counseling agency that specializes in helping
restructure credit payments. Credit counselors can often reduce your monthly
bills by negotiating lower payments or long-term payment plans with your
creditors. Trustworthy credit counseling agencies provide their services free
of charge or for a small monthly fee tied to a repayment plan. Beware of credit
counseling agencies that offer counseling for a large upfront fee or donation.
For consumer debt advice, contact www.debtadvice.org/
When you call a credit counseling agency, they will ask you to
provide current information about your income and expenses. Make sure you ask
if the agency has a charge before you sign any documents!
Preserve your good credit
Do not underestimate (misjudge) how important it is to keep your
good credit. Your future ability to purchase items, rent or buy a home, and do
other things often requires a credit check. Consumer credit agencies and your
lender can help you explore solutions to keep your credit rating from getting
blemished.
Maintaining good credit is even important for job hunters. When
you apply for a job, the employer probably will check your credit report to
determine whether:
· You have been sued
· You have filed for bankruptcy
· You have trouble paying your bills
4. Explore loan workout solutions with your
lender
First and foremost, if you can keep your mortgage current, do
so.
But if you find you are unable to make your mortgage payments, you might
qualify for a loan workout option. Check with your lender to see which option
may be available. Some options may not apply to your loan if it is not insured
by FHA.
If your problem is temporary - we can call your lender to
discuss these possibilities:
·
Reinstatement: Your lender is always willing to discuss
accepting the total amount owed in a lump sum by a specific date. Forbearance
may accompany this option.
·
Forbearance: Your lender may allow you to reduce or
suspend payments for a short period of time and then agree to another option to
bring your loan current. A forbearance option is often combined with a
reinstatement when you know you will have enough money to bring the account
current at a specific time. The money might come from a hiring bonus,
investment, insurance settlement, or tax refund.
·
Repayment
plan: You may be able to
get an agreement to resume making your regular monthly payments, plus a portion
of the past due payments each month until you are caught up.
If it appears that your situation is long-term or will
permanently affect your ability to bring your account current - we can call
your lender to discuss these options:
·
Mortgage
modification: If you can make
payments on your loan, but don't have enough money to bring your account
current or you can't afford your current payment, your lender may be able to change
the terms of your original loan to make the payments more affordable. Your loan
could be permanently changed in one or more of the following ways:
·
Adding the missed
payments to the existing loan balance.
·
Changing the interest
rate, including making an adjustable rate into a fixed rate.
·
Extending the number
of years you have to repay.
·
Partial
Claim: If your mortgage is
insured, your lender might help you get a one-time interest-free loan from your
mortgage guarantor to bring your account current. You may be allowed to wait
several years before repaying this loan. You qualify for an FHA partial claim
if:
·
Your loan is between 4
and 12 months delinquent
·
You are able to begin
making full mortgage payments again
When your lender files a partial claim, HUD will pay your lender
the amount necessary to bring your mortgage current. You must sign a promissory
note, and a lien will be placed on your property until the promissory note is
paid in full.
The promissory note is interest-free and is due when you pay off
the first mortgage or when you sell the property.
If keeping your home is not an option - we can
call your lender to discuss these possibilities:
·
Sale: If you can no longer afford your home, your
lender will usually give you a specific amount of time to find a purchaser and
pay off the total amount owed. You will be expected to use the services of a
real estate professional who can aggressively market the property.
·
Pre-foreclosure
sale or short payoff: If you can't sell the
property for the full amount of the loan, your lender may accept less than the
amount owed. Financial help may also be available to pay other lien holders
and/or help towards some moving costs.
·
Assumption: A qualified buyer may be allowed to take over
your mortgage, even if your original loan documents state that it is
non-assumable.
·
Deed-in-lieu
of foreclosure: As a last resort, you
"give back" your property and the debt is forgiven. This will not
save your house, but it is less damaging to your credit rating. This option
might sound like the easiest way out, but it has limitations:
·
You usually have to
try to sell the home for its fair market value for at least 90 days before the
lender will consider this option
·
This option may not be
available if you have other liens, suc h as other
creditor judgments, second mortgages, and IRS or state tax liens
If you have an FHA-insured loan and your
lender is not responsive
Your lender has to
follow FHA servicing guidelines and regulations for FHA-insured loans. If your
lender is not cooperative, contact us immediately toll free at 800-206-3934 ext
9117, or you can contact FHA's National Servicing Center at toll free (888)
297-8685 or via email hsg-lossmit@hud.gov.
Beware of predatory
lending schemes
Most mortgage lenders are trustworthy and
provide a valuable service by allowing families to own a home without saving
enough money to buy it outright. But dishonest or "predatory" lenders
do exist and engage in lending practices that increase the chances that a
borrower will lose a home to foreclosure. Beware especially of those who make
high risk second mortgages. Other abusive practices include:
·
Making a mortgage loan
to an individual who does not have the income to repay it
·
Charging excessive
interest, points and fees
·
Repeatedly refinancing
a loan without providing any real value to the borrower
Borrowers facing unemployment and/or
foreclosure are often targets of predatory lenders because they are desperate
to find any "solution".
Homeowners receive many refinance offers in
the mail saying they are "pre-approved" for credit based on the
equity in their homes. Borrowing against your house may seem attractive when
you are struggling to pay your mortgage and other bills. But stop and think
about this: if you can't make your current payments, increasing your debt will
make it harder to keep your home, even if you get some temporary cash.
Beware of scams
·
Equity skimming: In this
type of scam a "buyer" approaches you offering to repay the mortgage
or sell the property if you sign over the deed and move out - usually leaving
you with the debt and no house. Signing over your deed does not necessarily
relieve you of the responsibility of paying the loan. Such an agreement
may be legitimate, and in your best interest, if you go into it understanding
the full scope of the agreement between you and the buyer, and the
ramifications of the agreement. We can help you to evaluate such an
agreement. HUD also has couseling services that
can advice you on such an agreement.
·
Phony counseling
agencies: charging for counseling that is often free of charge. If you have any
doubt about paying for such services, call us toll free at 800-206-3934 ext
9117 before you pay anyone or sign anything.
·
Do not sign anything
you do not understand. It is your right and duty to ask questions.
·
Information is your
best defense against becoming a victim of predatory lending, especially for a
desperate homeowner
Where to report suspected predatory lending
Homeowners can call toll free (800) 348-3931
to get information on what steps to take to file a complaint. Homeowners who
call will also receive a booklet containing information on predatory practices.
What
happens when I miss my mortgage payments?
What
should I do?
Who
is my lender? How do I make contact?
I
don't remember what type of mortgage I have.
Do
I need to keep living in my house to qualify for assistance?
My
employer has already announced layoffs
What are the key points
to remember?
What
precautions can I take?
Will
I be responsible for any out-of-pocket expenses?
What happens when I
miss my mortgage payments?
Foreclosure may occur. This means your lender
can legally repossess (take over) your home. When this happens, you must move
out of your house. If your property is worth less than the total amount you owe
on your mortgage loan, a deficiency judgment could be pursued, meaning you
would not only lose your home, you also would owe HUD money.
Both foreclosures and deficiency judgments
could seriously affect your ability to qualify for credit in the future. So you
should avoid foreclosure if at all possible.
·
Do not ignore letters
from your lender. If you are having problems making your payments, call or
write to your lender's loss mitigation department immediately. Explain your
situation. Be prepared to provide financial information, such as you-r monthly
income and expenses. Without this information, they may not be able to help.
·
Stay in your home for
now. You may not qualify for assistance if you abandon your property.
·
Contact us toll free
800-206-3934 ext 9117 for a free consultation. We can be your most valuable
resource. Our services are free of charge.
Who is my lender? How
do I make contact?
Look at your monthly mortgage coupons or
billing statements for the lender's name and contact information.
I don't remember what
type of mortgage I have. How can I find this information?
Look on the original mortgage documents or
call your mortgage lender.
Do I need to keep
living in my house to qualify for assistance?
Usually yes, but call your lender to discuss
your specific circumstances and get advice on options that may be available.
My employer has already
announced layoffs in the coming month. What can I do now?
You have started learning about available
options here. Now, figure out if a layoff will make it hard for your family to
make your mortgage payments. If so, consider other resources you have to pay
your mortgage. Review your spending habits and see where you can reduce
spending. If you have a lot of other debt, consider contacting a nonprofit,
consumer credit counseling agency. Take advantage of any help your employer
offers. If you still believe you will have trouble making your mortgage
payments, contact your lender right away.
What are the key
points to remember?
19.
Don't lose your home
and damage your credit history
20.
Call or write your
mortgage lender immediately and be honest about your financial situation
21.
Stay in your home to
make sure you qualify for assistance
22.
Arrange an free consultation with us by calling toll free at (800)
206-3934 ext 9117.
23.
Cooperate with the
associate or lender trying to help you.
24.
Explore every
alternative to keep your home
25.
Beware of scams
26.
Never sign anything
you don't understand. And remember that signing over the deed to someone else
does not necessarily relieve you of your loan obligation.
27.
Act now. Delaying
can't help. If you do nothing, you will lose your home and your good credit
rating!
These precautions can help you avoid being
"taken" by a scam artist:
·
Don't sign any papers
you don't fully understand.
·
Make sure you get all
"promises" in writing.
·
Check with a lawyer or
your mortgage company before entering into any deal involving your home.
·
If you're selling the
house yourself to avoid foreclosure, check to see if there are any complaints
against the prospective buyer. You can contact your state's Attorney General,
the State Real Estate Commission, or the local District Attorney's Consumer
Fraud Unit for this type of information.
Will I be responsible
for any out-of-pocket expenses if I am approved for a workout option?
You may have to pay expenses such as recording
fees for a loan modification. Because every situation is different, contact
your lender for more information. But, if a lender has no contact with you and
has to start foreclosure, you may have to pay very high legal fees. To avoid this,
call your lender as soon as you realize you might have trouble.
Mortgage lenders
The mortgage lenders listed below have
voluntarily joined the federal government to assist homeowners who are
concerned about the future or have suffered due to recent changes in the
economy. If your lender is listed here, you can help protect your home by
contacting them immediately!
|
Lender |
Phone #1 |
Phone #2 |
|
Bank of America |
(800) 846-2222 |
(716) 635-2264 |
|
Chase Home Finance |
(800) 848-9136 |
|
|
Chase Home Finance |
(800) 526-0072 |
(800) 527-3040 |
|
CitiMortgage |
(800) 926-9783 |
|
|
Countrywide |
(800) 763-1255 |
(800) 669-4576 |
|
(800) 338-6441 |
(888) 648-3124 |
|
|
Irwin Mortgage
Corporation |
(888) 444-6446 |
|
|
James B. Nutter
& Company |
(800) 315-7334 |
|
|
Midland Mortgage |
(800) 552-3000 |
(800) 654-4566 |
|
Mortgage Service |
(800) 449-8767 |
|
|
(800) 367-9305 |
|
|
|
Principal
Residential Mortgage, Inc. |
(800) 367-6448 |
(800) 962-4450 |
|
Wells Fargo Mortgage |
(800) 766-0987 |
|
|
Wendover Financial Services Corporation |
(888) 934-1081 |
(800) 436-1022 |
|
Washington Mutual
Home Loans, Inc. |
(866) 926-8937 |
(800) 254-3677 |
Most of the information provided for you is
free from HUD/FHA, Department of Veterans Affairs, Department of Labor,
Fannie Mae, Freddie Mac, and members of the Mortgage Industry-at-large.
Servicemembers Civil Relief Act (SCRA) Common Questions
Who
is eligible?
Am
I entitled to debt payment relief?
Is
the interest rate limitation automatic?
Am
I eligible even if I can afford to pay my mortgage at
a higher interest rate?
What
if I can't afford to pay my mortgage even at the lower rate?
Am
I protected against foreclosure?
What
information do I need to provide to my lender?
Will
my payments change later?
Will
I need to pay back the interest rate "subsidy" at a later date?
How
long does the benefit last? Does the period begin and end with my tour of duty?
How
can I learn more about relief available to active
duty military personnel?
Reservists, guardsmen
and other military personnel can find answers to questions about mortgage
payment relief and protection from foreclosure provided by the Servicemembers Civil Relief Act of
2003 (formerly The Soldiers' and Sailors' Civil Relief Act of 1940).
The Act applies to active duty military
personnel who had a mortgage obligation before enlistment or before being
ordered to active duty. This includes:
·
Members of the Army,
Navy, Marine Corps, Air Force, Coast Guard
·
Commissioned officers
of the Public Health Service and the National Oceanic and Atmospheric
Administration engaged in active service
·
Reservists ordered to
report for military service
·
People ordered to
report for induction (training) under the Military Selective Service Act
·
Guardsmen called to
active service for more than 30 consecutive days.
In limited situations, dependents of servicemembers are also entitled to protections.
Am I entitled to debt
payment relief?
The Act limits interest that may be charged on
mortgages taken out by a servicemember (including
debts incurred jointly with a spouse) before he or she entered into active
military service. At your request, lenders must reduce the interest rate to no
more than 6% per year during the period of active military service and
recalculate your payments to reflect the lower rate. This provision applies to
both conventional and government-insured mortgages.
Is the interest rate
limitation automatic?
No. To ask for this temporary interest rate
reduction, you must submit a written request to your mortgage lender and
include a copy of your military orders. The request may be submitted as soon as
the orders are issued, but no later than 180 days after the date of your
release from active duty military service.
Am I eligible even if
I can afford to pay my mortgage at a higher interest rate?
If a mortgage lender believes that military
service has not affected your ability to repay your mortgage, they have the
right to ask a court to grant relief from the interest rate reduction. This is
does not happen very often.
What if I can't afford
to pay my mortgage even at the lower rate?
Your mortgage lender may let you stop paying
the principal amount due on your loan during active duty service. Lenders are
not required to do this but they generally try to work with servicemembers
to keep them in their homes. You will still owe this amount, but will not have
to repay it until after you complete active duty service.
Most lenders also have other programs to
assist borrowers who can't make their mortgage payments. If you or your spouse
finds yourself in this position at any time before or after active duty
service, contact your lender immediately and ask about loss mitigation options.
If you have an FHA-insured loan and are having difficulty making mortgage
payments, you may also be eligible for special forbearance and other loss
mitigation options.
Am I protected against
foreclosure?
Mortgage lenders may not foreclose while you
are on active duty or within 90 days after military service without court approval., A lender would be required to show in court that
your ability to repay the debt was not affected by your military service.
What information do I
need to provide to my lender?
When you or your representative contacts your
mortgage lender, you should provide the following information:
·
Notice that you have
been called to active duty
·
A copy of the orders
from the military notifying you of your activation
·
Your FHA case number
·
Evidence that the debt
precedes your activation date
HUD has reminded FHA lenders of their
obligation to follow the SCRA. When notified that a borrower is on active
military duty, an FHA lender must inform the borrower or representative of the
adjusted payment amount due, provide adjusted coupons or billings, and ensure
adjusted payments are not considered insufficient payments.
Will my payments
change later? Will
I need to pay back the interest rate "subsidy" at a later date?
The change in interest rate is not a subsidy.
Interest in excess of 6% per year that would otherwise have been charged is
forgiven. However, the reduction in the interest rate and monthly payment
amount only applies during the period of active duty. Once the period of active
military service ends, the interest rate will revert back to the original
interest rate, and payments will be recalculated accordingly.
How long does the
benefit last? Does the period begin and end with my tour of duty?
Interest rate reductions are only for the
period of active military service. Other benefits, such as postponement
(delaying) of monthly principal payments on the loan and restrictions on foreclosure, may begin immediately upon assignment to active
military service and end on the third month following the term of active duty
assignment.
How can I learn more
about relief available to active duty military personnel?
Servicemembers who have questions about the SCRA or the
protections they may be entitled to, can contact their unit judge advocate or
installation legal assistance officer. Dependents of servicemembers
can also contact or visit local military legal assistance offices where they
live. A military legal assistance office locator for each branch of the armed
forces is available at www.legalassistance.law.af.mil/content/locator.php