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FORECLOSURE PREVENTION PROGRAM

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Prevention Options

Avoid foreclosure using a foreclosure prevention program during a grace period (pre-foreclosure):

Two main solutions are possible with many variations:

• a loan refinance or new loan is obtained to pay off late payments and bring the loan current.
• the Collections department works out new payments with the owner to avoid foreclosure.

Hire a foreclosure prevention expert:

A foreclosure expert can help to quickly navigate the options that may be available to you and select the best option for your situation.

• Special Forbearance

Your lender may be able to arrange a repayment plan based on your financial situation and may even provide for a temporary reduction or suspension of your payments. You may qualify for this if you have recently experienced a reduction in income or an increase in living expenses.

• Mortgage Modification
  
  You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem and can afford the new payment amount. Most lenders can work with home owners even if they have poor credit and have a foreclosure date. Chances to obtain a loan to regain a current status on your mortgage become diminished once you have received a notice of default (NOD). Notice of Default is usually sent after 90 days of the mortgage payment being late.

• Partial Claim

Your lender may be able to work with you to obtain a one-time payment from the FHA-Insurance fund to bring your mortgage current. You may qualify if:

• your loan is at least 4 months delinquent but no more than 12 months delinquent;
• are able to begin making full mortgage payments.
  

When your lender files a Partial Claim, the U.S. Department of Housing and Urban Development will pay your lender the amount necessary to bring your mortgage current. You must execute 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.

• Pre-foreclosure sale.

This will allow you to avoid foreclosure by selling your property for an amount less than the amount necessary to pay off your mortgage loan.
You may qualify if:

• the loan is at least 2 months delinquent;
• you are able to sell your house within 3 to 5 months; and
• a new appraisal (that your lender will obtain) shows that the value of your home meets HUD program guidelines.

• Deed-in-lieu of foreclosure

As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it is not as damaging to your credit rating as a foreclosure. You may qualify if:

• you are in default and don't qualify for any of the other options;
• your attempts at selling the house before foreclosure were unsuccessful; and
• you don't have another FHA mortgage in default.

Special Government Programs for Seniors

The Home Equity Conversion Mortgage (HECM) is a widely accepted and used reverse mortgage product by seniors 62 or older. Available since 1989, HECMs are insured by the federal government through the Federal Housing Administration (FHA), a part of the U.S. Department of Housing and Urban Development (HUD).

The amount of available proceeds you can qualify for under the HECM program depends on your age, appraised home value, and current interest rates. The older you are, and the more valuable your home is (and the less you owe on your home), the more funds you qualify for.

These types of loans can be used to provide income to seniors, help stave off a foreclosure, or simply provide a means for seniors to use the equity in their homes.

You the home owner can pursue any of these options on your own. However, these can be very technical, legal and complex solutions to implement. A great deal of experience in real estate, legal terms and finance is needed to properly access and pursue the right solution for you. A home owner typically does not have this kind of experience nor the time to implement a solution before a foreclosure takes place. An expert who understands all of your options, can explain them to you in detail and implement them quickly is invaluable to saving your home. Provide the details on your situation below and a home foreclosure prevention expert will do just that for you.

Sell Your Property:
 
You can sell your property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on their credit history.

Public Auction:
 
A third party buys the property at a public auction at the end of the pre-foreclosure period.

The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure or by buying back the property at the public auction.  This is also referred to as bank-owned or REO properties (Real Estate Owned by the Lender).