230,000 Homes Saved By FHA Loss Mitigation
July 18th, 2007
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With all the news about foreclosures, it’s good to know that FHA mortgage borrowers can often avoid the court house steps.
HUD says that the FHA mitigation program has saved 230,000 borrowers from foreclosure in just the past three fiscal years. (The government year begins each October 1st.)
Loss mitigation techniques under the FHA loan program include:
Special Forbearance, in which the lender arranges a repayment plan based on the borrower’s financial situation and possibly provide for a temporary reduction or suspension of payments;
Mortgage Modification, in which the lender capitalizes the mortgage delinquency, usually reducing the monthly payment and/or extending the term of the mortgage;
Partial Claim, in which the lender obtains a one-time payment from the FHA insurance fund to bring the mortgage current;
Pre-Foreclosure Sale, in which the borrower avoids foreclosure by selling the property for its appraised value, and these proceeds are less than the amount necessary to pay off the mortgage, and
Deed-in-Lieu of Foreclosure, in which the borrower gives back the property to the lender. The borrowers lose their house, but do not damage their credit rating as much as a foreclosure would.
As always, if you think that foreclosure may be in your future and you have an FHA loan, visit the HUD’s special site for help and advice.
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January 30th, 2008 at 10:27 am
My sister needs help. She is a doctor in an upstate NY area where home values have plummeted. She has been told that she is not eligible for refinance because her mortgages are 100% of the value of the home. On top of this she has adjustable rate mortgages. Her current mortgage lender will not do anything for her because the loans were sold to them and they claim they are just a holding company. What can she do? She is a hardworking, conscientious individual who if given the chance will payback every penny she owes but needs to get out of these ARMs in order to have a chance. If she is not helped immediately she will begin to be delinquent on her mortgage and go into foreclosure. Help please?
April 3rd, 2008 at 5:13 pm
She can speak to her holder/investor for a modication of her current terms and interest rate. There are so many different modifications to choose from so she needs to work with a company in order to submit the best new loan scenario to fit her specific needs. A specialized company can help with all the proper paper, new title insurance so the hom is properly covered will guarantee the process can be quick and pain less. If she chooses to do this on her own, the bank might give her a new mod with bad terms. Ex: A loan fixed for only 24 months, normally called a “teaser freezer”. Another one is a fixed rate but at a higher rate because there is more risked now that the equity of her home is gone. The lender can also state that she may not qualify due to her income (it might be to much and they feel she can afford her adjustments or pay down the mortgage balance on her own), or they may not like the condition of the house. They may also waste your time claiming that they lost your paper work and lenders will waste your time. Once properly qualified your sister may be able to add any missed missed mortgage payments, if she has missed any and continue on a new monthly payment plan fixed for a longer period if not the 30 years, and save a month payment with out having the expense or the paper work of a refinance.