New FHA Policy To Cut Foreclosures
August 26th, 2008
Related FHA Stories
- HUD Moves To Help FHA Borrowers Facing Bankruptcy
- HUD Extends Help To Troubled Borrowers
- HUD Brings Back The Swat Team
- New Fed Policy on Foreclosures
- What HUD Told Lenders About FHASecure
Story Tools
The FHA has restructured its loan modification policies to assure that foreclosure fees and attorney charges can be financed.
This may seem like a fairly-obscure action and one of little consequence, but it’s a good example of how a little tweak in the rule-book can potentially benefit troubled FHA mortgage borrowers and cut foreclosure rates at the same time.
“Where loss mitigation is being attempted after foreclosure has been initiated,” says the FHA, “mortgage servicers and mortgagors have advised that foreclosure related costs and legal fees are often impediments to successful loss mitigation. Many mortgagors who are able to resume making monthly mortgage payments frequently do not have sufficient funds to reimburse the mortgagee the legal fees and foreclosure costs incurred prior to qualifying for loss mitigation and therefore are denied participation.”
In other words, there are situations where an FHA borrower has enough money to make payments after a foreclosure action has started but not enough money to pay off foreclosure costs. It’s better for everyone to avoid a foreclosure, so HUD is saying that rather than demand immediate repayment, foreclosure costs can be financed over time.
“Effective with this Mortgagee Letter, the Department will begin allowing legal fees and foreclosure costs related to a canceled foreclosure action to be incorporated into either the Loan Modification or the Partial Claim,” says the FHA.”
To make sure that consumers are not gouged with foreclosure costs, HUD has a price list of allowable fees. You know, three “thereofs” for a dollar, two “whereas” for 50 cents, etc…. (kidding, just kidding….)
The new FHA policy can be found at MORTGAGEE LETTER 2008-21.
- |
- |
-
- |
This entry was posted on Tuesday, August 26th, 2008 at 3:24 am and is filed under . You can follow any responses to this entry through the RSS 2.0 feed. You can skip to the end and leave a response. Pinging is currently not allowed.
Listen to FHA Loan Pros columnist Peter Miller on American Public Radio:
RSS Feed
February 16th, 2009 at 10:08 am
I AM A FIRST TIME HOME BUYER AND I AM IN FORCLOSURE. I PAID THIS COMPANY TO HELP ME GET A MODIFICATION AND ALSO ADJUST MY MORTGAGE PAYMENT NOW 4 1/2 MONTHS LATER THEY CANT HELP ME DUE TO NO PROGRAMS AVAILABLE FOR FIXED RATE, SO THEY SAY. 4 1/2 MONTHS WASTED AND THEY CAN COME TAKE MY HOME ANYTIME. I TRUSTED THIS COMPANY. CAN YOU HELP ME?