Some of your options
include the following:
Special Forbearance. Your
mortgage company may be able to arrange a repayment plan based
on your financial situation. Your mortgage company may even
provide for a temporary reduction or suspension of your payments.
You may qualify for this if you have recently lost your job
or your source of income or if you had an unexpected increase
in living expenses. You must furnish information to your mortgage
company to show that you would be able to meet the requirements
of the new payment plan.
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 but your net
income is less than it was before the default (failure to pay).
Partial Claim. Your mortgage company may be able to work with you to obtain
an interest-free loan from HUD to bring your mortgage current. You may qualify
if:
- your loan is at
least 4 months delinquent but no more than 12 months delinquent;
- your mortgage is
not in foreclosure; and
- you are able to
begin making full mortgage payments.
When your mortgage
company files a Partial Claim, HUD will pay your mortgage company
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 will be due if you sell or leave
your property, or when your mortgage matures.
Pre-foreclosure
sale. This will allow you to sell your property and pay
off your mortgage loan to avoid foreclosure and damage to
your credit rating. You may qualify if:
- the "as is" appraised
value is at least 70% of the amount you owe and the sales
price is 95% of the appraised value;
- the loan is at
least 2 months delinquent prior to the pre-foreclosure sale
closing date; and
you are able to sell your house within 3 to 5 months (depending on what your
mortgage company agrees to).
An additional benefit
to this option is the assistance you will receive with the
Seller-paid closing costs.
Deed-in-lieu of
foreclosure. As a last resort, you may be able to voluntarily "give
back" your property to the mortgage company. This won't
save your house, but it will help your chances of getting
another mortgage loan in the future. You can 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 mortgage in default.
A housing counseling
agency can help you determine which, if any, of these options
may meet your needs. You should also discuss the situation
with your mortgage company.
One last thing, beware
of scams! Solutions that sound too simple or too good to be
true usually are. If you're selling your home without professional
guidance, beware of buyers who try to rush you through the
process. Unfortunately, there are people who may try to take
advantage of your financial difficulty. Be especially alert
to the following:
Equity skimming. In
this type of scam, a "buyer" approaches you, offering
to get you out of financial trouble by promising to pay off
your mortgage or give you a sum of money when the property
is sold. The "buyer" may suggest that you move out
quickly and deed the property to him or her. The "buyer" then
collects rent for a time, does not make any mortgage payments,
and allows the mortgage company to foreclose. Remember that
signing over your deed to someone else does not necessarily
relieve you of your obligation on your loan.
