Solutions For Homeowners With Mortgage Problems
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How To Avoid Foreclosure
 
'STAY IN MY HOME' Options

'MOVE OUT' Options
 
(Refinance or Modify Your Existing Loan(s)... )

Home Affordable Modification Program
(HAMP)
 
If you are not unemployed, but you’re still struggling to make your mortgage payments, you may be eligible for the Home Affordable Modification Program (HAMP®). HAMP may lower your monthly mortgage payments in order to make them more affordable and sustainable for the long-term.

If you currently occupy your home as your primary residence, we encourage you to contact your mortgage servicer as soon as possible to begin the HAMP evaluation process.

In an effort to continue to provide meaningful solutions to the housing crisis, effective June 1, 2012, the Government expanded the population of homeowners that may be eligible for the Home Affordable Modification Program to include:

  • Homeowners who are applying for a modification on a home that is not their primary residence, but the property is currently rented or the homeowner intends to rent it.
  • Homeowners who previously did not qualify for HAMP because their debt-to-income ratio was 31% or lower.
  • Homeowners who previously received a HAMP trial period plan, but defaulted in their trial payments.
  • Homeowners who previously received a HAMP permanent modification, but defaulted in their payments, therefore losing good standing.

If you are a homeowner who falls into any of these criteria, you may be eligible for a modification under the expanded criteria. Please check with your mortgage servicer to see if you are eligible to begin the HAMP evaluation process.

You may be eligible for HAMP if you meet all of the following criteria:

  • You obtained your mortgage on or before January 1, 2009.
  • You owe up to $729,750 on your primary residence or single unit rental property
  • You owe up to $934,200 on a 2-unit rental property; $1,129,250 on a 3-unit rental property; or $1,403,400 on a 4-unit rental property
  • The property has not been condemned
  • You have a financial hardship and are either delinquent or in danger of falling behind on your mortgage payments (non-owner occupants must be delinquent in order to qualify).
  • You have sufficient, documented income to support a modified payment.
  • You must not have been convicted within the last 10 years of felony larceny, theft, fraud or forgery, money laundering or tax evasion, in connection with a mortgage or real estate transaction.
Contact your mortgage company to see if you may be eligible for HAMP. If your mortgage servicer does participate in the MHA Program but makes the determination that you are not eligible for a HAMP modification, they may offer you modification alternatives of their own.
  • (Sell Your Home in a Short Sale, or do a Deed-In-Lieu of Foreclosure...)
     
    Home Affordable Foreclosure Alternatives (HAFA) Program
    If you can't afford your mortgage payment and it's time for you to transition to more affordable housing, the Home Affordable Foreclosure AlternativesSM (HAFA) program is designed for you. HAFA provides two options for transitioning out of your mortgage: a short sale or a Deed-in-Lieu (DIL) of foreclosure. 
     
    Option 1 is a Short Sale.
    A Short Sale is when the mortgage company lets you sell your house for an amount less than what you owe on your mortgage balance.
     
    Option 2 is a Deed-In-Lieu of Foreclosure. The mortgage company lets you give the deed/title back, transferring ownership back to the lender.  It is a quicker version of a foreclosure but does not include having a judgement outstanding for any remaining balance or arrearages.

    In either case, HAFA offers benefits that make the transition as favorable as possible:

    • You can get free advice from HUD-approved housing counselors and licensed real estate professionals.
    • Unlike conventional short sales, a HAFA short sale completely releases you from your mortgage debt after selling the property. This means you will no longer be responsible for the amount that falls "short" of the amount you still owe. The deficiency is guaranteed to be waived by the servicer.
    • In a HAFA short sale, your mortgage company works with you to determine an acceptable sale price.
    • HAFA has a less negative effect on your credit score than foreclosure or conventional short sales.
    • When you close, HAFA may provide $3,000 in relocation assistance

    You may be eligible for HAFA if you meet all of the following criteria:

    • You have a documented financial hardship.
    • You have not purchased a new house within the last 12 months.
    • Your first mortgage is less than $729,750.
    • You obtained your mortgage on or before January 1, 2009.
    • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction
    HAFASM is available for mortgages that are owned or guaranteed by Fannie Mae and Freddie Mac, or serviced by over 100 HAMPSMparticipating mortgage servicers.

    Home Affordable Refinance Program (HARP)

    If you're not behind on your mortgage payments but have been unable to get traditional refinancing because the value of your home has declined, you may be eligible to refinance through the Home Affordable Refinance Program (HARP). HARP is designed to help you get a new, more affordable, more stable mortgage. HARP refinance loans require a loan application and underwriting process, and refinance fees will apply. Program ends December 31, 2015.

  • Step 1: Determine whether your mortgage is owned or guaranteed by Fannie Mae or Freddie Mac by visiting their respective Loan Lookup Tools.
  • Step 2: Contact your current mortgage servicer or another that is approved by Fannie Mae or Freddie Mac to inquire about HARP.

  • Step 3: Compare rates and costs with additional mortgage companies to ensure best refinance terms.
  • (Non-Government Sponsored) Lender Short Sale

    If you're not eligible for a Government Sponsored Short Sale with the HAFA program, you should contact the loss mitigation department at your lender to ask about doing a traditional Short Sale.
     
    The difference between the HAFA Short Sale Program and the lender's short sale program is HAFA will guarantee debt forgiveness on the balance of the mortgage following the sale.  With a traditional mortgage, that is not guaranteed. 
     
    There are two types of Short Sale Approvals.
    Approval Type 1: LIEN RELEASE only.
    This would mean there would be a balance to be paid on the account following the short sale. It usually requires the seller to pay back some portion of the balance remaining via an unsecured note.
     
    Approval Type 2: FULL DEBT FORGIVENESS.
    This would mean there would be a ZERO balance following the short sale with no additional monies due.
     
    NOTE: Either scenario could include having the seller contribute cash at closing to the lender depending on a) the approval type requested, b) the amount of outstanding deficiency, and c) the financial hardship of the seller.  
     
    Treasury/FHA Second Lien Program (FHA2LP)
    If you have a second mortgage and your first mortgage servicer agrees to participate in FHA Short Refinance, you may be eligible to have your second mortgage on the same home reduced or eliminated through the FHA Second Lien Program (FHA2LP). If your second mortgage servicer agrees to participate, the total amount of your mortgage debt after the refinance cannot exceed 115 percent of your home's current value.

    You may be eligible for FHA2LP if you meet the following criteria:

    • You are eligible for FHA Short Refinance.
    • You obtained your mortgage on or before January 1, 2009.
    • You must not have been convicted within the last 10 years of felony larceny, theft, fraud, forgery, money laundering or tax evasion in connection with a mortgage or real estate transaction.
    • If the servicer of your first mortgage agrees to an FHA Short Refinance and you have a second mortgage on the same home, the first mortgage servicer will work with the second mortgage servicer to reduce or eliminate the second mortgage.
    • More than a dozen mortgage servicers have agreed to review homeowners for FHA2LP when the first mortgage servicer has agreed to a refinance under FHA Short Refinance.

    *Eligibility criteria is for guidance only. Only your mortgage company can qualify you for this solution.

     
    (Non-Government Sponsored) Lender Deed-In-Lieu
     
    If you're not eligible for a Government Sponsored Deed-In-Lieu with the HAFA program, you should contact the loss mitigation department at your lender to ask about doing a traditional
    Deed-In-Lieu of foreclosure.
     
    While not guaranteed, relocation assistance can be offered as well as a financial incentive for the seller if the home is offerred back in good condition.
     

    Short Sale vs Foreclosure 
    If you can't qualify or a loan modification or refinance, then your are faced with needing to move from your home.  That leaves two choices - a Deed-in-lieu of foreclosure or a short sale.  To minimize the further impacts to your credit, a short sale is always the first choice vs a deed-in-lieu or foreclosure.
     
    With a deed in lieu, you get out of the house faster and save yourself the headache of trying to sell in a short sale.  You just get the lender to agree to take the deed back. In some cases, the lender will give you money to help relocate.  Most lenders prefer to do a deed in lieu if you occupy the home, and do not have junior liens. The upside is you get the lender to agree to take the home back and be done with it...The downside is it will decrease your credit score much more than a short sale.

    A short sale is the process of selling your home for less than what you owe on your mortgages. It requires approval from the mortgage holders on an agreed sale amount required to release the mortgages. Unlike what most people and realtors equate a short sale to, it is not simply a "low ball" offer to buy a home. It is meant to reflect the true "as is" value of the home.

    A short sale will have less of an impact on your credit most times depending on how many months delinquent you are in your payments. A short sale will allow for you to stay in the home  while the file is being reviewed by the lender.  If a foreclosure complaint has been filed, that process will continue while being reviewed for a short sale.

    In order to make the best decision, a seller needs to consider their credit risk. 
     
    Other loss mitigation options available...
     
    • Do Nothing – If a homeowner does nothing, they most likely will lose their home at foreclosure auction. Loan applications generally ask if the applicant has ever been foreclosed upon.
    • Payoff/Refinance – Completely paying off the entire loan amount plus any default amount and fees. Usually this is accomplished through a refinance of the debt. New  debt is at a normally higher interest rate and there may be a prepayment penalty because of the recent default. With this option, there should be equity in the home.
    • Reinstatement – Paying the entire default amount plus interest, attorney fees, late fees, taxes, missed payments and fees.
    • Loan Modification – Utilizing the existing mortgage company to refinance the debt or extend the terms of the loan. This may allow the homeowner to catch up at a more affordable level. To qualify, you must prove to the lender you have fixed the problem that caused the late payment.
    • Forebearance – Lender may be able to arrange a trial repayment plan based on the homeowner’s financial situation. The lender may even be able to provide a temporary payment reduction or suspension of payments.
    • Deed in Lieu of Foreclosure – Voluntarily give the deed back to the bank instead of the bank foreclosing. Banks generally require the home be well maintained, all mortgage payment and taxes must be current.
    • Bankruptcy – This option can liquidate debt and/or allow more time. You should speak to a qualified bankruptcy attorney to see if bankruptcy makes sense for you.

                 – Chapter 7 (Liquidation) To completely settle personal debt
                 – Chapter 13 (Wage Earner Plan) Payments are made to pay off debts in 3-5 years
                 – Chapter 11 (Business Reorganization) A business debt solution
    • Strategic Foreclosure/Abandon the Home – Not a recommended option under any circumstances...This is used often by folks that can't get approved to do a "Deed-In-Lieu" , Loan Modification, Refinance, or Short Sale when they are facing an extreme financial hardship - and give up.

    Advantages Of A Short Sale...  
    * provides a detailed and organized process for getting your mortgages released for less than you owe
    * minimal inpact to your credit profile if handled properly, showing as "settled for less than the original   
      amount" or "pre-foreclosure in redemption".
    * home will sell faster
    * lenders do not get stuck with all the legal and overhead costs of taking a home back through foreclosure
    * homeowners will avoid foreclosure and can focus on rebuilding their lives

    Do You Need Help With A Short Sale? 
    Call 732-531-8282 for a FREE No Risk Consultation, or email at:
    info@shortsaletosell.com