Free Consumer Finance and Foreclosure FAQs | Free Consumer Finance and Foreclosure Legal FAQs

Are you at risk of foreclosure?

Mon, 15 Dec 2008 00:48:18 GMT

If your financial situation has changed for the worse, you may be worried that you might be at risk of foreclosure. Have your finances changed due to a mortgage payment increase, loss of job, divorce, medical expenses, increase in taxes or other reasons? Is your credit card debt becoming unmanageable? Are you using your credit cards to buy groceries? Is it becoming difficult to pay all your monthly bills on time? If you are afraid of missing a mortgage payment, you may need to evaluate whether you are at risk of foreclosure.

How do creditors get paid when foreclosing on a house to satisfy unpaid debts?

Wed, 09 Apr 2008 08:27:26 GMT

A foreclosure is where the creditor collects its lien by forcing a sale of the debtor's real property. The creditor receives the amount of the proceeds from the sale equal to the unpaid debt plus expenses incurred in collecting the debt. Any other creditors there may be would receive their share of the proceeds and any remaining proceeds go to the debtor. Priority is the order in which creditors receive proceeds from the foreclosure sale. The lien held by the bank that provided a first mortgage to purchase the home is usually the first in line having priority in the sale proceeds. If the foreclosure is a result of a creditor enforcing a judgment, that creditor may still be second in line behind the first mortgage holder in receiving proceeds from the forced sale. The manner in which mortgage foreclosures are handled vary form state to state. In some states, a creditor may foreclose a mortgage without going to court while in other states it requires a complex court proceeding.

What happens when you miss your first mortgage payment?

Mon, 15 Dec 2008 00:53:45 GMT

Foreclosure processes vary by state. However, typically, after you miss your first month missed payment, your lender will contact you by letter or phone. A housing counselor may be able to help.

When and why does foreclosure begin?

Tue, 29 May 2007 21:19:00 GMT

Lenders will initiate foreclosure proceedings when homeowners become delinquent in their mortgage obligations, usually after three payments are missed. The lender will then notify the buyer in writing that he or she is in default. The lender can request a trustee's sale or a judicial foreclosure, in which the property is sold at public auction.

A borrower can cure the default by paying the overdue amount and the pending payment after the notice of default is recorded, usually no later than a few days before the property's sale.

Some sales allow the successful bidder to take possession immediately. If the former owner refuses to vacate the premises, the court can issue an unlawful detainer that allows the sheriff to come out and evict them.

Borrowers should do everything they can to avoid foreclosure, which is one of the most damaging events that can occur in an individual's credit history.

What are unsecured debts and how does an unsecured creditor collect on a debt?

Tue, 29 May 2007 21:19:00 GMT

An unsecured debt is a debt where there is no collateral. Unsecured debts include medical bills, credit cards, department store cards, personal loans, collection accounts, student loans, amounts remaining after foreclosure or repossession, and bounced checks. When there is no collateral securing the debt, then the creditor has to either pursue repayment directly from the borrower by relentlessly calling, writing letters, and pursuing other strategies to persuade the debtor to repay the debt. Often, an unsecured creditor will resort to suing the debtor in court in order to obtain a court-ordered judgement for repayment. There are a few creditors who will never compromise, but most will take a less than full payment as settlement in full in order to close a troublesome account rather than incur the cost of litigation or collection. (Utility companies, however, rarely settle for less than the full balance.)

What happens after you miss a second mortgage payment?

Mon, 15 Dec 2008 00:56:09 GMT

After missing your second month of mortgage payments, if you haven't already been contacted by your lender, your lender will likely begin calling you to discuss why you have not made your payments. It is important that you take their phone calls. Talk to your lender and explain your situation and what you are trying to do to resolve it. At this time, you still may be able to make one payment to prevent yourself from falling three months behind. A housing counselor can help.

What happens after a third month of missed mortgage payments?

Mon, 15 Dec 2008 00:57:49 GMT

If you've missed three months of mortgage payments, you will likely receive a letter from you lender stating the amount you are delinquent, and that you have 30 days to bring your mortgage current. This is called a "Demand Letter" or "Notice to Accelerate". If you do not pay the specified amount or make some type of arrangements by the given date, the lender may begin foreclosure proceedings. They are unlikely to accept less than the total due without arrangements being made if you receive this letter. You still have time to work something out with your lender. A housing counselor can still help.

Which debts are most likely to be settled for less than payment-in-full?

Tue, 29 May 2007 21:19:00 GMT

Most unsecured debts can be settled. An unsecured debt is a debt where there is no collateral. Unsecured debts include medical bills, credit cards, department store cards, personal loans, collection accounts, student loans, amounts remaining after foreclosure or repossession, and bounced checks. There are a few creditors who will never compromise, but most will take a lessthanfull payment as settlementinfull to close a troublesome account. (Utility companies, however, rarely settle for less than the full balance.)

Secured, collateralized debts (such as a home or automobile) are an entirely different story. If the creditor can simply repossess the property, why should he negotiate? You can often renegotiate a short payment relief with a secured debt but don't attempt to settle the account while you still possess the property.

Also, the creditor must have a good reason to want to settle. If the account is paid current and there is no recent history of late payment, it will be difficult to convince the creditor that it is in their best interest to settle. (This should not be read as a recommendation to stop paying bills that are current. If you stop paying your current bills, you will almost certainly make your credit situation worse.) Perhaps bad credit is not an issue for you at this point and you feel you must stop paying your bills in order to settle them and get back on top of your debt load. If this is the case, you make that decision at your own risk. In other words, don't do it.

Can unsecured debts be settled?

Tue, 29 May 2007 21:19:00 GMT

An unsecured debt is a debt where there is no collateral. Unsecured debts include medical bills, credit cards, department store cards, personal loans, collection accounts, student loans, amounts remaining after foreclosure or repossession, and bounced checks. There are a few creditors who will never compromise, but sometimes creditors will settle unsecured debts for less than the total amount due. The typical reason most creditors will settle an unsecured debt is because they would have to incur sometimes substantial costs involved in suing the debtor for a judgment for repayment and still be left with a debtor who simply can not pay the judgment. When there is no collateral to repossess to satisfy the debt, the creditor is left with nothing. Many creditors will calculate how much it would cost to collect and estimate the amount they are likely to actually collect, and then make a decision about whether or not it is better to accept a reduced amount upfront.

What happens after a fourth month of missed mortgage payments?

Mon, 15 Dec 2008 01:00:22 GMT

After missing four months of mortgage payments, you are likely nearing the end of time specified in your lender's Demand or Notice to Accelerate Letter. When the 30 day cure period ends, if you have not paid the full amount or worked our arrangements you will probably be referred to your lender's attorneys. You will incur all attorney fees as part of your delinquency.

What happens at a Sherrif's or Public Trustee's Sale during foreclosure?

Mon, 15 Dec 2008 01:03:25 GMT

A Sheriff's or Public Trustee's Sale is the actual day of foreclosure. You may be notified of the date by mail, a notice is taped to your door, and the sale may be advertised in a local paper. The time between the Demand or Notice to Accelerate Letter and the actual Sale varies by state. In some states it can be as quick as 2-3 months. This is not the move-out date, but the end is near. You have until the date of sale to make arrangements with your lender, or pay the total amount owed, including attorney fees.

Will filing for bankruptcy stop collection efforts?

Wed, 12 Dec 2007 00:11:59 GMT

This answer depends upon the type of creditor that is after you. When filing for bankruptcy an “automatic stay” goes into effect. The automatic stay protects you from most creditors taking action to collect the debts. However, a creditor may remove this protection by requesting removal from the bankruptcy court. In general, the automatic stay will protect you (sometimes temporarily) from foreclosures on your home or from being evicted.

Do creditors have a certain amount of time to sue for payments?

Tue, 29 May 2007 21:19:00 GMT

Yes. The first thing you should do is determine if the statute of limitations for collecting a debt in your state has expired. If the number of years has passed, the debt may be uncollectable. An attorney should be consulted about whether or not the original creditor or any assigned collection agency can still go to court to get a judgment for repayment of the debt.

What is the Redemption Period?

Mon, 15 Dec 2008 01:05:29 GMT

The Redemption Period is a period of time after the property is sold. It is available in some states. If available, you will be notified of the time frame during which you may be able to redeem, or buy back, your foreclosed property.

What is acceleration?

Tue, 29 May 2007 21:19:00 GMT

Many contracts for debts contain "acceleration" clauses. This clause gives a creditor the right to "accelerate" the repayment when a payment is missed. Often, the creditor can require payment in full even when a single payment is missed. The courts may be able to force the debtor to pay a secured debt by seizing the debtor's property and selling it to pay off the debt.

What is the Hope for Homeowner's Act?

Mon, 15 Dec 2008 01:16:08 GMT

This is a new program for borrowers at risk of default and foreclosure. The program provides new, 30-year, fixed rate mortgages that are insured by the Federal Housing Administration (FHA). It may help you refinance your mortgage into a more affordable payment. Participation in the Hope for Homeowner's Act is voluntary. Both lender(s) and borrower(s) must agree to participate.

What exactly is repossession?

Tue, 29 May 2007 21:19:00 GMT

Repossession is when a creditor has the ability to seize the item you bought or the property you used as collateral for a loan. The creditor usually sells the property and uses the proceeds to satisfy the unpaid debt. If the sale of the property brings less then the amount owed, the creditor may be able to force the debtor to pay the difference.

Who is eligible for the Hope for Homeowner's Act program?

Mon, 15 Dec 2008 01:19:06 GMT

You should contact your lender to determine eligibility, but you may be eligible if, among other factors:

The home is your primary residence, and you have no ownership interest in any other residential property, such as second homes;
Your existing mortgage was originated on or before January 1, 2008 and you have made at least six payments;
You are not able to pay your existing mortgage without help;
As of March 2008, your total monthly mortgage payments due were more than 31 percent of your gross monthly income;
You certify that you have not been convicted of fraud in the past 10 years, intentionally defaulted on debts; and did not knowingly or willingly provide material false information to obtain existing mortgage(s).

Can a creditor garnish a debtor's wages?

Tue, 29 May 2007 21:19:00 GMT

Yes, wage garnishment is a court order that requires an employer to withhold part of an employee's wages and submit that portion to the creditor in order to pay the debt.

Who can help me apply for the Hope for Homeowner's Act program?

Mon, 15 Dec 2008 01:20:53 GMT

The FHA does not accept loan applications for the Hope for Homeowner's Act program directly. Borrowers seeking help should contact their lender, another FHA-approved lender, a housing counselor, or an attorney to apply or learn more about their options.

Can a creditor add interest to a debt?

Tue, 29 May 2007 21:19:00 GMT

Yes. The FDCPA allows a collector to add interest to a debt if the original agreement calls for the addition of interest during collection proceedings or the addition of such interest is allowed under state law. Every state authorizes the collection of such interest.

Who can help me apply for the Hope for Homeowner's Act program?

Mon, 15 Dec 2008 01:20:56 GMT

How much can I borrow under the Hope for Homeowner's Act?

Mon, 15 Dec 2008 01:22:28 GMT

If you are approved for a H4H mortgage, your new mortgage will be no more than 90% of the new appraised value of your home with the lender essentially writing down your current mortgage to that amount.

What can't a creditor do?

Tue, 29 May 2007 21:19:00 GMT

Contact third parties, other than an attorney or a credit bureau, except to locate you
Call you repeatedly or contact you before at an unreasonable time (the law presumes that before
8 a.m. or after 9 p.m. is unreasonable)
Contact you at work if your employer prohibits it
Use or threaten to use violence
Use obscene or profane language
Place telephone calls to you without identifying themselves as bill collectors
Claim you owe more than you do
Claim to be attorneys
Claim that you'll be imprisoned or your property will be seized
Send you a paper that resembles a legal document, or
Add unauthorized interest, fees or charges.

What costs are associated with a new mortgage under the Hope for Homeowner's Act?

Mon, 15 Dec 2008 01:24:29 GMT

If you are approved for a new mortgage under the Hope for Homeowner's act, the new mortgage will replace all of the current mortgages on your home. You will not owe any payments, fees or debts on mortgages you now hold. However, you must agree to share both the equity created at the beginning of this new mortgage and a portion of any future appreciation in the value of your home. In addition to an upfront mortgage insurance payment of 3%, you will pay a 1.5% annual mortgage insurance premium on your outstanding mortgage balance. This premium will be included in your monthly payments. Finally, you will need to pay closing costs on the loan. You will receive a Good Faith Estimate of these costs.

When can a creditor garnish wages?

Tue, 29 May 2007 21:19:00 GMT

For the most part, a creditor must sue, obtain a court judgment and then solicit the help of a sheriff or other law enforcement officer to garnish wages. Even then, a creditor can only garnish a certain percentage of the debtor's net pay.

If I refinance under the Hope for Homeowner's Act, can I take out a second mortgage later?

Mon, 15 Dec 2008 01:26:25 GMT

You cannot take out a second mortgage for the first five years of the loan, except under certain circumstances for emergency repairs.

What can a creditor do if a debtor won't pay?

Tue, 29 May 2007 21:19:00 GMT

Creditors are very likely to report the delinquencies to one or more credit bureaus, thus harming the credit record. In Idaho they may seek a judgment and court order to garnish wages; that is, an order to an employer to pay directly to the credit grantor some portion of your wages. Federal law sets a limit on what portion may be taken, and many state laws are even more protective. But if they have a good income, the probability is that some of it is subject to garnishment.

Can a creditor give a debtor bad credit?

Tue, 29 May 2007 21:19:00 GMT

In many cases, the creditor will give a bad credit rating by reporting a late payment or failure to pay to a credit reporting agency. A bad credit rating may affect the ability to take out a loan or to get credit cards, buy a house or even to rent an apartment. Creditors know that the best way for a consumer to clear up a bad credit rating is to pay the debts appearing on credit reports.

What is the interest rate on a new Hope for Homeowner's Act mortgage?

Mon, 15 Dec 2008 01:27:37 GMT

The interest rate for the new mortgage will be based on current market interest rates and will be provided by the lender.

How long does it take to apply for a Hope for Homeowner's Act mortgage?

Mon, 15 Dec 2008 01:29:05 GMT

Processing time will vary, but usually takes approximately 60 days. Consult your lender when you apply.

What is the Fair Debt Collection Practices Act (FDCPA)?

Tue, 29 May 2007 21:19:00 GMT

The FDCPA applies to everyone who collects consumer debts for someone else, including attorneys who collect consumer debts. While creditors collecting their own accounts are excluded from the act, most creditors follow the act's mandates and prohibitions in the interest of using sound and fair business practices. The FDCPA requires that debt collectors treat debtors fairly and prohibits certain methods of debt collection. Of course, the law does not erase any legitimate debts that are owed.

How does a collection agency work?

Tue, 29 May 2007 21:19:00 GMT

When a collection agency is involved in the collection of an unpaid debt, the debtor sends one payment each month to the agency. The agency's gets a portion of this payment and the rest goes to the orginal creditor. The creditors are satisfied that the debtor is trying to straighten out their debts and that they are receiving a regular amount every month. The benefit to the debtor is that they now make only one payment each month at an amount that they can afford, and are no longer being bothered by creditors.

Is there an income restriction to get a Hope for Homeowner's Act mortgage?

Mon, 15 Dec 2008 01:32:06 GMT

There isn't an income restriction, but you will need to demonstrate that you have sufficient, steady income to make the new H4H mortgage payments.

Can I still get a Hope for Homeowner's Program mortgage if I'm already in foreclosure?

Mon, 15 Dec 2008 01:35:05 GMT

If your lender has started already started foreclosure proceedings, you may still be able to obtain a Hope for Homeowner’s Act loan, though it depends somewhat on which stage of the foreclosure process you are in. Talk to your lender immediately for more detailed information.

What is the Truth In Lending Act?

Tue, 29 May 2007 21:19:00 GMT

The Act requires all creditors who deal with consumers to make certain written disclosures concerning all finance charges and related aspects of credit transactions (including disclosing finance charges expressed as an annual percentage rate).

What Is a money judgment?

Tue, 29 May 2007 21:19:00 GMT

A money judgment in a civil matter is an order issued by a court that one party to the lawsuit is to pay the other party a sum of money. The amount of the money awarded is referred to as a "money judgment".

What is the FHASecure refinancing program?

Mon, 15 Dec 2008 01:38:01 GMT

FHASecure is a refinancing option that gives homeowners with non-FHA mortgages, current or delinquent and regardless of reset status, the ability to refinance into a FHA-insured mortgage. With FHASecure, the lender will not automatically disqualify you because you are delinquent on your loan, and the lender may offer you a second mortgage to make up the difference between the value of your property and what you owe.

I've fallen on bad times and am having trouble paying my mortgage. What should I do?

Mon, 15 Dec 2008 01:42:48 GMT

Homeowners facing financial difficulties and unable to make their mortgage payments are strongly encouraged to contact their lender. Many lenders offer assistance to their borrowers to help them bring their mortgage current. Homeowners may also want to contact a HUD-approved housing counseling agency to find out about programs that may be able to assist them, especially if communication with the lender has broken down. To find a HUD-approved housing counseling agency, please call 1-800-569-4287 or search online.

What is a lien?

Mon, 16 Jun 2008 22:42:22 GMT

Some creditors have special rights to collect debts in the form of liens. Liens may come up in various ways including judgment liens obtained as a result of court proceedings. Creditors commonly seek to create a lien on a debtor's property through a judicial process of lien creation, which is governed by state law. Once a lien has been created state law governs how the lien is executed against the debtor's property. A debtor may provide a creditor with a lien on personal property in order to obtain a loan form the creditor, such as a car loan. When taxes are not paid, the government will have a lien. A mechanic who works on real property will have a mechanics lien whereby the mechanic may retain the property until payment is made for the work. The lien may give the creditor priority over other creditors attempting to collect from the same debtor. A lien on property may give the creditor the right to foreclose by selling the debtor's property to pay off the debt.

Are homeowners with interest only mortgages eligible for an FHASecure refinance?

Mon, 15 Dec 2008 01:45:00 GMT

Yes, so long as you are current on your mortgage, you are eligible for an FHASecure refinance. If you are delinquent, the default must have been due to the payment shock of an interest rate reset or, in the case of an Option ARM, the "recasting" of the mortgage to fully amortizing.

I'm in foreclosure... can refinancing under FHASecure still help me?

Mon, 15 Dec 2008 01:48:34 GMT

It is possible that FHASecure may help homeowners already in foreclosure but each situation is unique. Once in foreclsoure, your options to refinance your mortgage depend upon a variety of factors including the value of your home and how much you owe, and if the lender is willing to offer a second mortgage. Homeowners facing foreclosure are strongly encouraged to talk with their lenders.

What is included in a monthly mortgage payment?

Tue, 29 May 2007 21:19:00 GMT

The monthly mortgage payment mainly pays off principal and interest. But most lenders also include local real estate taxes, homeowner`s insurance, and mortgage insurance (if applicable).

What are the requirements for an FHA Streamlined Mortgage Refinance?

Mon, 15 Dec 2008 02:11:54 GMT

The basic requirements of an FHA streamlined mortgage refinance are:

The mortgage to be refinanced must already be FHA insured.
The mortgage to be refinanced should be current (not delinquent).
The refinance is to result in a lowering of the borrower's monthly principal and interest payments.
No cash may be taken out on mortgages refinanced using the streamline refinance process.

What is a loan modification, and how will it help me with my mortgage?

Fri, 06 Mar 2009 03:05:50 GMT

A loan modification occurs when a homeowner enters into an agreement with his or her mortgage loan servicer to change the terms of the mortgage. The goal of a loan modification is to lower monthly mortgage payments to a level that homeowners can better afford, thus decreasing the risk of foreclosure. Typically, loan modification programs are targeted at homeowners whose ability to afford their current mortgage payment has declined, either due to job loss, increased interest rates, decreased home values, or other similar circumstances.

The exact provisions of loan modifications vary among loan servicers. For instance, some programs may reduce your payments and/or interest rate on your loan for a certain period of time. Other programs may make permanent modifications to your loan. Again, different loan servicers may have different loan modification programs, so you’ll need to check with your loan servicer in order to find out the terms of any available loan modification programs, or other programs designed to help you stay in your home.

Under the Homeowner Affordability and Stability Plan, loan modification will lower your monthly mortgage payment to an interest rate that is not more than approximately 31% of your monthly gross income. You will be given a trial period of three months under the new interest rate, and a new monthly payment schedule. If you are successful in making your payments during the trial period, you can enter into a loan modification that lasts five years. After five years, your interest rate will go up again at a rate of no more than 1% per year; however, your interest rate will never be higher than the current market interest rate on the date that you entered into the loan modification agreement with your loan servicer.

Furthermore, if reducing the interest rate on your mortgage loan is not enough to bring your monthly payment below 31% of your gross monthly income, then your loan servicer can use other options to reduce your monthly payments to that level. For instance, your loan servicer could forgive part of the principal balance of your loan, defer part of the balance, to be paid at a later date, and /or extend the repayment period on your loan for up to 40 years.

How long does it take to get a loan modification?

Fri, 06 Mar 2009 03:09:17 GMT

The length of time that it takes to get a loan modification depends greatly on how long it takes your mortgage holder to process your loan modification, as well as how long it takes you to provide your mortgage holder with all of the information necessary to modifying your loan. Given the expected increase in loan modification requests as a result of the Homeowner Affordability and Stability Plan, it may take weeks or even months for your mortgage holder to process your loan modification.

However, you can help speed up the process of your loan modification by gathering the necessary documents that you will need for your loan servicer to process your loan modification request. If you have all these documents readily available for your loan servicer, then your loan servicer can get started right away in determining whether you are eligible for a loan modification, and, if so, in processing your loan modification.

What kinds of streamline refinances do lenders offer?

Mon, 15 Dec 2008 02:14:13 GMT

According to the U.S. Housing and Urban Development Department (HUD), lenders may offer streamline refinances in several ways. Some lenders offer "no cost" refinances (actually, no out-of-pocket expenses to the borrower) by charging a higher rate of interest on the new loan than if the borrower financed or paid the closing costs in cash. From this premium, the lender pays any closing costs that are incurred on the transaction.

Lenders may offer streamline refinances and include the closing costs into the new mortgage amount. This can only be done if there is sufficient equity in the property, as determined by an appraisal. Streamline refinances can also be done without appraisals, but the new loan amount cannot exceed the original loan amount. Investment properties (properties in which the borrower does not reside in as his or her principal residence) may only be refinanced without an appraisal.

What do I need to give to my loan servicer if I am requesting a loan modification?

Fri, 06 Mar 2009 03:12:48 GMT

You are likely to need the following documents for your loan modification request:

· Recent paystubs or documentation of your monthly gross household income

· Your most recent income tax return

· Documentation of any debts that you owe, including credit cards, student loans, vehicle loans,

etc., which shows the amount of the debts and your monthly payments on those debts

· Documentation of a second mortgage, if you have one, including the amount owed on the mortgage loan and the monthly payment amount

· Information about any other assets that you own

· A letter of explanation as to why you need a loan modification, i.e. the circumstances that have caused your financial hardship, such as job losses, medical expenses, etc.

What is Judicial Foreclosure?

Mon, 15 Dec 2008 02:23:20 GMT

All states allow this type of foreclosure, and some require it. In a judicial foreclosure, the lender files a type of lawsuit with the judicial system to foreclosure on the property. The borrower will receive a notice in the mail demanding payment. The borrower then has only 30 days to respond with a payment in order to avoid foreclosure. If a payment is not made after a certain time period, the mortgaged property then proceeds into foreclosure and is sold at a public auction to the highest bidder, carried out by a local court or sheriff's office.

What is a Power of Sale Foreclosure?

Mon, 15 Dec 2008 02:25:34 GMT

A Power of Sale Foreclosure, also known as statutory foreclosure, is allowed by many states if the mortgage includes a "power of sale" clause. After a homeowner has defaulted on mortgage payments, the lender sends out notices demanding payments. Once an established waiting period has passed, the mortgage company itself - rather than local courts or sheriff's office - carries out a public auction. Non-judicial foreclosure auctions often proceed fairly quickly, though they may be subject to judicial review to ensure the legality of the proceedings.

Will I be ineligible for a loan modification under the Homeowner Affordability and Stability Plan if I am current in my mortgage payments?

Fri, 06 Mar 2009 03:21:17 GMT

No. You may still be eligible for a loan modification under the Homeowner Affordability and Stability Plan if you are current in your mortgage payments, but you are struggling to make those payments. For instance, if you have had a significant increase in your mortgage payment due to an adjustable interest rate, or if you have had a decrease in income, you may be eligible for a loan modification. If you meet the minimum eligibility requirements for a loan modification as outlined above, then your loan servicer is required to evaluate your loan in order to determine whether you are at risk of imminent default, which means that some circumstances in your life exist that make it very possible that you could default on your mortgage loan and/or lose your home to foreclosure. If your loan service considers your loan to be at risk of imminent default, then you are entitled to a loan modification, regardless of the fact that you are still current on your mortgage payments.

What is Strict Foreclosure?

Mon, 15 Dec 2008 02:29:14 GMT

Not all states allow for a "strict foreclosure." In fact, according to HUD only a small number of states allow for it. In strict foreclosure proceedings, the lender files a lawsuit against a homeowner that has defaulted on their mortgage. If the borrower cannot pay the mortgage within a specific timeline ordered by the court, the property goes directly back to the mortgage holder, rather than being sold at auction like in other type of foreclosure proceedings. Generally, strict foreclosures take place only when the debt amount is greater than the value of the property.

Will I be eligible for a loan modification under the Homeowner Affordability and Stability Plan if I am behind in my mortgage payments, but my house is not yet in foreclosure?

Fri, 06 Mar 2009 03:24:37 GMT

As long as you are otherwise eligible under the basic requirements discussed above, you have missed two or more mortgage payments, and your loan servicer is participating in the loan modification program under the Plan, your loan servicer must evaluate your loan for loan modification eligibility. There is no distinction made in the eligibility requirements in terms of whether you are current in your payments, behind in your payments, or facing foreclosure. The only distinction based on the status of your payments in the Plan relates to mandatory consideration of your loan for a modification, and certain financial counseling requirements.

I'm current on my mortgage. Will the Home Affordable Refinance help me?

Tue, 12 May 2009 16:46:07 GMT

If you are current on your mortgage, you may be able to refinance your loan under the Home Affordable Refinance Program. Many homeowners who are current on their mortgages have been unable to efinance their mortgages and rtake advantage of today's lower interest rates because their homes have decreased in value. These eligible borrowers may now have the opportunity to refinance. Through the Home Affordable Refinance Program, Fannie Mae and Freddie Mac will allow the refinancing of mortgage loans that they own or that they placed in mortgage backed securities.

What are the eligibility requirements to refinance under the Making Home Affordable Plan?

Tue, 12 May 2009 16:49:23 GMT

You may be able to refinance your mortgage under the Making Home Affordable Plan if:

• You are the owner occupant of a one to four unit home;

•The loan on your property is owned or securitized by Fannie Mae or Freddie Mac;

•At the time you apply, you are current on your mortgage payments (current means that you haven’t been more than 30-days late on your mortgage payment in the last 12 months or, if you have had the loan for less than 12 months, you have never missed a payment);

•You believe that the amount you owe on your first mortgage is about the same or slightly less than the current value of your house;

•You have income sufficient to support the new mortgage payments; and

•The refinance improves the long term affordability or stability of your loan.

How do I know if my loan is owned or has been securitized by Fannie Mae or Freddie Mac?

Tue, 12 May 2009 16:51:31 GMT

You should call your mortgage lender or servicer (the organization to whom you make your monthly mortgage payments) and ask about the program.

Both Fannie Mae and Freddie Mac have established toll-free telephone numbers and web submission processes to make this data available. Borrowers will provide or enter information to determine if either agency owns or securitized the loan. This information is not a guarantee of eligibility for the refinance program, as other qualifying criteria must also be met.

Fannie Mae: 1-800-7FANNIE (8am to 8pm EST).
Freddie Mac: 1-800-FREDDIE (8am to 8pm EST)

I owe more than my property is worth. Do I still qualify to refinance under the Making Home Affordable Program?

Tue, 12 May 2009 16:57:30 GMT

You may still be able to refinance your home under the Making Home Affordable Plan even if you owe more than your property is worth. Eligible loans will include those where the first mortgage will not exceed 105% of the current market value of the property. For example, if your property is worth $200,000 but you owe $210,000 or less on your first mortgage you may qualify. The current value of your property will be determined after you apply to refinance.

Will refinancing lower my payments?

Tue, 12 May 2009 17:02:53 GMT

Refinancing your home often will lower your monthly payments. However, whether your payments are reduced may depend upon how your home is refinanced and whether your loan is modified or not. Under the Home Affordable Refinance program, creditworthy borrowers who have shown a commitment to paying their mortgage have the opportunity to refinance their mortgage so that the payments are affordable and sustainable for the life of the loan.

Borrowers whose mortgage interest rates are much higher than the current market rate should see an immediate reduction in their payments. However, borrowers who are paying interest only, or who have a low introductory rate that will increase in the future, may not see a reduction in their payment if they refinance to a fixed rate and payment. These borrowers, however, could save a great deal over the life of the loan by avoiding future mortgage payment increases.

When you submit a loan application, your lender will give you a "Good Faith Estimate" that includes your new interest rate, mortgage payment and the amount that you will pay over the life of the loan. Compare this to your current loan terms. If it is not an improvement, a refinancing may not be right for you.

Will refinancing my mortgage under the Home Affordable Refinance Program, or other programs, reduce the amount that I owe on my loan?

Tue, 12 May 2009 17:06:57 GMT

Refinancing your mortgage under the Home Affordable Refinance Program will not reduce the amount you owe on the mortgage. The objective of the Home Affordable Refinance is to help borrowers get into more affordable loans. Refinancing will not reduce the principal amount you owe to the first mortgage holder or any other debt you owe. However, refinancing should save you money by reducing the amount of interest that you pay over the life of the loan.

If you refinance your loan in connection with a loan modification, however, you may be able to obtain a principal reduction on your mortgage.

How do I apply to refinance my mortgage under the Home Affordable Refinance Program?

Tue, 12 May 2009 17:11:56 GMT

You should call your mortgage servicer or lender and ask about the Home Affordable Refinance application process. The number is on your monthly mortgage bill or coupon book. It may take some time to speak to someone at your bank about refinancing under this option. This is because the program is fairly new, so lenders and servicers are just beginning to implement the program and it may take time before they are ready to process all applications. In the meantime, it will help your lender and speed up the application process if you gather some information and documents before you call.

You should speak to an attorney regarding your refinancing options as well. You may qualify for a variety of programs and an attorney will be able to explain which program is best for your situation. Also, when you are represented by an attorney, the attorney may be able to speed up the process of getting your refinance approved by your lender.

Who is eligible for a loan modification under the Home Affordable Modification Program?

Tue, 12 May 2009 17:15:55 GMT

To apply for a Home Affordable Modification, you must:

• Be an owner-occupant in a one to four unit property;

• Have an unpaid principal balance that is equal to or less than $729,750 for one unit properties (there is a higher limit for two to four unit properties - consult your servicer);

• Have a loan that was originated on or before January 1, 2009;

• Have a mortgage payment (including taxes, insurance, and home owners association dues) that is more than 31% of your gross (pre-tax) monthly income; and

• Have a mortgage payment that is not affordable, perhaps because of a significant change in income or expenses.

If you answered YES to all of these questions, you may be eligible to apply for a Home Affordable Modification. Your servicer will be able to tell you if you qualify.

Contact an attorney for more information about your eligibility for various programs.

What is Deed-In-Lieu of Foreclosure?

Tue, 12 May 2009 17:35:41 GMT

A Deed in Lieu of foreclosure (DIL) is a disposition option in which a mortgagor voluntarily deeds collateral property in exchange for a release from all obligations under the mortgage. A DIL of foreclosure may not be accepted from mortgagors who can financially make their mortgage payments.

What happens during Assumption of a mortgage?

Tue, 12 May 2009 17:40:52 GMT

Assumption of an FHA-insured mortgage is a servicing function where the responsibility of the mortgage is acquired by another person through either Simple or Creditworthiness process. Individuals may assume mortgages originated prior to December 1, 1986, by utilizing the "Simple Assumption" process. For those mortgages originated on December 1, 1986 and thereafter, HUD placed certain restrictions on the assumption of those FHA-insured mortgages and those mortgages have to go through the Creditworthiness Assumption process.

What is a pre-foreclosure sale?

Tue, 12 May 2009 17:44:16 GMT

HUD's Preforeclosure Sale (PFS) Program allows the mortgagor in default to sell his/her home and use the net sale proceeds to satisfy the mortgage debt even though these proceeds are less than the amount owed.

What is a Special Forbearance?

Tue, 12 May 2009 17:45:42 GMT

A Special Forbearance (SFB) is a written repayment agreement between a mortgagee and a mortgagor, which contains a plan to reinstate an asset that is minimum three mortgage payments due and unpaid.

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