 
Mortgage Delinquency Help
Your housing payment is your most important obligation, and a plan to resolve the delinquency must be in place prior to addressing your unsecured debt, although a debt management plan can certainly be part of the solution.
Rental delinquencies are very difficult to resolve and the process for eviction can be very short. As soon as you know you will have difficulty paying your rent on the due date, talk to your landlord or property manager about arrangements. If they will not work with you, the legal eviction process will begin. Many states, through Legal Services, have a Tenant-Landlord Hotline to call, and an attorney will call you back to answer questions about your rights. Review your lease as well to see what your rights and the financial penalties will be if you are evicted or move out voluntarily.
Mortgage delinquencies can also have a short timeframe to foreclosure, depending if you live in a non-judicial foreclosure state. That means that the lender doesnÕt have to go through a court process to foreclose; the only requirements of the lender are to send one certified notification when you are 90 days delinquent and to advertise the foreclosure sale for 30 days in a legal newspaper. ThatÕs how the bankruptcy attorneys and counseling agencies that charge large fees get your name and market to you that they can save your home.
CCCS offers confidential, free housing counseling through our Community Outreach Program. The counselor will prepare a realistic priority budget and work with you to prepare an action plan to bring your mortgage current. Lenders do not want to foreclose in most cases as they stand to lose money, but you must present their ÒWorkoutÓ or ÒLoss MitigationÓ departments with a workable plan, and one prepared with a certified housing counselor will be taken more seriously. That plan may include a Debt Management Plan to deal with your unsecured debt, but primary effort and resources must be put toward saving your home. Many loans also have guarantors such as VA and FHA and they have special programs to help reinstate the mortgage. If you are behind on your mortgage, call (907) 279-6501 or our state wide toll free number (800) 478-6501 and ask to make a Housing Appointment right now!
OPTIONS:
Sale of Home: Can you sell the house to repay what is owed, and avoid foreclosure? If this looks possible, you must contact the mortgage company and ask for more time to list the property, and find out what it will cost to pay off the loan. Next, contact a real estate broker for a fair market analysis and listing. HUD, VA and other guarantors will sometimes allow a sale to pay off some percentage of the loan and then they will Òmake the lender wholeÓ. This is called a Òshort saleÓ or a Òcompromise saleÓ. HUD requires counseling and a signed certificate showing that the seller was informed of possible tax consequences on the forgiven portion of the loan.
Deed In Lieu: Can the lender take back the deed and cancel the debt? Homeowners with equity can lose this money, or, if the lender forgives some debt at the transfer, may owe tax to the IRS on this income. This process saves some costs of foreclosure and prevents foreclosure being placed on the credit report.
Forbearance: Are you behind on the mortgage due to temporary circumstances? Lenders will often accept payment of one-half the arrears and then monthly payments in the amount of one and one-half times the normal payment. In some circumstances, they may even accept less.
Special Forbearance: For FHA loans only. Borrowers can pay as little as 50% of the regular payment for up to 9 months, then 150% until the loan is brought current. Prior HUD approval is not necessary.
Partial Claim: FHA will pay off the arrears to the lender and then extend the mortgage up to 3 years to allow this amount to be paid back directly to FHA. Mortgage must be between 4 and 7 months delinquent to initiate this option. A special forbearance must be tried first.
Modification or Re-finance: Does the homeowner have some equity? Is the current interest rate at least 2% below the current loan rate? The lender may agree to lengthen the repayment period, reduce the interest rate or reduce the principal portion of the payment. FHA loans can sometimes qualify for a ÒstreamlineÓ refinance if the loan can be brought current.
Reinstatement: Can you make up the arrears using assets or a loan? If so, the counselor or client can contact the mortgage company and make arrangements to do so as quickly as possible.
Workout: An alternative to foreclosure, such as assumption, pre-foreclosure sale, modification and deed in lieu of foreclosure. Many lenders have a special work-out department.
Assumption: For VA and FHA (made before 1990) loans only. A buyer can take over the clientÕs loan by first paying the difference between the selling price and the balance owed on the mortgage loan. You can list the property with a real estate agent who would advertise the property as ÒassumableÓ. At sale, the homeowner must receive a Òrelease of liability waiverÓ so they do not lose their right to future assumable loans. If not, they remain responsible for the assumed loan if the new borrower defaults.
Refunding: Specifically for VA loans. VA purchases the loan and can lower the interest rate.
PMI (Private Mortgage Insurance): Because they have to pay a claim to the lender in case of foreclosure, these insurance companies will sometimes loan enough to bring the mortgage current. A new loan is set up outside the mortgage allowing monthly payments to the PMI provider. Your lender must provide you with the name of the PMI company.
Bankruptcy: A last option that stops the foreclosure process. It is a temporary stay and can be lifted if the client again falls behind on the mortgage. The homeowner that cannot pursue any of the above options may want to seek legal counsel.
Here are some links to sites on the Internet that may be of assistance to you.
http://www.hud.gov/foreclosure/index.cfm
http://www.cccsatl.org/housing.html
Do you want CCCS of Alaska to assist you with your delinquent rent or mortgage?
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