WHAT OPTIONS ARE AVAILABLE TO HELP ME KEEP MY HOME?
If you want to keep your home and your income problem is temporary, talk to your lender about alternatives based upon your specific situation. Factors include (among many) who owns your loan, who services your loan, the amount of arrearage, the value of the property and your equity. These are examples of some of the types of assistance available.
Special Forbearance – Your lender may provide for a temporary reduction or suspension of your payments to allow you time to overcome the problem that reduced your income. Then you may be offered a payment plan so you can pay back the missed payments a little at a time until you are caught up.
Mortgage Modification – A modification is a permanent change to your loan through which the overdue payments may be added to your loan balance, the interest rate may be changed, or the number of years you have to pay off the loan may be extended.
Partial Claim – This is a one-time loan from the FHA insurance fund to bring your mortgage current. The loan is interest free and does not need to be repaid until you pay off your first mortgage or sell your house. This option is available only to borrowers with FHA-insured loans. However, if you have a conventional loan, ask your lender if they offer an “advance claim.”
WHAT OPTIONS DO I HAVE IF I CAN’T KEEP MY HOME?
If your income or expenses have changed so much that you are not able to continue paying the mortgage, your best option is to move to more affordable housing.
Most lenders offer workout plans that allow homeowners to transfer ownership to their lender or to a third party for less than full payoff. These options protect you and your family from the consequences of foreclosure.
Pre-foreclosure “short” sale – With your lender’s permission, you can offer your house for sale and sell it at fair market value even if the amount you receive from the sale is less than the amount you owe. If you meet certain conditions, you may be eligible to receive relocation expenses.
Deed-in-lieu of foreclosure – As a last resort, you may be able to return your property to your lender voluntarily. If you leave the property clean and undamaged, you may be eligible to receive relocation expenses.
Be aware that there could be income tax consequences to any plan that reduces the amount of debt you owe, so check with a tax adviser before accepting these workout options.