Your OptionsYour Options (cont.)

Foreclosure
Foreclosure is a legal issue in which the bank is attempting to collect on a debt. That debt is in the form of a note and mortgage. You signed a note and mortgage at the closing. You either purchased a home or other real property or cooperative apartment or you have refinanced same. The note is your personal promise to pay. The mortgage is the lien against the property that is the collateral behind your promise to pay. If and when you are late in your payments then the bank can and will start a "Foreclosure Proceeding".

You will get served with a legal summons and complaint from the banks attorneys who specialize in foreclosure. You have 20, 30 or 40 days to answer the complaint. You need to have your attorney answer the complaint. First, in any foreclosure preceding you must answer the complaint. If you don't answer the complaint then you will be held in "default". Once defaulted, the bank is able to ask the court for the relief demanded in the complaint, which is to foreclose on the home and sell it at public auction. If you are served with a foreclosure summons and complaint you must

Partial Claim
Your lender 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 and no more than 12 months delinquent; your mortgage is not in foreclosure; you are able to begin making full mortgage payments

Partial Claim (for FHA Loans only)
If you have an FHA Loan, we will be able to start discussions with your lender for a Partial Claim. This strategy is only available on FHA loans. Working together with The Department of Housing and Urban Development (HUD), your lender will agree to help you with a one-time payment from the FHA Insurance Fund. You may qualify if your loan is:
1. At least 4 months but no more than 12 months delinquent
2. You are able to begin making full mortgage payments
3. You have resolved the hardship that caused you to fall behind
4. You may or may not be in Foreclosure
5. The mortgagor has the long-term financial stability to support the mortgage debt or make the payment
5. The home owner does not have the ability to repay the past due amount through a special forbearance or modification
6. The property is your primary residence
7. If you have filed for Bankruptcy you may still qualify for a partial claim, the Bankruptcy Court must give approval

You will be required to sign a promissory note with HUD and they will place a lien on your property. This HUD loan is interest-free and will bring your account up to date immediately, but it is due when you pay off the loan or when you sell or leave the property.

Temporary Indulgence
Temporary Indulgence is a grace period usually 30 to 60 days that maybe granted to allow you to bring the mortgage current. I f requested, you will have to demonstrate evidence that you can bring the loan current such as proof that you;
1. Have a contract for sale of the property and a closing date
2. Have an insurance settlement or one pending
3. Have approved or are pending and approved funding from another source
4. Have and approved "Special relief provision" completion date

Military indulgence
Military personnel will required to submit their active-duty orders as the only needed proof of hardship, instead of the full range of financial statements required with standard forbearance, thus streamlining the process for a forbearance request.

Fannie Mae will ask its lender partners to report military indulgence, rather than forbearance, to the credit bureaus, thus protecting the borrower's credit history. This enhanced special forbearance is a temporary change to Fannie Mae's guidelines and may be requested by borrowers through Dec. 31, 2003, unless otherwise extended by the company.

Freddie Mac's "Peace of Mind" mortgage relief plan applies to America's military personnel called to active duty in Operation Iraqi Freedom. The plan is a mortgage relief plan Freddie Mac and its lender partners developed immediately after the Sept. 11, 2001, terrorist attacks to provide assistance to victims' families and military personnel serving in Operations Enduring Freedom and Noble Eagle. Mortgage payment relief is available to borrowers on active duty with the U.S. military--including active reservists--with Freddie Mac-owned mortgages who obtained their mortgage before their active duty began.

Repayment Plan
The most common way of resolving a loan default is to work out a plan (Repayment Plan) which will let you repay part of the delinquency each month, along with you regular monthly installment. Clients will be eligible for a Repayment Plan for the amount they are delinquent if their financial circumstances have stabilized, your lender to distribute your past-due amount over a set period of time, usually 18-24 months, depending on your circumstances. The lender will usually ask for 25-50% of the arrearage down and the remainder will be paid out over a period of months. You will need to provide financial information to prove that you are now capable of making this responsibility. Remember, this monthly amount is in addition to your usual mortgage payment.

Reinstatement
The Reinstatement amount is total amount that is past due amount including late fees and Attorney costs. This amount will get your Mortgage caught up immediately. Because of your financial circumstances in the past, you may be facing a sizable amount of past-due fees, including back payments, late fees and legal expenses. If you are able to promise a lump-sum to bring your payments to a current status by a specific date, you may be eligible for a Reinstatement.

Consider what funds are at your disposal. Many clients have retirement funds, credit cards or insurance policies that can provide the much-needed funds to stay secure in their home. Other clients will seek private loans from family or friends or co-workers. A Reinstatement will offer you the quickest method for resolving your mortgage foreclosure. With your foreclosure resolved you can enjoy the security of your home.

Mortgage Forbearance
An option you might want to consider as a way to prevent foreclosure is mortgage forbearance. It’s commonly used for temporary financial bearing situations such as short periods of unemployment or poor health. In the simplest of terms, mortgage forbearance enables you to temporarily stop making your mortgage payments.
As for mortgage rates and interest, they continue to accumulate on the mortgage forbearance and are added to the remaining balance of the loan. You are generally also asked to sign a forbearance agreement that states when the lender will require you to pay the amount you owe. Once the forbearance period comes to an end, you are once again obliged to make full payments on your home loan. While mortgage forbearance may only serve as temporary fix, it does buy you some time to overcome your financial situation, and is a far better option than losing the home you worked so hard to purchase.

Bankruptcy
Bankruptcy is a federal court process designed to help people eliminate their debts or repay them under the protection of the bankruptcy court. Bankruptcies can generally be described as "liquidation" or "reorganization."

When you file bankruptcy, an "automatic stay" goes into effect. The automatic stay prohibits most creditors from taking any action to collect the debts you owe them unless the bankruptcy court lifts the stay and lets the creditor proceed with collections.

Chapter 7

In Chapter 7 bankruptcy, you ask the bankruptcy court to discharge most of the debts you owe. In exchange for this discharge, the bankruptcy trustee can take any property you own that is not exempt from collection, sell it, and distribute the proceeds to your creditors.

Chapter 13

In Chapter 13 bankruptcy, you file a repayment plan with the bankruptcy court to pay back your debts over time. The amount you'll have to repay depends on how much you earn, the amount

Mortgage assumption An assumption is just what the name implies: it occurs when a borrower assumes a seller's existing debt on a subject property, and that amount is subtracted from the purchase price. It's a form of leverage, resulting in less financing that the borrower must arrange, or less cash the borrower must to bring to closing. For example, a buyer assuming a $55,000 loan as part of a $100,000 purchase price would only have to make up a difference of $45,000, either in cash or with additional financing.

FHA Mortgage Assumption
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

Short Sale
A short sale is when a lender accepts a discount on a mortgage to avoid a possible foreclosure auction or bankruptcy. Instead of buying from a seller, you are purchasing the property directly from the lender for a discount. For example: A homeowner, who is facing foreclosure, has an existing first mortgage of $275,000. You write an offer to the lender for $205,000, which is accepted as full payment for the loan. This is a short sale. Secondly, lenders know they could lose a lot more money if the property goes to auction. There are so many fees involved if the property goes to auction, that they would be better off taking the discount beforehand and be finished with the headache of it all.

Deed in Lieu of Foreclosure

The Deed in Lieu of Foreclosure offers some advantages to the borrower and the lender. The borrower is immediately release from or all of the personal indebtedness associated with the defaulted loan, also the borrower avoids the public notoriety of a foreclosure.

If you have been unable to make your monthly mortgage payments and have also been unsuccessful trying to sell your home at the market value, this form of foreclosure may be what is necessary to get you back on track. This procedure allows you to transfer your property voluntarily to your lender or Mortgage Company and your debt or deficiency is often forgiven. This will not save your home, but it will help you with your chances of getting another mortgage loan in the future and it will help you avoid the lengthy legal process of foreclosure. Although it is a negative strike on your credit rating, it is less harmful than a mortgage foreclosure.

HOPE BY FHA
Under this program certain borrowers facing difficulties in paying programs their mortgages will be eligible to refinance into affordable FHA-Insured mortgages.

HomeSaver Advance
HomeSaver Advance is an extension of Fannie Mae's HomeStay® initiative — a multi-faceted initiative that helps lenders and servicers meet the needs of today's challenging market. Home Saver Advance is the latest example of our ongoing commitment to flexible servicing policies and homeownership preservation.

HomeSaver Advance, an unsecured personal loan, is a new loss mitigation alternative available to approved Fannie Mae servicers for eligible borrowers designed to bring a cure to the delinquency on a first lien loan. It provides funds to cure arrearages of principal, interest, taxes, and insurance (PITI). HomeSaver Advance is documented by a borrower-signed promissory note, payable over 15 years at a fixed rate of 5% with no payments or interest accrual for the first six months.

HomeSaver Advance is designed for qualified borrowers who have fallen behind on their mortgage, but are able to resume timely payments once their loan is brought current by the advance. It helps simplify and streamline the workout process for applicable loans, as it provides an option for earlier resolution of delinquent loans.

2nd Mortgage Issues
You may not only have arrearages with your first mortgage, but also outstanding issues with a second mortgage or home equity loan. We can help you with these financial difficulties as well.

Just as we are negotiating with your Mortgage Company we will do the same with any other creditors that have placed liens on your home. If you are past due with any creditor that has a lien on your home you are in jeopardy of foreclosure with them as well. For instance… if you are past due with a second mortgage and not with the first mortgage, the second may buy out the first and then foreclose. We understand how these processes work and we will move quickly to resolve and late mortgage issues.