Atlanta Homeowners Facing Foreclosure

Atlanta Homeowners Facing Foreclosure

Atlanta Homeowners Facing Foreclosure

Most homeowners are ice-covered with fear and have no clue which direction to go in when faced with foreclosure. Innocently, there are many options available to homeowners that currently have a FHA mortgage, but few people are conscious that this assistance is available. Below please review the options now available to individuals with a FHA Mortgage.

Loss Mitigation Options

HUD has shaped a Loss Mitigation Program, which gives the mortgage corporation the option of providing assistance to FHA homeowners who are behind on their mortgage. The loss alleviation tools are used at the option of the lender. The loss alleviation options include:

Special forbearance plans

Mortgage modifications

Partial claims.

Pre-foreclosure sales

Deeds-in-lieu of foreclosure

Special Forbearance

Special forbearance allows lenders to postpone or reduce credit payments over an 18-month era with the total amount of arrearages (the amount owed) not to go beyond the equivalent of 12 months of payments. Mortgagees may enter into a special forbearance agreement without HUD's permission. The eligibility conditions for a particular forbearance plan are: 1) an instinctive decrease in income or an increase in living expenses, and 2) the lender determines the borrower has a sensible ability to pay under the terms of the forbearance plan to eliminate the arrearage. This tool is intended for homeowners who are knowledgeable an involuntary, temporary reduction in income, or increase in living expenses. The particular forbearance agreement can be entered into after 4 months of missed payments, but no later than 7 missed payments.

Mortgage Modification

A mortgage adjustment changes the terms of the loan agreement by either extending the time over which the loan will be repaid and/or reducing the interest rate to the present market rate. This tool is geared to homeowners who have recovered from financial crisis but have experienced a permanent decrease in income. This is essentially a valuable tool during times of low interest rates.

Partial Claims

From beginning to end a partial claim, FHA will pay off the amounts owed by the homeowner's (excluding late charges) equaling up to 12 months of payments and accumulated over a period of no more than 18 months in order to cure the non-payment. The lender must create a reimbursement plan involving no more than 36 monthly installments. Homeowners are required to reimburse this "subordinate loan" to FHA after satisfying the terms of the original mortgage. This tool can only be used when the homeowner has missed at least 4 payments and when mortgage modification or particular forbearance alone will not resolve the criminal behavior. A partial claim can be used in union with a special forbearance but not mortgage modification.

Pre-foreclosure Sale

Pre-foreclosure sales offer homeowners who are not capable to recover from their default an opportunity to sell their home in order to avoid foreclosure. Homeowners agreed a three month period to sell their homes for at least 95% of the appraised value. Lenders must initiate foreclosure or deed-in-lieu within 60 days of the end of this three month period if the attempt at pre-foreclosure is not successful.

Deed-in-Lieu of Foreclosure

Deed-in-lieu allows homeowners who are unable to bring their mortgage current through the use of the other loss alleviation tools to voluntarily turn over the deed to their homes "in lieu" of, or in its place of satisfying the terms of their mortgage. This should be considered when the borrower does not qualify for any other loss mitigation options or an effort at a pre-foreclosure sale fails. Homeowners who choose this option may be remunerated up to $500.

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