FORECLOSUREKIT.org

Foreclosure Timeline

admin — Thu, 19 Mar 2009 15:54:52 +0000

First Missed Payment: Lender will typically contact borrower by letter or phone.

Second Missed Payment: Lender attempts to contact a borrower to discuss missed payments.

Third Missed Payment: After the third payment is missed, lender sends out “Demand Letter” or “Notice to Accelerate” letter. Most banks will allow 30 days to bring a mortgage current or barrower’s attempt of some type of payment arrangement or reffer to foreclosure assistance resources.

Fourth Missed Payment: Borrower is nearing the end of time allowed in the “Demand” or “Notice to Accelerate” letter. If payment is not made or borrower did not work out an arrangement, case is referred to lender’s attorney. All attorney fees become part of a delinquency amount.

Sheriff’s or Public Trustee’s Sale: This is the actual day of foreclosure. Home owner may be notified of the date by mail 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. Borrower has until the date of sale to make arrangements with a lender, or pay the total amount owed to stop foreclosure.

Redemption Period: After the sale date borrower may enter a redemption period. Redemption time frame is given on the same notice that state uses for your Sheriff’s or Public Trustee’s Sale.

Judicial VS Power of sale Foreclosure

All 50 states allow Judicial Sale, while only 29 allow “Power of Sale”. Majority of lenders will include “Power of Sale” clause into agreements if allowed by the state law. Power of Sale is faster than the judicial foreclosure.

Judicial Sale Foreclosure:

The mortgage lender will file suit with the local court system.
Borrower will receive a letter from the court demanding payment.
Typical 30 day period is allowed for a response and a payment to avoid foreclosure.
At the end of the 30-day period, a judgment is entered and the lender requests sale of the property by auction.
The auction is carried out by the sheriff’s office, usually a few months after the judgment.
Once the property is sold, borrower is served with an eviction notice by the sheriff’s office, and must vacate the home immediately.

Power of Sale Foreclosure:

The mortgage lender will serve borrower with papers demanding payment.
After an established waiting period, a new deed of trust is drafted. This document temporarily conveys the property to a trustee.
The trustee will sell the house at public auction for the lender.
Many times, power of sale foreclosures are subject to judicial review to ensure legally of proceedings.
Typically lender is required to post a public notice of sale for the auction.

Both types of foreclosure require that any other involved parties be notified of the proceedings. For instance, if you took out another loan against the house with a third party, that lender must be contacted and its loan amount must be paid from the auction’s proceeds. If the third-party lender isn’t paid, it can apply the mortgage to the new property owner. Many times, the lender will actually buy the property back and attempt to sell it through the real estate market at a later date.

In some cases if the sale of the property doesn’t satisfy the amount of the loan, deficiency judgments are made against the borrower. The entire amount of deficiency may be required, although some states only require the difference between the fair value of the property and the loan amount be paid.

Only Connecticut and Vermont allow almost obsolete procedure called strict foreclosure. In these cases, once judgment is made on the lawsuit, the property is automatically assumed by the mortgage holder.

Department of Treasury Home Affordable Modification

admin — Tue, 10 Mar 2009 20:40:03 +0000

What is it?

This program provides the lender with incentives to reduce the current mortgage payment to 38% Front-End DTI (DTI is Debt-to-Income ratio). In plain English that means that the sum of all mortgage expenses, such as payment, property taxes, insurance and so forth, must be reduced to 38% of current pre-tax income. For example, pre-tax income is $3,000. Maximum DTI allowed to qualify is $1,140, which is 38% of income. The lender must reduce the mortgage portion of DTI to a number that when combined with the property insurance, property taxes and other related mortgage expenses, does not exceed $1,140.

If the lender is able to make those reductions, the Department of Treasury will provide a number of incentives as compensation.

First, Treasury will lower TDI even further, matching lenders concession on dollar-to-dollar basis. Treasury incentives, combined with lender reductions, will result in DTI of 31% or in above example – $930 per month.

Second, Department of Treasury will provide the lender with a $1,000 up-front compensation. Additionally, for every year that you stay in this program, and keep up with your payments, the servicer will receive up to a $1,000 per year, for three years.

Third, if you are current on your mortgage (meaning, less than 30-days late) or have agreed to participate in this program before you were 30-days late, the lender will receive an additional $1,500 as a bonus. Now, take a minute and add these bonuses. Your lender stands to get as much as $5,500 if you were to refinance!

Do I qualify?

The program requirements are relatively modest. Along with tax returns, pay stubs, form 4506-T (Request for Transcript of Tax Return) the requirements are:

Lender must be able to reduce DTI to 38% as described above
The home must be an owner occupied, single family 1-4 unit property
The home must be your primary residence
The home may not be investor-owned
The home may not be vacant or condemned
Borrowers in bankruptcy are not automatically eliminated from consideration for a modification
If you are in foreclosure – you can qualify for a modification without waiving your legal rights
Unpaid mortgage balance must be equal to or less than: $729,750
There is no minimum or maximum LTV ratio for eligibility purposes

What will this cost me?

You know in life there are no “free” things. Well, in this case, as strange as it sounds everything is free. Moreover you actually get paid if you are lucky enough to have a lender that will consider this program.

There are no modification fees or charges borne by the borrower.
Modification fees and charges to the servicer will be reimbursable by the investor. These include notary fees, property valuation and other required fees. Servicer reimbursement by the investor will take place within the normal process between the servicer and the investor.
Unpaid late fees will be waived for the borrower. These include late fees prior to the start of the Trial Period and accrued during the period.
The servicer will cover the cost of the credit report.

Additionally, if you pay your new mortgage on time you will be eligible to accrue up to $1,000 each year in Pay-for-Performance Success Payments. And this works for up to five years – that means you can receive up to $5,000. The payment will be directed to the servicer, who will use these payments to reduce the principal balance of your mortgage.

How do I sign up?

The first step is to contact your lender. Regardless of your situation, this program is available, and lenders are considering it. You must prove to your lender, that this program is a better deal for them. How do you do that? Well, that’s for you to decide…

Official and somewhat confusing description of this program

How to Write a Hardship Letter

admin — Mon, 09 Mar 2009 00:36:30 +0000

Regardless of the specifics of your situation, a properly written hardship letter should always address key factors: Loss mitigator, reading your letter, would have to know why, what and how.

Why? (…are you writing a hardship letter)

This should always be a first paragraph. It is an opening to all future dialogs with the lender Loss Mitigation Department. Nobody cares if your dog broke a leg and you spent all the money on your vet bills. Your job is not to seek sympathy; your job is to explain (within one or two paragraphs) why the amount of money coming in, is less to the amount of money going out. It’s that simple.

A good example of an opening paragraph would be “I am contacting you today to request a loan modification (short sale, reinstatement, whatever) and explain the circumstances that have caused us to fall behind on our mortgage (line of credit, credit cards, etc)”. I like this opening statement because it achieves two major objectives. First, you are letting them know there is a solution, even though it hasn’t been presented to you yet. Second, you are planting the seed of an alternative –a better option for your lender to consider.

Continue the conversation by providing a more detailed summary of “Why?” you’ve missed the payments. Be careful not to trap yourself inside your explanation. What I mean is don’t give details such as “I used to make $ 756.75 per week and now its $543.92”. A better way would be “The industry I’m employed in, experienced a significant slowdown. My employer in particular, reduced its workforce by 20%. I’m thankful for having seniority, which has allowed me to continue my employment, although my work hours have been significantly reduced”.

In most cases, I would recommend tailoring examples from above as an opening part to any hardship letter. Modify the statements as you wish to fit your particular situation, and avoid irrelevant information. Remember the person reading your letter has heard it all, from clever to downright stupid. So keep it brief and to the point.

What? (…are you proposing in a hardship letter)

Please note that facts in this section will ultimately lead to the amount of final settlement.

Tell the reader EXACTLY what you are looking for. Well, maybe not exactly. The objective is to let the mitigator know a solution that will work for you.

For example, let’s take loan modification. Saying something like “if you will reduce my monthly payment by X amount…” may prove to be counterproductive. Your goal is to steer the adjustor into proposing the lowest possible payment. By giving specific numbers you are potentially limiting yourself from getting a better deal. All you know is that lower payment will help. You also know that X amount is what you are looking for. So leave it at that.

Negotiation is an art, and the letter of hardship certainly falls into that category. Trapping yourself from the beginning into something rigid, like X amount, is a big mistake in any negotiation strategy. Enough has been written on that subject, so I’ll spare you “IMHO” and back to the letter.

Suggesting a path to resolution, is the message you want to convey. Simply write “Constant strain from exorbitant mortgage payments, has made it impossible to provide basic necessities for my family. Reduced work hours, combined with recent mortgage rate increases has caused me to fall behind on payments”. It’s simple and to the point.

For some people, this is the hardest idea to grasp. The bank’s objective is to avoid the worst case scenario, which is foreclosure. It’s not to say that you will get the red carpet treatment. You will however, be presented with options, so it’s always better to let the bank give you the numbers first. There will be plenty of opportunities to negotiate actual numbers once the dialogue is open. The hardship letter is simply the first step in seeking a solution.

How? (…your poposition will solve the problem)

As you are writing this letter, think about why are you writing this letter? The point I’m making is that you are in this unfortunate situation because payments were missed. The credibility has been damaged. Will get back to this point a little later…

The mitigator’s job is to assess a number of factors. On the contrary, the “mitigator” title, his / her job is to reduce bank’s losses. Having a bullet proof “How?” is the key to working out the deal. The temptation to provide actual numbers or terms should be avoided. Instead, suggest how lower payments will allow you to keep up with ALL obligations.

Keep it brief and make sure reduced payments (or whatever else you are seeking) will indeed solve the problem. If all your payments equal your income you’ll never make it. There always going to be that unexpected expense, and last thing you want is to fall behind again. Don’t overlook the importance of working out the deal which will provide you with a little money for the unexpected.

My view is that adjuster will pull an updated credit report and see that $400 credit card payment, that department store card, that auto loan with 37 payments remaining. There is no need to provide the specifics in the actual letter. Instead include a separate spread sheet containing money in / money out statement.

Now, back to credibility. The single most important factor that is considered by a lender is a likelihood of this loan going back into default. I encourage you to read the previous sentence again. Did you read it? Now think about it, here you are with missed payments, other debt and lower income asking a lender to refinance the loan. Are you out of your mind?

Well, you’re not! Millions of consumers have been able to get out of high interest loans, reduce their balances, and keep their homes. Structuring the Hardship Letter in a precise, easy to read form, will give you an edge, but addressing the why, what and how, will give you credibility with the mitigator.

Below are downloadable FREE HARDSHIP letters samples you may use. Just remember to put you name instead of “Your Name Here”…

Tennessee Foreclosure Assistance

admin — Fri, 27 Feb 2009 00:35:33 +0000

Tennessee Foreclosure Prevention Counselors

Tennessee Housing Counselors are familiar with the various foreclosure prevention arrangements that lenders will consider. Working with a Certified Housing Counselor is a good way to make sure the advice you receive is accurate, reliable, and appropriate. You Certified Housing Counselor will advise on Tennessee law that may help you to avoid foreclosure. Local counselors are also aware of Tennessee and federal programs that provide additional financial, legal or foreclosure assistance that you may need.

Remember, some housing counselors may charge a fee, so be sure to ask whether their services are free when you contact their office. Meet with the counselor before your mortgage payments are too far behind. Our hope is that the information you find here will help you to avoid foreclosure, and we encourage you to take action right away.

Homeownership Preservation Foundation

Homeowner’s HOPE™, a counseling service provided by the Homeownership Preservation Foundation. Since 2002, HOPE foreclosure counselors have provided advice and education to more than 300,000 homeowners.

Homeownership Preservation Foundation helps homeowners avoid foreclosure. Foundation is an independent nonprofit that provides HUD-approved counselors dedicated to helping homeowners and the help is free. HOPE counselors are experts in foreclosure prevention and trained to set up a plan of action designed to stop foreclosure

Foreclosure Legal Assistance Project program offered by Legal Aid

There are eight Legal Aid or Legal Services organizations in Tennessee. These are not-for-profit law offices that give free foreclosure legal help to people who cannot afford to pay a lawyer. Legal Aid cannot help everyone with every legal problem. Even if Legal Aid cannot represent you directly in a case, they may be able to tell you where to get help or give you advice that will help you handle the case yourself.

The Legal Services organizations also have “Pro Bono” programs. Many private attorneys have agreed to help provide free legal help to low income persons through this program. Your case may be referred to a volunteer attorney who will represent you free of charge through the Pro Bono program.

The Legal Aid offices do not charge for the legal foreclosure help that is given. You may have to pay court costs to take a case to court. You may also have to pay for some other expenses, such as, copies of records, court reporters, and so forth. However, you will not be charged for the attorney’s or paralegal’s time or advice.

Washington Foreclosure Assistance

admin — Fri, 27 Feb 2009 00:02:30 +0000

Free Foreclosure Counseling in State of Washington.

Free foreclosure counseling is available. Contact the State of Washington Homeownership Information Hotline at 1.877.894.HOME for a list of participating foreclosure counselors in Washington State.

Washington Foreclosure Prevention Counselors

Washington Housing Counselors are familiar with the various foreclosure prevention arrangements that lenders will consider. Working with a Certified Housing Counselor is a good way to make sure the advice you receive is accurate, reliable, and appropriate. You Certified Housing Counselor will advise on Washington law that may help you to avoid foreclosure. Local counselors are also aware of Washington and federal programs that provide additional financial, legal or foreclosure assistance that you may need.

Homeownership Preservation Foundation

Foreclosure Legal Assistance Project program offered by Legal Aid

If qualified, foreclosure case is analyzed quickly and in detail to determine what can be done to stop foreclosure. Legal Aid refers clients with potentially fee generating predatory lending cases to the private consumer bar. Legal Aid does not have the resources to represent everyone who qualifies and needs legal services. You can reach Legal Aid at (800) 999-8904.

Indiana Foreclosure Assistance

admin — Thu, 26 Feb 2009 22:36:05 +0000

The Indiana Foreclosure Prevention Network

Indiana began addressing the problem of foreclosure with the launch of a major statewide initiative to assist Hoosiers who are in danger of losing their homes. The Indiana Foreclosure Prevention Initiative was developed by a coalition of community organizations, housing-related agencies, government agencies, lenders and banks, known as the Indiana Foreclosure Prevention Network (IFPN).

Through this unique partnership of the public, private and nonprofit sectors, a toll-free helpline, 1-877-GET-HOPE was established. The helpline is available seven days a week, from 8 a.m. to 8 p.m. For anyone who may be at risk of foreclosure, the helpline provides FREE, CONFIDENTIAL FINANCIAL COUNSELING with no obligation or commitment.

Lenders Offer Options to Stop Foreclosure

Lenders in Indiana offer options to help you avoid foreclosure. However, these options work best when your loan is only one or two payments behind. The farther behind you are on your payments, the fewer options are available. Contact your mortgage lender at the first sign of difficulty to prevent foreclosure.

Indiana Foreclosure Prevention Counselors

Indiana Housing Counselors are familiar with the various foreclosure prevention arrangements with your mortgage lender will consider. Working with a Certified Housing Counselor is a good way to make sure the advice you receive is accurate, reliable, and appropriate. You Certified Housing Counselor will advise on Indiana law that may help you avoid foreclosure. Local counselors are also aware of Indiana and federal programs that provide additional financial, legal or foreclosure assistance that you may need.

Remember, some housing counselors may charge a fee, so be sure to ask whether their services are free when you contact their office. Meet with the counselor before your mortgage payments are too far behind and timeline has passed. Our hope is that the information you find here will help you to avoid foreclosure, and we encourage you to take action right away.

Indiana Legal Services

Indiana Legal Services (ILS) is a nonprofit law firm that provides free foreclosure legal assistance to eligible low-income people throughout the state of Indiana. ILS helps clients who are faced with foreclosure problems.

Over half a million people in Indiana live below the poverty level. ILS recognizes and supports other agencies around the state that provide legal assistance to the poor, such as legal aid societies and pro bono programs. Even with all of these agencies working hard, it is difficult to meet the legal needs of the poor in Indiana.

ILS receives funds from many different sources, including funding from Congress through the Legal Services Corporation, funding through United Way agencies and other agencies around the state. ILS also accepts private donations.

In 2004, ILS served over 11,000 low income people. Some of these cases were full representation cases, where an ILS attorney represented the client in a court or agency action. Some of these cases involved giving a client advice about his or her legal rights and what action the client could take.

Massachusetts Foreclosure Assistance

admin — Thu, 26 Feb 2009 22:00:17 +0000

Governor’s Foreclosure Prevention Plan

Governor Deval Patrick joined state and local officials, non-profit leaders, mortgage lenders and city homeowners, to unveil his comprehensive foreclosure prevention plan designed to keep people in their homes and to stabilize neighborhoods across the Commonwealth.

The five-point plan consists of targeted neighborhood stabilization pilot programs in Lawrence and five other Bay State cities, transition resources from lenders and servicers, consumer outreach and education, lending best practices and coordination to increase utilization of MassHousing’s loan refinancing program.

“A surge in foreclosures is taking a real toll on families, entire neighborhoods and local economies here in Lawrence and across the Commonwealth,” said Governor Patrick. “Our prevention plan is comprehensive and gives distressed homeowners and communities the immediate and long-term relief they need right now.”

Transitional Foreclosure Resources

To assist these crucial efforts, the administration’s prevention plan calls on participating lenders to provide $5,000 to the housing counseling agency working with an eligible homeowner who loses his or her home to foreclosure or gives a deed in lieu of foreclosure. The transition resources will enable the homeowner to pay for first and last month’s rent and moving expenses. The remaining money will be retained by the non-profit organization to offset the administrative cost of its counseling programs. Transition resources will be limited to borrowers who are working with a qualified housing counselor approved or sponsored by NeighborWorks, CHAPA or HUD and who have an ARM first mortgage on an owner-occupied one through four-family home and meet other criteria.

The “Mortgage Relief” Initiative

The Mortgage Relief initiative has grown from five regional banks to nearly fifty banks of every size, with branches throughout much of New England. The participating banks represent a safe and sound place to discuss foreclosure prevention, with expertise and respect. Whenever possible, the banks participating in the initiative will help eligible homeowners refinance into conventional loans that will better meet their needs.

The banks aim to help homeowners with high-rate, nontraditional, or resetting loans who are having difficulty making payments (or expect to).

Banks that serve the region, regardless of their size, have a stake in the success of the New England economy. The banks participating in the Mortgage Relief Initiative:

have committed to reach out to borrowers in high-rate mortgages with difficult terms;
are expanding their utilization of programs that may help borrowers with limited home equity (programs like Federal Housing Authority loans, and loans guaranteed by state agencies);
have designated one or more “go to” lenders who can help borrowers explore their mortgage relief options;

Borrowers in those difficult situations should work to contact the servicer of their mortgage as soon as possible (in particular, the servicer’s loss mitigation department), or a mortgage-counseling service.

Home Saver Foreclosure Prevention Program

Are you worried about keeping up with your monthly mortgage payments? Were you surprised by the terms of your loan after you closed your mortgage? MassHousing’s Home Saver program may be able to help you avoid losing your home through foreclosure.

Home Saver is privately financed; no taxpayer dollars are used for the program.

Home Saver is a counseling and loan program that helps borrowers who are unable to repay their mortgage. It is a proactive step that home owners take before their mortgage becomes unaffordable, and before foreclosure becomes a real possibility. Home Saver includes a mandatory counseling component and a refinancing of your existing loan.

Home Saver assists home owners with modest incomes who are burdened by an unaffordable loan. Given the loan’s terms and the borrower’s income, assets, obligations and other considerations, there could have been no reasonable expectation that the loan could be repaid.

North Carolina Foreclosure Assistance

admin — Thu, 26 Feb 2009 20:47:23 +0000

Home Protection Program and Loan Fund

The North Carolina Home Protection Program and Loan Fund helps workers who lose their jobs as the result of changing economic conditions avoid foreclosure of their homes. Created by the General Assembly in 2004 and operated by the North Carolina Housing Finance Agency.

If you qualify, you can receive a zero-interest loan that is usually equal to the lesser of $24,000, 24 months of monthly mortgage payments, or the minimum amount required to bring loans and other mortgage-related obligations current. The loans can be either short-term—to bring a mortgage current, or long-term—to keep a mortgage current for up to 24 months while you participate in an approved retraining program.

A unique component of the program is a temporary 120-day stay of foreclosure. Under N.C. statute (Session Law 2005-276, Section 20.2, as amended), once a homeowner’s completed application has been received by the Agency, the stay of foreclosure is imposed. While the stay protects you from foreclosure, it does not protect against collection, prevent late payments from being included on your credit report, or relieve you from honoring any agreements to pay mortgage-related obligations.

Homeowners apply through participating local agencies, which offer housing counseling and determine whether applicants are eligible for assistance from the loan fund. Homeowners must provide all necessary information with the application, including the circumstances that caused the financial hardship and the factors affecting prospects for resuming mortgage payments. Please note that the counseling agency’s determination of eligibility for a loan does not guarantee assistance; the North Carolina Housing Finance Agency approves or denies all loans.

To be eligible for a loan, you must meet all of the following criteria:

have lost your job due to changing economic conditions
have a mortgage that is secured by real property
demonstrate an ability to resume your mortgage payment after the assistance ends, and
have had a stable employment and credit history prior to losing your job.

Assistance is available on a first-come, first-serve basis, and until funds are expended. Homeowners who need assistance should be directed to the Home Protection Program Counseling Agency in their area.

State Home Foreclosure Prevention Project

The State Home Foreclosure Prevention Project (SHFPP) was created by recent emergency legislation signed into law by Governor Easley on August 17, 2008. The SHFPP is a partnership, led by the Commissioner of Banks, to reduce subprime foreclosures in North Carolina. The partners include housing counselors, legal assistance organizations, mortgage servicers and community organizations.

A homeowner facing foreclosure on a subprime loan made between January 1, 2005 and December 31, 2007 should receive a letter from their mortgage servicer 45 days prior to foreclosure with information on resources available to assist the homeowner in avoiding foreclosure.

By providing quality legal representation in foreclosure actions, the Project saves homes, preserves credit ratings and strives to make prohibitive the cost of conducting business for the unscrupulous brokers and lenders.

The Mortgage Foreclosure Project includes a “team” of attorneys and staff who are located in LANC offices and who specialize in foreclosure defense and predatory lending law. The MFP team acts on referrals from Legal Aid of North Carolina offices and community organizations throughout North Carolina.

Legal Aid of North Carolina: 866-219-LANC (866-219-5262)

New Jersey Foreclosure Assistance

admin — Thu, 26 Feb 2009 20:06:20 +0000

Foreclosure Mediation Program

The Office of the Courts Foreclosure Mediation Program provides homeowners with access to housing counselors and court trained mediators to resolve foreclosure actions by proposing work-out and payment arrangements between distressed borrowers and lenders. The program will also provide lawyers to income-eligible homeowners.

This program is a partnership of The Judiciary, the Office of the Attorney General, the Housing & Mortgage Finance Agency, Legal Services of New Jersey, the Office of the Public Advocate and, the Department of Banking.

If the hotline is busy due to heavy call volume, visit www.lsnjlaw.org/foreclosure and complete the online form. Someone will get back to you as soon as they can. All submissions are responded to in the order they are received.

Call Toll Free: 1-888-989-5277. The Foreclosure Mediation Hotline is open from 8 a.m. to 6 p.m. Monday through Friday.

Home Ownership Preservation Refinance Program (HPRP)

New Jersey Housing and Mortgage Finance Agency HPRP provides an affordable financing alternative to borrowers whose current mortgage is no longer suitable for their financial situation as well as closing cost assistance and homeownership counseling. HPRP is a 30- or 40-year loan, refinanced through a state-approved lender, with a fixed rate of 8 percent for a 30-year loan and 8.125 percent for a 40-year loan. The loan can be equal to 100 percent of the appraised value of the home or 103 percent of the appraised value if private mortgage insurance is included in the mortgage loan.

To participate in the program:
Families may earn up to 140 percent of the area median income
Must demonstrate a financial hardship
Home must be their primary residence
And must have been denied a loan modification

If the loan has already reset, a borrower may have up to three 30-day or one 60-day delinquency during the past 12 months. There is no minimum credit score requirement. Borrowers seeking to refinance before a rate reset must have no late payments during the past 12 months, must have a credit score of 575 or higher. Additionally, borrower may not own any other residential real estate property and must show the ability to repay the loan.

The Anti-Predatory Lending Project (APLP)

If you feel you have been taken advantage of or misled by a lender, contact Legal Services of New Jersey. Legal Services of NJ provides legal representation to low-income New Jersey homeowners facing foreclosure. Homeowners regardless of income level may file a complaint with the NJ Department of Banking and Insurance by calling 800-446-7467.

The Anti-Predatory Lending Project (APLP) at LSNJ provides free attorney advice and legal representation to low-income New Jersey homeowners who are facing foreclosure or who may be at an increased risk of foreclosure because they were deceived or treated unfairly by a mortgage broker, mortgage lender, or mortgage servicer. The APLP also helps victims of foreclosure rescue scams—people who are in danger of losing their homes after someone falsely promised to help them avoid foreclosure. Contact the APLP through LSNJ’s statewide, toll-free legal hotline, at 1-888-LSNJ-LAW (1-888-576-5529).

Pennsylvania Foreclosure Assistance

admin — Thu, 26 Feb 2009 19:18:42 +0000

Foreclosure Mitigation Counseling Initiative

The Pennsylvania Housing Finance Agency (PHFA) has established the Foreclosure Mitigation Counseling Initiative to help interested homeowners to avoid foreclosure.

Mortgage foreclosure mitigation assistance will be made available to homeowners of owner–occupied homes with mortgages in foreclosure or in danger of default. Homeowners will be provided with such assistance that will consist of activities that are likely to prevent foreclosures and result in the “long-term affordability” of the mortgage.

The counseling sessions associated with this initiative are free services to the homeowner. Counseling and advice of all likely restructuring and refinancing strategies or the approval of a workout strategy by all interested parties is required.

Refinance to an Affordable Loan Program (REAL)

The REAL program offers attractive 30-year fixed rates. Because it combines 100 percent financing with flexible credit underwriting, it may offer relief to homeowners like you who otherwise may not qualify for typical mortgage refinance programs.

You might be eligible for a REAL loan if:

The combined gross annual income of all borrowers may not exceed $120,000.
You are no more than 59 days past due on your existing mortgage.
You must have a credit score of at least 620 OR meet all of the following conditions:
- Your mortgage payment adjusted in the last 12 months to a higher interest rate or a fully amortized payment and you have made no more than two, 30-day late payments since the adjustment.
- Your credit history of other debt shows no more than three, 30-day late payments 12 months
- You may borrow up to 100 percent of your home’s value based upon a current appraisal.
- Your monthly total debt costs may not be more than 50 percent of your total gross monthly income.

If you meet the conditions above, contact a PHFA-participating REAL lender. You may also call PHFA’s toll-free consumer information hotline at 1.800.822.1174 for more details.

PHFA also offers free mortgage counseling through its network of Foreclosure Mitigation Counseling Initiative (FMCI) Agencies. These agencies can review your specific situation and help you sort through your options. They can also help you gather the information and documents required for the HERO Program which is described below.

Homeowners’ Equity Recovery Opportunity Loan Program (HERO)

HERO is a loan program designed to improve the financial situation of Pennsylvanians who are not able to afford their current mortgage payments and may face foreclosure. The HERO program provides for up to 100 percent financing but, instead of refinancing your current mortgage into a new loan, PHFA purchases your loan directly from your current lender and then sets you up on an affordable repayment agreement. This program is for borrowers not eligible for PHFA’s REAL program (Refinance to an Affordable Loan) or another mortgage refinance product available in the general market due to credit issues or owing more than your home’s current appraised value.

HERO provides an affordable interest rate.
PHFA services the loan so you don’t have to worry about it being sold to another lender or servicer.
Property taxes and insurance are included in your monthly payment amount.
If you owe more than your home’s current value, PHFA may be able to negotiate with your current lender to reduce the amount owed on your loan.
The HERO loan may be used to pay off: the current mortgage debt, closing costs, prepayment penalties, and delinquent property taxes.
All approved borrowers must attend in-person financial counseling at a PHFA-approved agency.

You might be eligible for a HERO loan if:

The combined gross annual income of all borrowers may not exceed $120,000
You have made an effort to meet your financial obligations to the best of your ability.
You have sufficient and stable income to support timely repayment of the HERO loan in regular, monthly installments
You own the mortgaged property and reside in it as your permanent residence
If you have stopped making your mortgage payments, you can account for your cash flow by showing how you have escrowed, saved, or redirected those funds.
The HERO loan must be in first lien position.

If you meet the conditions above, contact the HERO Loan Program Specialist at 1.800.822.1174. The Loan Program Specialist will further explore whether HERO may be your answer. This may include sending you a HERO Prequalification Form and requesting additional documentation relevant to your income, debts, and mortgage terms.

Emergency Mortgage Assistance Program

Thousands of Pennsylvania families faced with the possible loss of their homes through foreclosure have received help from the Homeowners’ Emergency Mortgage Assistance Program (HEMAP). This unique program, created by Act 91 of 1983, is the only one of its kind in the nation.

HEMAP is a loan program designed to protect Pennsylvanians who are financially unable to make their mortgage payments and are in danger of foreclosure. HEMAP funds loaned to prevent foreclosure are not a grant. These funds are a loan and must be repaid.

When approved for HEMAP assistance, a loan is created to bring the delinquent payments current. Two types of assistance are available to the homeowner depending on their income and financial situation: continuing mortgage assistance loans and non–continuing mortgage assistance loans.

If a homeowner qualifies for a non–continuing mortgage assistance loan, their mortgage is brought current to a specified date and the homeowner is responsible for making all subsequent monthly mortgage payments to their lender along with a monthly payment to HEMAP. The homeowner may also be required to make a cash contribution toward the mortgage delinquency at the time the HEMAP loan closes.

If a homeowner qualifies for a continuing mortgage assistance loan, their mortgage is brought current to a specified date and then HEMAP subsidizes their monthly mortgage payment to their lender.

All HEMAP loans, continuing or non–continuing, are limited to a maximum of 24 months from the date of the mortgage delinquency, or to a maximum of $60,000.00, whichever comes first.
HEMAP loan recipients are required to pay up to 40 percent of their net monthly income, as determined by HEMAP, towards their total housing expense. The minimum monthly payment/contribution to HEMAP, set by law, is $25.00 per month per mortgage assisted.

If the homeowner qualifies for a continuing mortgage assistance loan, the homeowner sends their designated monthly payment/contribution amount to HEMAP. HEMAP combines the amount sent by the homeowner with HEMAP funds and forwards the full monthly mortgage payment directly to the lender on the homeowner’s behalf. Homeowner’s contributions are set at 40 percent of the household net monthly income (NMI) less the utility expense and homeowners insurance costs, if it is not escrowed.

The interest rate on mortgage assistance loans is nine percent when household income requires repayment based on the 40 percent calculation. If income does not require repayment based on the 40 percent calculation, interest will not be charged and will be adjusted back and forth to nine percent as necessary. There is a mandatory minimum payment of $25.00 per month per mortgage assisted.