Monday, October 19, 2015

FHA Loan Workout Solutions to Avoid Foreclosure and keep your home.

If you  fall behind on your FHA insured mortgage, there may be options available that let you keep your house and avoid foreclosure. 
  • Reinstatement: If you have the money to do- if you win the lottery or your rich uncle dies and leaves you a lot of money, your lender will probably be willing to accept the total amount owed to them in a lump sum and reinstate the loan.  If you have most of what you owe,  they may combine a lump sum payment with a forbearance.
  • Forbearance: Your lender may allow you to reduce your house payments or suspend payments for a short period of time.  After that period of time however, the total amount that was not paid becomes due and then the lender will see which another option will bring your loan current.
  • Repayment Plan: You may be able to get an agreement to resume making your regular monthly payments plus an additional amount each month until you are caught up. There are both formal and informal repayment plans.
    • Informal plan is for a verbal agreement for a period of less than three months that will bring the payment current.
    • Formal plan is a written agreement that will bring the loan current and last for a period of from three to six months.
  • Mortgage Modification: If you are too far behind to catch up the loan in six months and do not have the cash to reinstate the loan you may be able to modify the loan. The lender may be able to change one or more terms of your original loan. He may be able to
    • Add the missed payments to the existing loan balance.
    • Changing the interest rate, including making an adjustable rate into a fixed rate.
    • Extend the number of years you have to repay the loan.
  •  Partial Advance: Consumers think of this as "moving the missed payments to the end of the note." In reality the way this is done is that the mortgage company files a claim with FHA for the missed payments and FHA makes the homeowners and interest-free loan which becomes due when the first mortgage is paid off.
These are the standard options. There are other options for those who may owe more on their home than what the home is worth. There are also options for those with a second mortgage. For more information talk to a HUD-approved housing counselor. Call me, Rod Williams 615-850-3453

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