Thursday, July 13, 2017

"Moving the missed payment to the end of the note," update.

Borrowers with an FHA mortgage who face a hardship and get behind on their house payments, may be eligible for a workout called a "partial claim."  The way the homeowner thinks about it and the way the mortgage company my describe it is that the missed payments were "moved to the end of the note."  In reality what happens is that the mortgage company files a claim against the FHA mortgage insurance and  FHA makes a loan to the borrower to catch up the missed payments.  No interest is charged on the loan and no payments are required.  The loan does not become due until the first mortgage is paid off. If the homeowners income is insufficient to resume making the regular payment, the partial claim may be combined with a modification that results in a lower payment.

As a housing counselor I sometime encounter people who have already had one partial claim and then experienced a new hardship and got behind again.  At one time, the amount of partial claim available was only 12 months of payments. Now the program is more generous.  Here is the way to calculate the amount of partial claim available as described in MORTGAGEE LETTER 2016-14:
Partial Claim : The total amount available is the lesser of: ( 1) the unpaid principal balance as of the date of Default associated with the initial Partial Claim , if applicable , multiplied by 30%, less any previous Partial Claim (s) paid on this Mortgage; (2) if no previous Partial Claim(s), the unpaid principal balance as of the date of the current Default multiplied by 30%; or (3) the total amount required to meet the Target Payment. The Partial Claim amount may include: arrearages; legal fees and foreclosure costs related to a canceled foreclosure action; and principal deferment ...
Assume a homeowner is ten months past due and assume the monthly payment is only $508 a month but with legal expenses and other foreclosure cost it would take $7750  to reinstate the loan. Also assume the homeowner had had a previous partial claim of $3000. Assume the amount of the principle balance at the date of default the first time they got a partial claim was $56,000. To calculate if this homeowner would be eligible for a partial claim one would do this calculation: $56,000 x 30% = $16,800, the total amount available for a partial claim. $16,800 - the amount of the first partial claim of $3000= $13,800, the amount of partial claim still available. Since the homeowners current amount needed is reinstate the loan is $7750, the homeowner should be eligible for a partial claim assuming they meet the other requirements.

Don't worry about knowing how to do this, that's my job.  If you are in default on your mortgage, there may be other solutions also.  If you live in the middle Tennessee area and are in default or are having trouble making your house payment, call me for a free consultation. Rod Williams 615-850-3453.

New program to help homeowners save their home from foreclosure.

The following is from the THDA website

The Tennessee Housing Development Agency’s (THDA) Principal Reduction Recast Program with Lien Extinguishment (PRRPLE) will lower monthly mortgage payments to affordable levels for eligible homeowners by providing (1) a reduction in the principal balance of their first mortgage loan, combined with a loan recast, modification, refinance or (2) principal reduction which results in a full lien extinguishment.

This program is available to qualifying homeowners who are facing a financial hardship, through no fault of their own, which resulted in a loss of income due to the death of a spouse, divorce, or underemployment.

The goal of the program is to reduce delinquencies and foreclosures by lowering mortgage payments to affordable levels for homeowners who have encountered a financial burden due to an eligible hardship, including but not limited to homeowners who are living on social security, long-term disability or other fixed income source.

If you have questions or need assistance with the PRRPLE application please call (855) 890-8073 or email
This is a great program and may save your home if you meet the criteria and if you can successfully apply.  The program expects a consumer to be able to answer questions they may not understand and assumes they know terminology they may not know.  To apply, you must scan and upload documents.  If you are a loan processor or a legal secretary it should be easy to make application by yourself; anyone else may have difficulty.

It you want help completing an application, call me.  There is no charge for my services.  I will evaluate you and see if you are eligible and if you are I will help you make application.  I can scan document for you and notarize documents and help you write letters you may need to write.  You can apply without help but your chances of successfully applying are greatly enhanced if someone who knows what they are doing helps you. I am a counselor with a HUD-approved housing counseling agency and have over 20 years of experience as a housing counselor and am good at what I do.  The agency is Woodbine Community Organization. Call me, Rod Williams, 615-850-3453.