What can homeowners who are behind on their mortgage payments, or who anticipate they might fall behind on their payments due to other life events, or who owe more on their house than its current value, do to try and stay in their home?
These homeowners should contact their lender immediately to discuss what options are available to them. Reluctance to do this is understandable, but the biggest mistake a homeowner can make is to avoid communicating with their lender. It’s in the interest of the lender to keep a borrower in their home and communications between the lender and borrower are the best way to achieve this outcome.
Homeowners who have difficulty reaching their lender should contact local, HUD-approved housing-counseling agencies that can assist in their dealings with their lender. A list of those HUD-approved agencies that have recently received funding from Congress for foreclosure counseling appears below.
Consumer Credit Counseling Service
Consumer Credit Affiliates
Housing for Nevada
Women’s Development Center
HID-HCA of Las Vegas
Washoe County Senior Law Project
Nevada Housing Division
1535 Old Hot Springs Road, Suite 50
Homeowners can also call 1-888-995-HOPE, the 24-hour Homeownership Preservation Foundation Hotline that can put homeowners in contact with counseling agencies or lenders.
Will any organization claiming to be a housing-counseling agency or offering foreclosure assistance be able to help me?
Homeowners should beware of and avoid dealing with organizations that claim to be housing counselors but are not HUD-certified and charge exorbitant fees. Some of these organizations might be able to help, but many have defrauded homeowners by charging large fees without providing any assistance.
Those who believe they are victims of fraud should contact an attorney. The following legal clinics might be able to provide legal assistance:
Clark County Legal Services
Nevada Legal Services, Inc
Homeowners can also consult the Nevada Division of Consumer Affairs, which regulates deceptive trade practices in the state, toll-free at 1-800-326-5202 or online at www.fyiconsumer.org.
Will my credit score be affected by if my home is foreclosed upon?
Credit bureaus such as Transunion, Equifax and Experian are a few of the familiar agencies that assess a consumer’s creditworthiness. They do so by analyzing a consumer’s outstanding debt, income and payment history and assigning a credit score.
A homeowner should expect that late mortgage payments or a foreclosure on their home will impact their credit score. Homeowners should contact a credit bureau directly to learn more about the impact of a foreclosure on their credit score.
What kind of relief for homeowners at risk of foreclosure is available under recent laws passed by Congress?
The Housing and Economic Recovery Act of 2008 created the HOPE for Homeowners (H4H) program, which will provides a way for some borrowers to refinance their mortgage. Homeowners should talk to the lender from whom they receive their monthly mortgage statements to determine whether they might be eligible for this program.
This measure also provided additional resources to HUD-approved, housing-counseling agencies to help them respond to increased demand for their services from homeowners struggling to pay their mortgages.
How does the H4H program work?
Under this program, which will end on September 30, 2011, you could be eligible to refinance your loan into a more affordable, 30-year, fixed-rate mortgage that is insured by the Federal Housing Administration (FHA).
The principal amount of the new mortgage will equal 90 percent or more of the home’s current appraised value.
H4H is voluntary, so the current lender and borrower must agree to participate. If you have more than one mortgage, all lenders must agree to release the liens against your home.
Who is eligible?
Your mortgage has to have been originated on or before January 1, 2008, it must be your primary residence, and you have to have made at least six payments.
As of March 2008, you must have or soon have a debt-to-income ratio of at least 31 percent and prove that you cannot afford your current loan.
Assuming you meet these and other key eligibility requirements, you may also apply for H4H if you are already facing foreclosure, bankruptcy, and if you are still current on your mortgage but your payments are set to increase soon.
What are the costs associated with this program?
In order to participate in this program, you will pay an upfront mortgage insurance payment of 3 percent along with a 1.5 percent annual premium that will be included in your monthly payments.
You are also obligated to equally share both the 10 percent equity created at the beginning of the new mortgage and any future appreciation in the value of your home with the FHA.
Lastly, you will not be able to apply for a second mortgage for the first five years, except under certain circumstances directly related to home repairs.
How do I apply?
Before you apply for this program, you may wish to contact a HUD-Approved Housing Counselor to determine if this program is the best option for your situation.
You can also find a list of FHA-approved lenders and counselors at www.fha.gov.
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