FHA
Survival Guide for the UnemployedMortgage Foreclosure AssistanceIf you have fallen behind in making your monthly mortgage payments, you may be eligible for assistance from one the following programs: the Pennsylvania Housing Finance Agency's (PHFA) Homeowners Emergency Mortgage Assistance Program (HEMAP), the Department of Housing and Urban Development's (HUD) Loss Mitigation Program, or the Veterans Administration (VA) Refunding Program. Bankruptcy is another option for some families |
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FHA Mortgages
Loss Mitigation Options
HUD has created a Loss Mitigation Program, which gives the mortgage company the option of providing assistance to FHA homeowners who are behind on their mortgage. The loss mitigation tools are used at the option of the lender. There is no longer a mandatory assistance program such as HEMAP for FHA homeowners. The loss mitigation options include:
- Special forbearance plans
- Mortgage modifications
- Partial claims.
- Pre-foreclosure sales
- Deeds-in-lieu of foreclosure
Special Forbearance
Special forbearance allows lenders to suspend or reduce mortgage payments over an 18-month period with the total amount of arrearages (the amount owed) not to exceed the equivalent of 12 months of payments. Mortgagees may enter into a special forbearance agreement without HUD's permission. The eligibility conditions for a special forbearance plan are: 1) an involuntary reduction in income or an increase in living expenses, and 2) the lender determines the borrower has a reasonable ability to pay under the terms of the forbearance plan to eliminate the arrearage. This tool is intended for homeowners who have experienced an involuntary, temporary reduction in income, or increase in living expenses. The special forbearance agreement may be entered into after 4 months of missed payments, but no later than 7 missed payments.
Mortgage Modification
A mortgage modification 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 current market rate. This tool is geared to homeowners who have recovered from financial crisis but have experienced a permanent reduction in income. This is a particularly valuable tool during times of low interest rates.
Partial Claims
Through a partial claim, FHA will pay off the homeowner's arrearages (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 default. The lender must create a repayment plan involving no more than 36 monthly installments. Homeowners are required to repay 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 special forbearance alone will not resolve the delinquency. A partial claim can be used in conjunction with a special forbearance but not mortgage modification.
Pre-foreclosure Sale
Pre-foreclosure sales offer homeowners who are unable to recover from their default an opportunity to sell their home in order to avoid foreclosure. Homeowners are given 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 unsuccessful.
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 mitigation tools to voluntarily turn over the deed to their homes "in lieu" of, or instead 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 attempt at a pre-foreclosure sale fails. Homeowners who choose this option may be paid up to $500.
INITIATING LOSS MITIGATION
As soon as the homeowner realizes that he will be delinquent in payments, s/he must contact their lender or a housing counselor to discuss Loss Mitigation options to prevent further delinquency. The homeowner should contact the Loss Mitigation department of the lender and seek counseling from a certified HUD counselor. You can get help from the Benefit Counselor at UIC at (215) 557-0822
HUD Approved Counseling Agencies
| Unemployment
Information Center 1201 Chestnut Street, Room 702 Philadelphia, PA 19107 Phone:215-557-0822 Fax:215-557-6981 |
CCCS
of Delaware Valley 1515 Market Street, Suite 1325 Philadelphia, PA 19102 Phone: 215-563-5665 |
Philadelphia
Development Partnership 1334 Walnut Street, 3rd Floor Philadelphia, PA 19107 Phone:215-545-3100 Fax: 215-546-8055 |
Philadelphia
Housing Development Corporation 1234 Market Street, 10th Floor Philadelphia, PA 19103 Phone:215-448-3000 Fax: 215-448-3133 |
| Housing
Association Info. Program 1528 Walnut Street, 10th Floor Philadelphia, PA 19107 Phone: |
Consortium
for Disabled Individual 260 South Broad Street, 18th Floor Philadelphia, PA 19102 Phone: 215-895-5609 |
Phila
Neighborhood Housing Serv 121 North Broad Street, Suite 502 Philadelphia, PA 19140 Phone: 215-988-9879 Fax: 215-988-1297 |
Resources
for Human Development 3721 Midvale Avenue Philadelphia, PA 19129 Phone: 215-951-0300 Fax: 215-951-0300 |
| New
Kensington CDC 2513-15 Frankford Avenue Philadelphia, PA 19125 Phone: |
Northwest
Counseling Service 5001 North Broad Street Philadelphia, PA 19141 Phone: 215-324-7500 |
Tenant Union Representative Network 1315 Walnut St., 3rd Floor Philadelphia, PA 19107 Phone:215-940-3900 |
Urban
League of Philadelphia 251-53 South 24th Street Philadelphia, PA 19103 Phone:215-451-5005 Fax215-451-5006 |
| Nueva
Esperanza, Inc 4261 North 5th Street Philadelphia, PA 19140 Phone: 215-324-0746 Fax: 215-324-2542 |
Phila.
Council for Community Advancement 100 North 17th Street, Suite 600 Philadelphia, PA 19103 Phone:215-567-7803 |