Home Foreclosure FAQ's
In this section, you will find answers to the
most frequent questions we receive about mortgages, interest rates, and
other information related to home foreclosure. If you have a question
we do not address, please ask us directly! Please check our Mortgage Terms Glossary for commonly
used mortgage terminology. You will also find more resources at US
Department of Housing and Urban Development. Homex Financial can
stop foreclosure and help you avoid foreclosure and the loss of you
home.
A situation in which a homeowner is unable to make
principal and/or interest payments on his or her mortgage, so the
lender, be it a bank or building society, can seize and sell the
property as stipulated in the terms of the mortgage contract.
Yes, Foreclosure can occur. This is the legal
means that your lender can use to repossess your home. When this
happens, you are required to move out of your house. If your property
is worth less than the total amount you owe on your mortgage loan, a
deficiency judgment could be pursued.
Both foreclosures and deficiency judgments can
affect your ability to qualify for credit in the future. So you should
avoid foreclosure if possible
If you are having problems making your payments,
call or write to your lender's Loss Mitigation Department without
postponement. Explain your situation to them. Be prepared to provide
them with financial information, such as your monthly income and
expenses. Without this information, they may not be able to help. To
avoid foreclosure, consider these three rules:
- Rule #1: Contact your lender
as soon as you know your payments will be late.
- Rule #2: Never ignore the
lender's letters or phone calls. Ignoring the problem won't make it go
away.
- Rule #3: Never assume your
situation is hopeless
Mortgage Modification
If you can make your regular payment now, but
cannot catch-up the past due amount, the lender might agree to modify
your mortgage. One solution is to add the past due amount into your
existing loan, financing it over a long term.
Modification might also be possible if you no
longer have the ability to make payments at the former level. The
lender can modify your mortgage to extend the length of your loan (or
take other steps to reduce your payments).
Pre-foreclosure Sale
This will allow you to avoid foreclosure by
selling your property for an amount less than the amount necessary to
pay off your mortgage loan.
You may qualify if:
- The loan is at least 2 months delinquent;
- You are able to sell your house within 3 to 5
months; and
- A new appraisal (that your lender will obtain)
shows that the value of your home meets program guidelines.
Deed in Lieu of Foreclosure
When the lender allows you to give-back your
property--and forgives the debt. Although it does have a negative
impact on your credit record, it is not as detrimental as foreclosure.
The lender might require that you attempt to sell
the house for a specific time period before agreeing to this option,
and it might not be possible if there are other liens against the home.
For FHA Loans
The lender might be able to help you receive a
one-time payment from the FHA Insurance fund. Your loan must be at
least 4 months but no more than 12 months past due and you must show
you are able to begin making full mortgage payments.
- You must sign a promissory note which allows
HUD to place a lien on your property for the amount received from the
fund.
- The note is interest free, but must eventually
be repaid.
- The note becomes due when you pay off the loan
or when you sell the property.
For VA Loans
VA Regional Loan Centers offer financial
counseling that's designed to help you avoid foreclosure. Call us to
discuss options for your specific situation.
Reinstatement
Reinstatement might be possible when you are
behind in your payments but can promise a lump sum to bring payments
current by a specific date.
Forbearance
In forbearance, you are allowed to delay payments
for a short period, with the understanding that another option will be
used afterwards to bring the account current. Lenders sometimes combine
Forbearance with Reinstatement if you know you'll have the funds to
bring your account current by a specific date.
A Repayment Plan
If your account is past due, but you can now make
payments, the lender might agree to let you catch up by adding a
portion of the past due amount to a certain number of monthly payments
until your account is current.
Partial Claim
Your lender may be able to work with you to obtain
a one-time payment from the FHA-Insurance fund to bring your mortgage
current.
You may qualify if:
- Your loan is at least 4 months delinquent but
no more than 12 months delinquent,
- You are able to begin making full mortgage
payments.
When your lender files a Partial Claim, the U.S.
Department of Housing and Urban Development will pay your lender the
amount necessary to bring your mortgage current. You must execute a
Promissory Note, and a Lien will be placed on your property until the
Promissory Note is paid in full.
The Promissory Note is interest-free and is due
when you pay off the first mortgage or when you sell the property.
Homex Financial can work with you to find the best
solution that fits your scenario. The most important part of the
equation is dealing with issues as soon as they arise. The longer you
wait to deal with foreclosure, the more potentially expensive it
becomes while increasing the risk that a solution is no longer
available.
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