Options after I receive a Foreclosure Notice

Your options include the following:

Special Forbearance. Your lender may be able to arrange a repayment plan based on your financial situation. Your lender may even provide for a temporary reduction or suspension of your payments.

You may qualify for this if:

·         You have recently lost your job or source of income or;

·         You had an unexpected increase in living expenses.

You must furnish information to your lender to show that you would be able to meet the requirements of the new payment plan.

Mortgage Modification. You may be able to refinance the debt and/or extend the term of your mortgage loan. This may help you catch up by reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem but your net income is less than it was before the default (failure to pay).

Partial Claim. Your lender may be able to work with you to obtain an interest-free loan from HUD to bring your mortgage current.

You may qualify if:

1.       Your loan is at least 4 months delinquent but no more than 12 months delinquent;

2.       Your mortgage is not in foreclosure; and

3.       You are able to begin making full mortgage payments.

When your lender files a Partial claim, HUD 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 will be due if you sell or leave your property, or when your mortgage matures.

Pre-foreclosure Sale. This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure and damage to your credit rating.

You may qualify if:

1.       The "as is" appraised value is at least 70% of the amount you owe and the sales price is 95% of the appraised value;

2.       The loan is at least 2 months delinquent prior to the pre- foreclosure sale closing date; and

3.       You are able to sell your house within 3 to 5 months (depending on what your lender agrees to).

An additional benefit to this option is the assistance you will receive with the seller-paid closing costs.

Deed-in-lieu of foreclosure. As a last resort, you may be able to voluntarily "give back" your property to the lender. This won't save your house, but it will help your chances of getting another mortgage loan in the future.

You can qualify if:

1.       You are in default and don't qualify for any of the other options;

2.      Your attempts at selling the house before foreclosure were unsuccessful; and you don't have another FHA mortgage in default.