AFRICAN-AMERICAN JUVENILE JUSTICE PROJECT (AAJJP)

ALTERNATIVES TO FORECLOSURE

You do NOT have to file bankruptcy to keep your home and you DO NOT have to pay someone to help you keep your home.  However, lawyers will charge to assist you with repayment plans, but you can do this yourself by following these directions.

The following are alternatives to foreclosure:

HUD/FHA

·          Forbearance

·          Loan Modification

·          Repayment/Installment Plan

·          Deed In-Lieu of Foreclosure

·          Sale

Conventional Loans

• Forbearance
• Repayment/Installment Plan

How do I exercise these options?

Call your mortgage company and ask to speak with their “Loss Mitigation” Department, Work-Out or HOPE (Countrywide), and/or Home Recovery Department.

What is HUD Form 92068-F?

This form is the Mortgage Assignment (not assistance) Program which request for financial information.  Ask your mortgage company for this form so that you can began your repayment or alternative to foreclosure process.

What documents do they need to process these options?

You will need to have available the following information and documents:

·          2 months of Bank Statements

·          Last 2 years of Tax Filings

·          Recent Utility Bill in your name

·          At least one (1) - four (4) months of the regular monthly mortgage payment

·          Personal Statement about your financial circumstances that lead to your delinquency

·          Current ability to pay the bill (recent pay stubs for at least the last two pay periods)

·          The name, address, and telephone number of your current employer

·          If self-employed, provide your last 2 years of tax information and a Year-to-Date and Profit/Loss Business Statement for the last 2 quarters.

What do I do with this information?

After you request to exercise one of these options, be prepared to fax these documents to their office immediately for a “work-out".

Which option should I choose?

Forbearance – this is a deferment plan.  If your loan is at least three or more months past-due then you can request a deferment for that period.  You must also agree to make payment arrangements for this amount and your regular monthly obligations (repayment).

Repayment/Installment Plan – Is an agreement to pay the past-due amount with or without making regular monthly payments.  In other words, you may pay it off with your regular monthly payments or separately and in full.

Deed In-Lieu of Foreclosure – You literally give your deed back to the mortgage company and they pay you between one – five thousand ($1,000 - $5,000.00) dollars to leave the property in move-in condition, clean with all fixtures and window treatment.  This keeps the property from being vandalized

Sale – The mortgage company will allow you to secure a Realtor to sell the property at fair market value (FMV) within 90 – 180 days.  If you are unable to do so then you can pay off the past-due amount or exercise the other options. 

What if my property is scheduled for sale?

Most law firms will refer you to the mortgage company to have your loan "re-instated."  Law firms DO NOT handle re-instatement; your mortgage company MUST approve it.  Send all letters and correspondences via fax and certified mail with return receipt to both the law firm and the mortgage company.  Request a "work-out" or to "re-instate the loan."

What if my property is scheduled for foreclosure and the court has served me with the legal pleadings?

 File an answer.  Respond to the allegations that you are past-due.  Do not lie and say that the allegations are false, if you know that they are true.  Instead, you should let the court know that you are capable of entering into an agreement and that you either were not given an opportunity to do so or you were unable to do so at that time.  However, you are now financial able to enter into an agreement.

What is RESPA?

A lot of mortgage companies are selling/transferring their loans to service companies (Bank of America to Aurora Loan Services and ALS to Countrywide, etc.)  Most of the loans are already in default status or past-due at least one or more months.  The new servicer is immediately initiating foreclosure proceedings.  This is a violation under RESPA.  Sec 6 of RESPA (12 U.S.C. Sec. 2605) states that you must receive notice of the transfer and you have 20 days to challenge the transfer or review the loan and repayment plan.  During the 20 days the new loan servicer cannot initiate foreclosure proceedings.  

What is the Fair Debt Credit Practices Act (FDCPA) Sec 809?

The FDCPA says that you have thirty (30) days to dispute a debt.  If you are in foreclosure, the law firm who is handling the proceeding must give you an initial notice that says they are representing the mortgage company.  The letter must state that the exact amount of money you owe and give you the opportunity to make payments to re-instate the loan.  They must give this letter BEFORE they initiate foreclosure proceedings and file a public notice.  During the thirty days, they must investigate your concerns.  You must be notified in writing of their decision.  Last, their letter must give you the name, address and telephone number of a work-out department or loss mitigation department at the mortgage company who is handling your loan.

For additional information http://www.hud.gov/foreclosure/index.cfm