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FAQ : Where can I get information on the FHA loss mitigation program?

Solution Details: HUD'S Loss Mitigation programs for FHA insured loans have a variety of options to prevent a possible foreclosure of your home.  All of HUD's Loss Mitigation programs are coordinated through your lender so be sure to call them to explore your loan workout options. 

Special Forbearance Plan:  Your lender may allow you to reduce or suspend payments for a short period of time after which another option must be agreed upon to bring your loan current.  A forbearance option is often combined with a Reinstatement when you know you will have enough money to bring the account current at a specific time in the future.  The money might come from a hiring bonus, investment, insurance settlement, or a tax refund.  This option can also be used as a repayment plan.  You may be able to get an agreement to resume making your regular monthly payments, in addition to a portion of the past due payments each month until you are caught up. 

Mortgage Modification:  If you can make the payments on your loan, but you do not have enough money to bring your account current or you cannot afford the total amount of your current payment, your lender may be able to change one or more terms of your original loan to make the payments more affordable.  Your loan could be permanently changed in one or more of the following ways:    adding the missed payments to the existing loan balance; changing the interest rate, including making an adjustable rate into a fixed rate; or extending the number of years you have to repay. 

Partial Claim Advance:  If your mortgage is insured, you may qualify for an interest-free loan from your mortgage guarantor to bring your account current.  The repayment of this loan may be delayed for several years. 

Pre-Foreclosure Sale or Short Payoff:  If the property's sales value is not enough to pay the loan in full, your lender may be able to accept less than full amount owed.  This option can also include a period of time to allow your real estate agent to market the property and find a qualified buyer.  Monetary help may also be available to pay other lien holders and/or help toward paying a few moving costs. 

Deed-in-lieu:  Your lender may agree to allow you to voluntarily "give back" your property and forgive the debt.  Although this option sounds like the easiest way out for you, generally, you must attempt to sell the home for its fair market value for at least 90 days before the lender will consider this option.  Also, this option may not be available if you have other liens such as judgments of other creditors, second mortgages, and IRS or State Tax liens. 

All requests for information or clarification related to Loss Mitigation should be directed to your servicing lender.  If your servicing lender will not provide you the information, please contact the National Servicing Center by calling 1-888-297-8685 or by email to Hsg-lossmit@hud.gov.

http://www.hud.gov/offices/adm/hudclips/forms/files/pa426h.pdf

DISCLAIMER: All policy information contained in this knowledge base article is based upon the referenced HUD policy document. Any lending or insuring decisions should adhere to the specific information contained in that underlying policy document.