Background
Home ownership in the United States has reached record levels. In 2005 the U.S. Census Bureau estimated the homeownership rate at 69 percent. Home ownership can build a foundation of strong personal wealth, stability, investment and involvement within a community. But the same innovations in mortgage lending that have facilitated homeownership have put homeowners at greater risk of delinquency. According to industry analysts, foreclosure filings are up 35 percent nationwide since a year ago. Foreclosures are devastating communities across the United States, destabilizing both lower income inner city areas and prosperous suburbs. The resulting increases in vacancies can mean lost property tax revenues and neighborhoods left victim to crime and lowering property values.

Help For Homeowners Facing Foreclosure
The U.S. Department of Housing and Urban Development (HUD) provides advice for homeowners facing the loss of their home. The following information is available on their web site at http://www.hud.gov/offices/hsg/sfh/econ/econ.cfm

The ownership of a home is a significant financial investment and source of pride to most Americans. The loss of a home can be financially and personally devastating.

Financial Problems are often associated with life changing experiences including:

• Divorce or separation
• Loss of job
• Reduction in work hours or overtime
• Illness, injury, or death of a family member
• Retirement

Contact Your lender As Soon As Possible
Many people avoid calling their lender when they are having problems meeting their mortgage obligation. Most are embarrassed to discuss any money problems and fear that a lender, aware of financial pressure, will rush to collection or foreclosure. The fact is that lenders want to help borrowers keep their homes. Foreclosure is expensive for lenders who are under regulatory obligations to work aggressively with borrowers who are having financial problems.

Lenders have numerous work-out options to help borrowers keep their homes. These options are more successful if the loan is only one or two payments behind. The farther behind the payment the fewer options available.

Talk to a Housing Counseling Agency
If you don’t feel comfortable talking with your lender, you should immediately contact a HUD-approved housing counseling agency and arrange an appointment with a counselor. A counselor can help determine you financial situation and what options are available to you. A counselor will be familiar with the different work-out options available and will be able to competently negotiate with your lender.
A HUD-approved counselor will help you establish a workable monthly budget. By meeting with them before your mortgage payments are too far behind it will protect your home and credit.
A counselor may provide information on other services and resources including additional financial, legal or medical assistance.

To find out more about HUD-approved housing counseling agencies and their services call (800) 569-4287 or visit HUD on the web at www.HUD.gov.

Protecting Your Credit Rating
Protecting your credit rating is important to rent or buy a home, complete other transactions and even to apply for a job. Consumer credit agencies and your lender can help you explore solutions to keep your credit rating.

Loan Workout Solutions
Reinstatement
The lender will accept the total amount owed in a lump sum by a specific date. This option is often combined with Forbearance.

Forbearance
The lender will allow reduced or suspended payments for a short period of time after which another option must be agreed upon to bring the loan current. A forbearance option is often combined with a Reinstatement to bring the account current at a specific time.

Repayment Plan
This is an agreement to resume making monthly payments in addition to portions of the past due payments.

Mortgage Modification
A loan may 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.
• Extending the number of years to repay

Claim Advance
If the mortgage is insured, a borrower may qualify for an interest-free loan from the mortgage guarantor to bring the account current. The repayment on this loan may be delayed several years.

Options if Keeping the Home is Impossible

• Sale. A lender may agree to a specific amount of time to find a purchaser and pay off the total amount owed.
• Pre-Foreclosure Sale of Short Payoff. If the property’s value is not enough to pay the loan in full, a lender may be able to accept less than the full amount owed.
• Assumption. A qualified buyer may be allowed to assume your mortgage, even if your original loan documents state that it is non-assumable.
• Deed in Lieu. A borrower may voluntarily “give back” their property and forgive the debt.

Special Disaster Relief Options
Additional assistance may be available: • Victims of a Natural Disaster • The Service member’s Civil Relief Act

Predatory Lending
Borrowers facing foreclosure and/ or unemployment are frequent targets of predatory lenders. For more information contact:

• HUD’s Predatory Lending Web Site
• Freddie Mac’s Predatory Lending Web Site
• Freddie Mac’s “Don’t Borrow Trouble” Web Site.

HUD- Approved Counseling Agencies in Ohio

http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=OH

Homeownership Preservation Foundation’s HOPE Hotline, available 24/7 to help those facing mortgage problems: (888) 995-HOPE (4673)

www.hpfonline.org