Saturday, May 26, 2007
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: No
- Primary Security Instruments: Mortgage
- Timeline: Typically 180 days
- Right of Redemption: Yes
- Deficiency Judgments Allowed: Yes
In Florida, all mortgages are foreclosed in equity. In a mortgage foreclosure action, the court severs, for separate trial, all counterclaims against the foreclosing lender. The foreclosure claim shall, if tried, be tried to the court without a jury.
The court order of foreclosure will specify how the foreclosure must take place, and the foreclosure must take place on those terms. Whenever a legal advertisement, publication, or notice relating to a foreclosure proceeding is required to be placed in a newspaper, it is the responsibility of the lender or their representative to place such advertisement, publication, or notice.
Equitable Right of Redemption ends at the foreclosure sale (or at another time specified by the courts, but this rarely happens). There is a period of time after the sale that "the court reviews the sale to ensure a fair price has been paid." Basically, this period of time allows parties to object to the sale on the basis that proper procedures were not followed or collusion existed between the bidders, for example. This period is usually 10 days, after which the Certificate of Sale is filed and title passes, if the sale is confirmed. If the sale is not confirmed, another sale is ordered. (Reference F.S. Chapter 702)
The lender may sue to obtain a deficiency judgment in Florida.
Foreclosure Summary copyright, © ForeclosureLaw.org
- Judicial Foreclosure Available: Yes
- Non-Judicial Foreclosure Available: Yes
- Primary Security Instruments: Deed of Trust, Mortgage
- Timeline: Typically 120 days
- Right of Redemption: Varies
- Deficiency Judgments Allowed: Varies
In California, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.
Using this type of foreclosure process, lenders may seek a deficiency judgment and under certain circumstances, the borrower may have up to one (1) year to redeem the property.
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed. Otherwise, the non-judicial power of sale foreclosure is carried out as follows:
A notice of sale must be: 1) recorded in the county where the property is located at least fourteen (14) days prior to the sale; 2) mailed by certified, return receipt requested, to the borrower at least twenty (20) days before the sale; 3) posted on the property itself at least twenty (20) days before the sale; and 4) posted in one (1) public place in the county where the property is to be sold.
The notice of sale must contain the time and location of the foreclosure sale, as well as the property address, the trustee's name, address and phone number and a statement that the property will be sold at auction.
The borrower has up until five days before the foreclosure sale to cure the default and stop the process.
The sale may be held on any business day between the hours of 9:00 am and 5:00 pm and must take place at the location specified in the notice of sale. The trustee may require proof of the bidders ability to pay their full bid amount. Anyone may bid at the sale, which must be made at public auction to the highest bidder. If necessary, the sale may be postponed by announcement at the time and location of the original foreclosure sale.
Lenders may not seek a deficiency judgment after a non-judicial foreclosure sale and the borrower has no rights of redemption.
Foreclosure Summary copyright, © ForeclosureLaw.org
Non-judicial foreclosure is not available
There is a right of redemption can end at the foreclosure sale altough a court can specify another time limit. (again this can be complicated make sure you are properly educated and prepared.)
If the Lender recovers less than the value of the loan, Lenders are allowed to collect on the the deficiency.
Foreclosure investors have to create a checklist. One of the things they have to consider is whether an eviction is involved.
As many Real Estate investors have learned it is sometimes better to bribe the tenants than evict them.
Another thing for a foreclosure investor to consider is that frequently the former tenants or owners destroy the property after selling off anything of value like cabinets and appliances.
I have seen foreclosure with all the granite cracked.
I suspect as some of these negative amortization loans go into foreclosure we are going to see quite a few homeowners destroy their property just before they vacate the home.
Here Ms. Weintraub lays out specifics of when a Realtor may not legally work for an investor in California.
She also discuses Foreclosure properties vs Short Sale properties from and investors perspective.
Friday, May 25, 2007
2945. (a) The Legislature finds and declares that homeowners whose
residences are in foreclosure are subject to fraud, deception,
harassment, and unfair dealing by foreclosure consultants from the
time a Notice of Default is recorded pursuant to Section 2924 until
the time surplus funds from any foreclosure sale are distributed to
the homeowner or his or her successor. Foreclosure consultants
represent that they can assist homeowners who have defaulted on
obligations secured by their residences. These foreclosure
consultants, however, often charge high fees, the payment of which is
often secured by a deed of trust on the residence to be saved, and
perform no service or essentially a worthless service. Homeowners,
relying on the foreclosure consultants' promises of help, take no
other action, are diverted from lawful businesses which could render
beneficial services, and often lose their homes, sometimes to the
foreclosure consultants who purchase homes at a fraction of their
value before the sale. Vulnerable homeowners are increasingly
relying on the services of foreclosure consultants who advise the
homeowner that the foreclosure consultant can obtain the remaining
funds from the foreclosure sale if the homeowner executes an
assignment of the surplus, a deed, or a power of attorney in favor of
the foreclosure consultant. This results in the homeowner paying an
exorbitant fee for a service when the homeowner could have obtained
the remaining funds from the trustee's sale from the trustee directly
for minimal cost if the homeowner had consulted legal counsel or had
sufficient time to receive notices from the trustee pursuant to
Section 2924j regarding how and where to make a claim for excess
(b) The Legislature further finds and declares that foreclosure
consultants have a significant impact on the economy of this state
and on the welfare of its citizens.
(c) The intent and purposes of this article are the following:
(1) To require that foreclosure consultant service agreements be
expressed in writing; to safeguard the public against deceit and
financial hardship; to permit rescission of foreclosure consultation
contracts; to prohibit representations that tend to mislead; and to
encourage fair dealing in the rendition of foreclosure services.
(2) The provisions of this article shall be liberally construed to
effectuate this intent and to achieve these purposes.
2945.1. The following definitions apply to this chapter:
(a) "Foreclosure consultant" means any person who makes any
solicitation, representation, or offer to any owner to perform for
compensation or who, for compensation, performs any service which the
person in any manner represents will in any manner do any of the
(1) Stop or postpone the foreclosure sale.
(2) Obtain any forbearance from any beneficiary or mortgagee.
(3) Assist the owner to exercise the right of reinstatement
provided in Section 2924c.
(4) Obtain any extension of the period within which the owner may
reinstate his or her obligation.
(5) Obtain any waiver of an acceleration clause contained in any
promissory note or contract secured by a deed of trust or mortgage on
a residence in foreclosure or contained that deed of trust or
(6) Assist the owner to obtain a loan or advance of funds.
(7) Avoid or ameliorate the impairment of the owner's credit
resulting from the recording of a notice of default or the conduct of
a foreclosure sale.
(8) Save the owner's residence from foreclosure.
(9) Assist the owner in obtaining from the beneficiary, mortgagee,
trustee under a power of sale, or counsel for the beneficiary,
mortgagee, or trustee, the remaining proceeds from the foreclosure
sale of the owner's residence.
(b) A foreclosure consultant does not include any of the
(1) A person licensed to practice law in this state when the
person renders service in the course of his or her practice as an
attorney at law.
(2) A person licensed under Division 3 (commencing with Section
12000) of the Financial Code when the person is acting as a prorater
as defined therein.
(3) A person licensed under Part 1 (commencing with Section 10000)
of Division 4 of the Business and Professions Code when the person
makes a direct loan or when the person (A) engages in acts whose
performance requires licensure under that part, (B) is entitled to
compensation for the acts performed in connection with the sale of a
residence in foreclosure or with the arranging of a loan secured by a
lien on a residence in foreclosure, (C) does not claim, demand,
charge, collect, or receive any compensation until the acts have been
performed or cannot be performed because of an owner's failure to
make the disclosures set forth in Section 10243 of the Business and
Professions Code or failure to accept an offer from a purchaser or
lender ready, willing, and able to purchase a residence in
foreclosure or make a loan secured by a lien on a residence in
foreclosure on the terms prescribed in a listing or a loan agreement,
and (D) does not acquire any interest in a residence in foreclosure
directly from an owner for whom the person agreed to perform the acts
other than as a trustee or beneficiary under a deed of trust given
to secure the payment of a loan or that compensation. For the
purposes of this paragraph, a "direct loan" means a loan of a real
estate broker's own funds secured by a deed of trust on the residence
in foreclosure, which loan and deed of trust the broker in good
faith attempts to assign to a lender, for an amount at least
sufficient to cure all of the defaults on obligations which are then
subject to a recorded notice of default, provided that, if a
foreclosure sale is conducted with respect to the deed of trust, the
person conducting the foreclosure sale has no interest in the
residence in foreclosure or in the outcome of the sale and is not
owned, controlled, or managed by the lending broker; the lending
broker does not acquire any interest in the residence in foreclosure
directly from the owner other than as a beneficiary under the deed of
trust; and the loan is not made for the purpose or effect of
avoiding or evading the provisions of this article.
(4) A person licensed under Chapter 1 (commencing with Section
5000) of Division 3 of the Business and Professions Code when the
person is acting in any capacity for which the person is licensed
under those provisions.
(5) A person or his or her authorized agent acting under the
express authority or written approval of the Department of Housing
and Urban Development or other department or agency of the United
States or this state to provide services.
(6) A person who holds or is owed an obligation secured by a lien
on any residence in foreclosure when the person performs services in
connection with this obligation or lien.
(7) Any person licensed to make loans pursuant to Division 9
(commencing with Section 22000), 10 (commencing with Section 24000),
or 11 (commencing with Section 26000) of the Financial Code, subject
to the authority of the Commissioner of Corporations to terminate
this exclusion, after notice and hearing, for any person licensed
pursuant to any of those divisions upon a finding that the licensee
is found to have engaged in practices described in subdivision (a) of
(8) Any person or entity doing business under any law of this
state, or of the United States relating to banks, trust companies,
savings and loan associations, industrial loan companies, pension
trusts, credit unions, insurance companies, or any person or entity
authorized under the laws of this state to conduct a title or escrow
business, or a mortgagee which is a United States Department of
Housing and Urban Development approved mortgagee and any subsidiary
or affiliate of the above, and any agent or employee of the above
while engaged in the business of these persons or entities.
(9) A person licensed as a residential mortgage lender or servicer
pursuant to Division 20 (commencing with Section 50000) of the
Financial Code, when acting under the authority of that license.
(c) Notwithstanding subdivision (b), any person who provides
services pursuant to paragraph (9) of subdivision (a) is a
foreclosure consultant unless he or she is the owner's attorney.
(d) "Person" means any individual, partnership, corporation,
limited liability company, association or other group, however
(e) "Service" means and includes, but is not limited to, any of
(1) Debt, budget, or financial counseling of any type.
(2) Receiving money for the purpose of distributing it to
creditors in payment or partial payment of any obligation secured by
a lien on a residence in foreclosure.
(3) Contacting creditors on behalf of an owner of a residence in
(4) Arranging or attempting to arrange for an extension of the
period within which the owner of a residence in foreclosure may cure
his or her default and reinstate his or her obligation pursuant to
(5) Arranging or attempting to arrange for any delay or
postponement of the time of sale of the residence in foreclosure.
(6) Advising the filing of any document or assisting in any manner
in the preparation of any document for filing with any bankruptcy
(7) Giving any advice, explanation or instruction to an owner of a
residence in foreclosure which in any manner relates to the cure of
a default in or the reinstatement of an obligation secured by a lien
on the residence in foreclosure, the full satisfaction of that
obligation, or the postponement or avoidance of a sale of a residence
in foreclosure pursuant to a power of sale contained in any deed of
(8) Arranging or attempting to arrange for the payment by the
beneficiary, mortgagee, trustee under a power of sale, or counsel for
the beneficiary, mortgagee, or trustee, of the remaining proceeds to
which the owner is entitled from a foreclosure sale of the owner's
residence in foreclosure. Arranging or attempting to arrange for the
payment shall include any arrangement where the owner transfers or
assigns the right to the remaining proceeds of a foreclosure sale to
the foreclosure consultant or any person designated by the
foreclosure consultant, whether that transfer is effected by
agreement, assignment, deed, power of attorney, or assignment of
(f) "Residence in foreclosure" means a residence in foreclosure as
defined in Section 1695.1.
(g) "Owner" means a property owner as defined in Section 1695.1.
(h) "Contract" means any agreement, or any term thereof, between a
foreclosure consultant and an owner for the rendition of any service
as defined in subdivision (e).
2945.2. (a) In addition to any other right under law to rescind a
contract, an owner has the right to cancel such a contract until
midnight of the third "business day" as defined in subdivision (e) of
Section 1689.5 after the day on which the owner signs a contract
which complies with Section 2945.3.
(b) Cancellation occurs when the owner gives written notice of
cancellation to the foreclosure consultant at the address specified
in the contract.
(c) Notice of cancellation, if given by mail, is effective when
deposited in the mail properly addressed with postage prepaid.
(d) Notice of cancellation given by the owner need not take the
particular form as provided with the contract and, however expressed,
is effective if it indicates the intention of the owner not to be
bound by the contract.
2945.3. (a) Every contract shall be in writing and shall fully
disclose the exact nature of the foreclosure consultant's services
and the total amount and terms of compensation.
(b) The following notice, printed in at least 14-point boldface
type and completed with the name of the foreclosure consultant, shall
be printed immediately above the statement required by subdivision
"NOTICE REQUIRED BY CALIFORNIA LAW
_________________________________ or anyone working
for him or her CANNOT:
(1) Take any money from you or ask you for money
until _________________________________________ has
completely finished doing everything he or she said
he or she would do; and
(2) Ask you to sign or have you sign any lien,
deed of trust, or deed."
(c) The contract shall be written in the same language as
principally used by the foreclosure consultant to describe his or her
services or to negotiate the contract; shall be dated and signed by
the owner; and shall contain in immediate proximity to the space
reserved for the owner's signature a conspicuous statement in a size
equal to at least 10-point bold type, as follows: "You, the owner,
may cancel this transaction at any time prior to midnight of the
third business day after the date of this transaction. See the
attached notice of cancellation form for an explanation of this
(d) The contract shall contain on the first page, in a type size
no smaller than that generally used in the body of the document, each
of the following:
(1) The name and address of the foreclosure consultant to which
the notice or cancellation is to be mailed.
(2) The date the owner signed the contract.
(e) The contract shall be accompanied by a completed form in
duplicate, captioned "notice of cancellation", which shall be
attached to the contract, shall be easily detachable, and shall
contain in type of at least 10-point the following statement written
in the same language as used in the contract:
"NOTICE OF CANCELLATION
(Enter date of transaction) (Date)
You may cancel this transaction, without any penalty or
obligation, within three business days from the above date.
To cancel this transaction, mail or deliver a signed and
dated copy of this cancellation notice, or any other
written notice, or send a telegram
(Name of foreclosure consultant)
(Address of foreclosure consultant's place of business)
NOT LATER THAN MIDNIGHT OF ________________________________.
I hereby cancel this transaction _______________________.
(f) The foreclosure consultant shall provide the owner with a copy
of the contract and the attached notice of cancellation.
(g) Until the foreclosure consultant has complied with this
section, the owner may cancel the contract.
(h) After the 65-day period following the foreclosure sale, the
foreclosure consultant may enter into a contract to assist the owner
in arranging, or arrange for the owner, the release of funds
remaining after the foreclosure sale ("surplus funds") from the
beneficiary, mortgagee, trustee under a power of sale, or counsel for
the beneficiary, mortgagee, or trustee. However, prior to entering
into that contract, the foreclosure consultant shall do all of the
(1) Prepare and deliver to the owner a notice in 14-point boldface
type and substantially in the form set forth below.
(2) Obtain a receipt executed by each owner and acknowledged
before a notary public, acknowledging a copy of the notice set forth
"NOTICE TO OWNER
(Date of Contract) (Date signed by Owner)
(Date of Foreclosure Sale)
You may be entitled to receive all or a portion of the surplus
funds generated from the foreclosure sale of your real property
located at: _________________________________________________
_____________________, California on _________________________
without paying any fees or costs of any kind to a third party.
You should check directly with the trustee or beneficiary who
conducted the foreclosure sale of your property to determine the
address, and telephone number of the party to whom you can direct
regarding filing a claim for surplus funds without paying a fee to a
party. No person or entity may require you to enter into any
requiring the payment of a fee to that person or entity in order to
the surplus funds from the foreclosure sale to which you may be
during the 65 days after the date of the trustee's sale."
2945.4. It shall be a violation for a foreclosure consultant to:
(a) Claim, demand, charge, collect, or receive any compensation
until after the foreclosure consultant has fully performed each and
every service the foreclosure consultant contracted to perform or
represented that he or she would perform.
(b) Claim, demand, charge, collect, or receive any fee, interest,
or any other compensation for any reason which exceeds 10 percent per
annum of the amount of any loan which the foreclosure consultant may
make to the owner.
(c) Take any wage assignment, any lien of any type on real or
personal property, or other security to secure the payment of
compensation. That security shall be void and unenforceable.
(d) Receive any consideration from any third party in connection
with services rendered to an owner unless that consideration is fully
disclosed to the owner.
(e) Acquire any interest in a residence in foreclosure from an
owner with whom the foreclosure consultant has contracted. Any
interest acquired in violation of this subdivision shall be voidable,
provided that nothing herein shall affect or defeat the title of a
bona fide purchaser or encumbrancer for value and without notice of a
violation of this article. Knowledge that the property was
"residential real property in foreclosure," does not constitute
notice of a violation of this article. This subdivision may not be
deemed to abrogate any duty of inquiry which exists as to rights or
interests of persons in possession of residential real property in
(f) Take any power of attorney from an owner for any purpose,
except to inspect documents as provided by law.
(g) Induce or attempt to induce any owner to enter into a contract
which does not comply in all respects with Sections 2945.2 and
(h) Enter into an agreement to assist the owner in arranging, or
arrange for the owner, the release of surplus funds prior to 65 days
after the trustee's sale is conducted, whether the agreement involves
direct payment, assignment, deed, power of attorney, or assignment
of claim from an owner to the foreclosure consultant or any person
designated by the foreclosure consultant.
2945.5. Any waiver by an owner of the provisions of this article
shall be deemed void and unenforceable as contrary to public policy.
Any attempt by a foreclosure consultant to induce an owner to waive
his rights shall be deemed a violation of this article.
2945.6. (a) An owner may bring an action against a foreclosure
consultant for any violation of this chapter. Judgment shall be
entered for actual damages, reasonable attorneys' fees and costs, and
appropriate equitable relief. The court also may, in its
discretion, award exemplary damages and shall award exemplary damages
equivalent to at least three times the compensation received by the
foreclosure consultant in violation of subdivision (a), (b), or (d)
of Section 2945.4, and three times the owner's actual damages for any
violation of subdivision (c), (e), or (g) of Section 2945.4, in
addition to any other award of actual or exemplary damages.
(b) The rights and remedies provided in subdivision (a) are
cumulative to, and not a limitation of, any other rights and remedies
provided by law. Any action brought pursuant to this section shall
be commenced within four years from the date of the alleged
2945.7. Any person who commits any violation described in Section
2945.4 shall be punished by a fine of not more than ten thousand
dollars ($10,000), by imprisonment in the county jail for not more
than one year, or in the state prison, or by both that fine and
imprisonment for each violation. These penalties are cumulative to
any other remedies or penalties provided by law.
2945.8. If any provision of this article or the application thereof
to any person or circumstance is held to be unconstitutional, the
remainder of the article and the application of such provision to
other persons and circumstances shall not be affected thereby.
2945.9. A foreclosure consultant is liable for all damages
resulting from any statement made or act committed by the foreclosure
consultant's representative in any manner connected with the
foreclosure consultant's (1) performance, offer to perform, or
contract to perform any of the services described in subdivision (a)
of Section 2945.1, (2) receipt of any consideration or property from
or on behalf or an owner, or (3) performance of any act prohibited by
(b) "Representative" for the purposes of this section means a
person who in any manner solicits, induces, or causes (1) any owner
to contract with a foreclosure consultant, (2) any owner to pay any
consideration or transfer title to the residence in foreclosure to
the foreclosure consultant, or (3) any member of the owner's family
or household to induce or cause any owner to pay any consideration or
transfer title to the residence in foreclosure to the foreclosure
2945.10. (a) Any provision in a contract which attempts or purports
to limit the liability of the foreclosure consultant under Section
2945.9 shall be void and shall at the option of the owner render the
contract void. The foreclosure consultant shall be liable to the
owner for all damages proximately caused by that provision. Any
provision in a contract which attempts or purports to require
arbitration of any dispute arising under this chapter shall be void
at the option of the owner only upon grounds as exist for the
revocation of any contract.
(b) This section shall apply to any contract entered into on or
after January 1, 1991.
2945.11. (a) Any representative, as defined in subdivision (b) of
Section 2945.9, deemed to be the agent or employee or both the agent
and the employee of the foreclosure consultant shall be required to
provide both of the following:
(1) Written proof to the owner that the representative has a valid
current California Real Estate Sales License and that the
representative is bonded by an admitted surety insurer in an amount
equal to at least twice the fair market value of the real property
that is the subject of the contract.
(2) A statement in writing, under penalty of perjury, that the
representative has a valid current California Real Estate Sales
License, that the representative is bonded by an admitted surety
insurer in an amount equal to at least twice the value of the real
property that is the subject of the contract and has complied with
paragraph (1). The written statement required by this paragraph
shall be provided to all parties to the contract prior to the
transfer of any interest in the real property that is the subject of
(b) The failure to comply with subdivision (a) shall, at the
option of the owner, render the contract void and the foreclosure
consultant shall be liable to the owner for all damages proximately
caused by the failure to comply.
For most families, a home is not only a significant financial investment but also a source of pride. The loss of a home, due to unexpected events such as unemployment, can be financially and personally devastating.
If you have been laid off or are facing unemployment, you can keep your home - - if you know the right steps to take. The Department of Housing and Urban Development/Federal Housing Administration, the Department of Veterans Affairs, the Department of Labor and the mortgage industry have worked together to produce important basic information - - and key links to local groups and organizations - - that can help you get through difficult times without losing your home.
Facing Money Problems
Financial problems are most often associated with the following life changes:
|Loss of job|
|Cuts in work hours or overtime|
|Illness, injury, or death of a family member|
|Divorce or separation|
If your family is facing any of these changes and cannot pay your bills, now is the time to look closely at what you owe and what you earn, eliminating unnecessary spending and reaching out for help if you still can't meet your financial obligations. Taking action now can help you protect your family from the loss of your home. This page was created to help you find advice, information, and web links that will help you keep your home.
Steps To Take When You May Be Unable To Pay Your Mortgage
This website is brought to you through the collaborative efforts of HUD/FHA, the Department of Veterans Affairs, Department of Labor, Fannie Mae, Freddie Mac , and members of the mortgage industry. Bookmark this site!
Many people avoid calling their lenders when they have money troubles. Most of us are embarrassed to discuss our money problems with others or believe that if lenders know we are in trouble, they will rush to collection or foreclosure.
Lenders want to help borrowers keep their homes. Foreclosure is expensive for lenders, mortgage insurers and investors. HUD/FHA, as well as private mortgage insurance companies and investors like Freddie Mac and Fannie Mae, require lenders to work aggressively with borrowers who are facing money problems.
Lenders have workout options to help you keep your home. However, these options work best when your loan is only one or two payments behind. The farther behind you are on your payments, the fewer options are available.
Do not assume that your problems will quickly correct themselves. Don't lose valuable time by being overly optimistic. Contact your mortgage lender to discuss your circumstances as soon as you realize that you are unable to make your payments. While there is no guarantee that any particular relief will be given, most lenders are willing to explore every possible option.
Finding Your Lender
Check the following sources for lender contact:
|Your monthly mortgage billing statement|
|Your payment coupon book|
|Web links or customer service numbers found under "help for homeowners" lenders|
Information To Have Ready When You Call:
To help you, lenders typically need:
|Your loan account number|
|A brief explanation of your circumstances|
|Recent income documents (such as Pay stubs; Benefit Statements from Social Security, Disability, Unemployment, Retirement, or Public Assistance. If you are Self-employed, have your tax returns or a Year-to-date Profit and Loss Statement available for reference)|
|List of household expenses|
Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance, you must complete the forms and return them to your lender quickly. The completed package will be reviewed before the lender talks about a solution with you.
- CALL TODAY! The sooner you call; the sooner help is available.
Do Not Ignore Mail From Your Lender
If you do not contact your lender, your lender will try to contact you by mail and phone soon after you stop making payments. It is very important that you respond to the mail and the phone calls offering help. If your lender does not hear from you they will be required to start legal action leading to foreclosure. This will substantially increase the cost of bringing your loan current.
Information For Families With FHA Loans
The Federal Housing Administration (FHA) provides a wide range of relief options for borrowers. There are many alternatives and ways to get help. These may include mortgage modifications, special forebearances, and other actions you can take to avoid foreclosure.
HUD's National Servicing Center works closely with customers who have FHA insured loans. Do you feel your lender is not responding to your questions? Do you need assistance contacting your lender? The NSC is ready to help!
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 will help you assess your financial situation, determine what options are available to you, and help you negotiate with your lender. A counselor will be familiar with the various workout arrangements that lenders will consider and will know what course of action makes the most sense for you and your family, based on your circumstances. In addition, the counselor can call the lender with you or on your behalf to discuss a workout plan. By meeting with a counselor before your mortgage payments are too far behind, you can protect yourself from future credit problems.
A good counselor will help you establish a monthly budget plan to ensure that you can meet all of your monthly expenses, including your mortgage payment. Your personal financial plan will clearly show how much money you have available to make the mortgage payment. This analysis will help you and your lender determine whether a reduced or delayed payment schedule could help you. Also, a counselor will have information on services, resources, and programs available in your local area that may provide you with additional financial, legal, medical or other assistance that you may need.
To find out more about HUD-approved housing counseling agencies and their services, please call (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. ET (6:00 a.m. to 2:00 p.m. PT). You can also get an automated referral to the three housing counseling agencies located closest to you by calling (800) 569-4287, or see our list of these HUD-approved agencies by state.Many of these local housing counseling agencies are affiliates of national and regional housing counseling intermediaries. The Websites for the HUD-approved National and Regional Housing Counseling Intermediaries describe the full range of assistance offered, as well as maps showing location of their affiliates.
Prioritize Your Debts
For the unemployed, getting by will require a new, tightened budget. Prioritize your bills and pay those most necessary for your family: food, utilities and shelter.
Failing to pay any of your debts can seriously affect your credit rating. However, if you stop making your mortgage payments you could lose your house. Whenever possible, any income available after paying for food and utilities should be used to pay your monthly mortgage payments. If your employment income has been stopped or reduced, first consider eliminating or reducing your other expenses (such as dining out, entertainment, cable, or even telephone services). If that does not provide enough income, consider using other financial resources like stocks, savings accounts, or personal property that may have value like a boat or a second car. Take any responsible action that will save cash.
In addition to speaking with your lender, you may want to contact a nonprofit consumer credit counseling agency that specializes in providing help in restructuring credit payments. Credit counselors can often reduce your monthly bills by negotiating reduced payments or long-term payment plans with your creditors. The majority of credit counseling agencies are reputable and provide their services free of charge or for a small monthly administrative fee tied to a repayment plan. Beware of credit counseling agencies that offer counseling for a large upfront fee or donation.
|For consumer debt advice contact the National Foundation for Credit Counseling |
|Use the Internet to find a HUD-approved housing counseling agency|
or dial (800) 569-4287 or TDD: (800) 877-8339. These agencies can provide financial counseling or refer you to a local credit counseling agency.
- When you call a consumer credit counseling agency, you will be asked to provide current information about your income and expenses. Make sure you ask if the agency has a charge before you sign any documents!
Preserve Your Good Credit
Do not underestimate the importance of preserving your good credit. Your future ability to purchase certain items, rent or buy a home, and complete other transactions often requires a credit check. Consumer credit agencies and your lender can help you explore solutions to keep your credit from getting blemished.
Maintaining good credit is even important for job hunters. When you apply for a job, the employer probably will check your credit report to determine:
|whether you have been sued|
|have filed for bankruptcy|
|or have trouble paying your bills|
Explore Loan Workout Solutions
First and foremost, if you can keep your mortgage current, do so.
However, if you find that you are unable to make your mortgage payments, you may qualify for a loan workout option. Check with your lender to find out which of these options may be available.
If Your Problem Is Temporary - Call Your Lender
|Reinstatement: Your lender is always willing to discuss accepting the total amount owed to them in a lump sum by a specific date. They will often combine this option with a Forbearance.|
|Forbearance: 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.|
|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.|
- If it appears that your situation is long-term or will permanently affect your ability to bring your account current:
|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. Extending the number of years you have to repay.
|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.|
If Keeping Your Home Is Not An Option -- Call Your Lender
|Sale: If you can no longer afford your home, your lender will usually agree to give you a specific amount of time to find a purchaser and pay off the total amount owed. You will be expected to obtain the services of a real estate professional who can aggressively market the property.|
|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 the 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.|
|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: 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.|
Resources for finding a real estate agent and selling your home
If you need to sell your home, there will be many questions you have to answer. You will need to find how much your house is actually worth, and you will have to find a real estate agent you are comfortable with. The following resources will help:
|International Real Estate Digest|
|National Association of Hispanic Real Estate Professionals|
|National Association of Realtors|
|National Association of Real Estate Brokers, Inc.|
|Selling a Home|
Special Disaster Relief Options - Call Your Lender
If your property has been damaged by a natural disaster or if you have been called up for active military duty or affected by a national tragedy, such as the terrorist acts of September 11, 2001, there may be additional assistance available.
For additional information you may wish to view these links:
|Victims of a declared Natural Disaster area |
|Called back to Active Military Duty: Questions & Answers for Reservists, Guardsmen and Other Military Personnel regarding The Servicemember's Civil Relief Act. |
HUD has a toll-free number for servicemen and women with questions concerning their mortgage. For more information, call (888) 297-8685 between the hours of 8 a.m. and 8 p.m. ET (5 a.m. to 5 p.m. PT) on weekdays.
Beware Of Predatory Lending Schemes
Most mortgage lenders are reputable and provide a valuable service by allowing families to own a home without saving the thousands or hundreds of thousands of dollars necessary to buy it outright. However, a few, unscrupulous lenders, especially those who make high risk second mortgages, engage in predatory lending practices that can increase the likelihood that a borrower will lose his or her home to foreclosure. These abusive practices include making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees or repeatedly refinancing a loan without providing any real value to the borrower.
Borrowers facing unemployment and/or foreclosure are frequent targets of predatory lenders because they are desperate to find any "solution" to their default.
Homeowners frequently receive refinance offers in the mail telling them that they have been "pre-approved" for credit based on the equity in their home. When you are wondering how you are going to pay your mortgage and other bills, it may appear very attractive to borrow against your house. But consider this, if you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.
Beware of Scams:
| Equity skimming: a buyer offers to repay the mortgage or sell the property if you sign over the deed and move out. |
| Phony counseling agencies: offer counseling for a fee when it is often given at no charge. |
|Do not sign anything you do not understand. It is your right and duty to ask questions. |
|Information is your best defense against becoming a victim of predatory lending especially for a desperate homeowner!|
Where to Report Suspected Predatory Lending – homeowners can either visit the Stop Mortgage Fraud web site or call (800) 348-3931 to get information on what steps to take to file a complaint. Homeowners who call will receive a brochure that contains information also found on the Web site.
For more information about Predatory Lending go to:
|HUD's Predatory Lending Web Site|
|Freddie MAC's Predatory Lending Web Site|
|Freddie Mac's "Don't Borrow Trouble" Web Site |
If you are interested in getting consumer brochures in different
languages: click here
Frequently Asked Questions (FAQ)
- How do I know who my lender is and how to contact them?
- Look at your monthly mortgage coupons or billing statements for the name of your lender and contact information.
- Look at your monthly mortgage coupons or billing statements for the name of your lender and contact information.
- I do not remember what type of mortgage loan I have, how can I find this information?
- Look on the original mortgage documents or call your mortgage lender.
- Do I need to keep living in my house to qualify for assistance?
- Typically, yes, but call your lender to discuss your specific circumstances and get advice on options that may be available.
- What type of information should I have ready to discuss with a lender?
- Typical information requested by lenders in a workout package include:
- Brief explanation of circumstances
- Recent income documents
- List of household expenses
- Typical information requested by lenders in a workout package include:
- My employer has already announced layoffs within the coming months, what can I do now?
- Through this website you have taken the first step toward educating yourself about available options. Determine if the layoffs will cause a financial hardship that will make it hard for your family to make your mortgage payments. If so, consider other resources that you have available to pay your mortgage. Review your spending habits and see where you can reduce spending. If you have a lot of consumer debt, consider contacting a nonprofit, consumer credit counseling agency. Take advantage of any employer offered resources. If you still believe that you will have trouble making your mortgage payments, contact your lender right away.
- Will there be any out-of-pocket expenses I will be responsible for if I am approved for a workout option?
- Some workout options do include expenses that the borrower is expected to pay, for example, recording fees for a loan modification. Because, every situation is different you should contact your lender for more information. However, if a lender has no contact with a borrower and has to start foreclosure, the legal fees that the borrower will be expected to pay can be very expensive. To avoid unnecessary legal fees, call your lender as soon as you realize you are in trouble.
Other ResourcesAdditional valuable information to help you is provided on the following Websites. Although all borrowers' situations are different, these resources have been prioritized to address some common concerns.
|Go directly to the loss mitigation department of the "help for homeowners" lenders that are ready to help you.|
|HUD-approved local housing counseling agencies|
|HUD-approved national and regional housing counseling intermediaries|
|Consumer credit counseling|
|Credit education curriculum|
Employment Information and Assistance
Federal Government Resources
|FHA's National Servicing Center|
|FHA mortgage terminology|
|Veterans home loan program|
|Referrals to other federal government Websites|
|Legal assistance for homeowners and renters|
|Community homebuyer education|
|Researching what your home is worth|
|Homebuyer education glossary|
|A glossary of credit terms|
This website is brought to you through the collaborative efforts of HUD/FHA, the Department of Veterans Affairs, Department of Labor, Fannie Mae, Freddie Mac, and members of the mortgage industry.
Steps To Take