As we all know several years ago, the housing market was booming -- people were eligible for low-interest loans and buying houses assuming the market was only going to get better. Unfortunately, years later the housing market took a turn for the worst leaving many people in need of mortgage assistance. The current administration has created the Making Home Affordable program to address the current housing crisis. If you are having trouble paying your mortgage, there are steps that you can take to prevent foreclosure. You may have the option of refinancing your mortgage loan home or modifying your mortgage loan. You don’t have to lose your home.

 

If you are facing a potential foreclosure you probably have lots of questions about the process. Refer to the U.S. Department of Housing and Urban Development’s Common Questions about Foreclosure page for more information. 

If you find yourself in a housing crisis – it is important that you act fast! People have

the most options when they are only one to two payments behind in their mortgage

payments. It is also important to remember, that lenders and housing counselors

may be overwhelmed with calls right now so patience is essential.  

 

·         Don’t panic and get organized. It is important to remain calm while trying to resolve your housing crisis. There will be many phone calls to make and lots of paperwork to gather so don’t panic and try your best to keep your paperwork in order as you move through the process. Try to keep all your mortgage papers, pay stubs, bank statements properly organized in folders.

 

·         Assess your finances. Lenders and housing counselors will likely ask you for a list of your monthly income and expenses. Plan ahead and compile this information as soon as you can. Keep in mind any income that you receive (e.g., employment, child support, etc.) They will probably also request additional information about other assets including bank accounts and retirement accounts. Make sure all this information is easily accessible. The best way to organize this information is on a spreadsheet or worksheet. Create your own or click here for an example.

 

·         Contact your lender right away. Lenders do not want you to lose your home. So it is important that you contact them as soon as you know that you will not be able to pay the mortgage. The sooner you contact them, the better. When you speak with them make sure you clearly explain why you are having trouble paying the mortgage.

 

·         Contact a HUD-approved housing counselor.  There are a number of ways to locate a housing counselor to provide you with guidance in addressing your mortgage issue. These services are free and can be offered over the phone or in-person. Housing counselors can help homeowners by contacting their lenders. You should never pay anyone to help you. Beware of the mortgage scams that try to charge you service fees. (see Beware of Mortgage Scams section below). You can also locate a mortgage housing counselor by clicking here.

 

·         Understand your Mortgage Rights. Make sure you review your mortgage contract. You want to make sure you know what your lender will do if you are unable to make your payments. Contact your state government housing office and local resources to learn about foreclosure laws and resources. Each state has different laws.

 

·         Understand Foreclosure Prevention Options. Educate yourself on the various foreclosure options. Click here for more information.

 

·         Read your mail. Now is not the time to ignore your mail. While you will likely receive mail from solicitors and potential scam artists (see Beware of Mortgage Scams section), you will also receive very important letters or paperwork in the mail while you try to resolve your mortgage situation.

There are a number of resources available to help you if you are in a housing

crisis. Take a look and learn more about how these programs can help you keep your

home.

·               Making Home Affordable program

·               Fannie Mae’s Home Affordable Modification program

·               Fannie Mae’s Home Affordable Refinance program

·               Freddie Mac’s Home Affordable Modification program

·               Freddie Mac’s Relief Refinance Mortgage program

·               HOPE NOW Borrower Assistance program

·               Guide to Avoiding Foreclosures

·         Unnecessary Spending. Now is the time to be very mindful of the money you spend. After you assess your expenses, you should see which expenses you can cut out or reduce. For example, maybe you can lower your cell phone plan or temporarily turn off your cable. You also want to make sure you that you don’t make any unnecessary purchases and charge them on your credit card. Remember, lenders will be checking your credit report.

 

·         Foreclosure Prevention Companies. You do not need to pay for mortgage assistance services. There are many for-profit companies out there offering to work with your lender to negotiate your mortgage for a large fee which can be as much as two to three months of your mortgage. While many of these may be legitimate businesses they are not doing anything different that you or a HUD approved housing counselor would do. Avoid them!

 

·         Foreclosure Recovery Scams. There are tons of scam artists ready to take advantage of your mortgage crisis. If anyone claims they can stop your foreclosure immediately if you sign over the title to your property and become a renter in your own home – run the other way!  Don’t ever sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor. (See Beware of Mortgage Scams section.

Scams promising to keep you from losing your home are popping up everywhere – you have probably seen the billboards/signs on street corners, read the advertisements on the Internet and may have already received the letters in your mailbox. People running these scams are ready to take advantage of people facing foreclosures. Unfortunately, there are businesses out there compiling and selling lists of foreclosed properties and the contact information of the distressed owners. It is important to be aware of these scams in order to protect yourself and your home. When trying to address your mortgage crisis, it is best to work with your mortgage lender to find real options to avoid foreclosure or contact a legitimate HUD-approved housing counselor that can help you work with your lender. Below are examples of common types of mortgage scams:

 

·         Foreclosure Consultants. These scam artists offer to act as a liaison between you and your lender to negotiate a payment plan or loan modification. This scammer generally tells you not to contact the lender directly, charges up-front fees for calls you could have made yourself and requests that you make any mortgage payments directly to them. Their “help” leads nowhere and you generally lose valuable time and money. You always run the danger of being in more financial trouble. Stay away from these services – rely on a qualified housing counselor.

 

·         False “government modification” programs. Some people may claim to be affiliated with the federal government and may also request that you pay high up-front fees for government mortgage modification programs. Even though these mortgage programs are legitimate, the scam artists’ claims are not! Also beware that these scammer’s websites are deceiving - they often use terms such as “federal,” “TARP” or other terms related to official government programs.

 

·         Bailout (leaseback/rent-to-buy schemes). This type of scam asks you to transfer your title to the scammer while you rebuild your credit. The scammers claim that they will obtain new and better financing and allow you to rent and eventually buy your house back. This agreement usually ends up with high upfront fees and monthly payments that you will not be able to afford. The deal is rigged to prevent the repurchase of your home. It is important to know that transferring your title to someone else does not change your mortgage obligations – you are still responsible for paying your mortgage. What does change however is that you will longer own your home.

 

·         Bait and Switch Deed Thefts. Scam artists working with you will sometimes pull a bait and switch. They will forge or cut and paste your signatures onto new documents. You will be told that these documents are related to a new loan, not a deed. 

 

·         Bankruptcy scams. This type of scam convinces you that if you file bankruptcy you can avoid foreclosure. While this may be true – it is only temporary. Filing bankruptcy will bring a temporary stop to the foreclosure however, eventually you will have to start paying your mortgage or the lender will be able to foreclose on your home. Remember, bankruptcy will negatively impact your credit score and will remain on your credit report up to 7 years. If you find yourself in financial trouble, contact a financial counselor immediately to avoid claiming bankruptcy and losing your home.

 

Make sure you report any potential scammer activity to federal agencies such as the Federal Trade Commission or your state consumer protection agencies. By reporting scams, you help prevent other from becoming victims.

There are a number of terms that you should be aware of when dealing with the potential loss of your home. While it might seem overwhelming, it is important to be aware or know how to access the information if necessary. For more information on common terms related to foreclosures and mortgages click here.

Reverse Mortgages are a specific type of home loan that allows a homeowner to convert the equity in his/her home into cash. Reverse mortgages allow older Americans greater financial security to supplement social security, address unexpected medical expenses, and make home improvements.

 

AARP develop this reverse mortgage calculator to provide approximate estimates for two federally-insured reverse mortgages.

Mortgage Calculators

There are a variety of user friendly calculators available on-line. Some of these calculators can help you calculate how much mortgage payments will be.

 

·            This Mortgage Calculator created by Bankrate.com can help you estimate your mortgage payments.

 

·            This Calculator also developed byBankrate.com can show you how much you will save by refinancing.

 

·            This Calculator helps you to see how long it will take you to breakeven after refinancing your mortgage.

 

Qualifying for Mortgage Assistance

·            Making Home Affordable program developed the Home Affordable Modifications and Home Affordable Refinance questionnaires to determine your eligibility.

 

·            Making Home Affordable program created aPayment Reduction Estimatorfor the Home Affordable Modification program to determine what your current mortgage debt-to-income is and how much your monthly payment may be reduced if you qualify for a modification.

 

Understand the Mortage Process

·             Navigate the Mortgage Process, developed by The Beehive helps you to be informed on what is happening during the mortgage process. This section includes important terms and options that are available to you.

 

Understanding Home Equity

·            Interactive: All About Equity is an easy to use tool to help you understand the concept of home equity.