What is Loss Mitigation?

 

Loss Mitigation is how mortgage lenders  and servicers attempt to reduce financial losses on delinquent mortgages by looking for solutions to help borrowers avoid foreclosure.

 

 Loss Mitigation Options for Homeowners:

 

1. Loan Modification - a permanent change in one or more of the terms of a Mortgagor's
     loan, allows the loan to be reinstated, and results in a payment the Mortgagor can afford.  
     The  Home Affordable Modification Program (HMP) is the name of one specific  loan
     modification program  to reach a monthly housing payment of that is no more than
     31% of the homeowner's gross income.  This program will end December 31, 2012.

 

2. Repayment Plan - distributes your delinquent payments over a period of time, usually no
     more than 10 months. A portion of the deffered delinquent amount is added to the
     normal monthly mortgage. 

 

3.  Partial Claim (only for FHA loans) - a second mortgage, insterest free, that is paid off at 
    the time when the homeowner's loan is paid off. Thiss option allows up to 12 months of the
    past due accreeud mortgage payment to be included in the second mortgage.

 

4. Fannie Mae HomeSaver Advance (FNMA Only) - a low interest rate loan provided by the
    first lien loan servicer to bring current a customer's delinquent mortgage. The loan repaid
    over a 15 year term, with payment and interest accrual deferred during the first 6 months
    after the advance.

 

5.  Short Sale - is the sale of a house for less than what the owner still owes on the mortgage.

 

6. Deed in Lieu - transfer title  of home back to  lender

 

 

 To learn more details about these Loss Mitigation options,  submit a question to Andrea@MyMortgageMatters.org.

 

 

 

 

Look Up Your Loan

I f your mortgage is owned by Fannie Mae or Freddie Mac, you may be eligible for a Home Affordable Refinance to take advantage of lower interest rates. Your mortgage company can tell you who owns your loan. You can also contact Fannie Mae and Freddie Mac directly by clicking on the links below.

 

Fannie Mae

Freddie Mac

Be In The Know:

 

 

HOMESAFE GEORGIA PROGRAM

The United States Department of Treasury (Treasury) established the Hardest Hit Fund (HHF) program in February 2010 and approved the HHF plans for Georgia on September 23, 2010. The purpose of the program is to help Georgia homeowners who have experienced a substantial decrease in income due to job loss or underemployment by providing a mortgage payment bridge while they seek new or better employment. The Georgia Department of Community Affairs (DCA), under contract with Georgia Housing and Finance Authority’s GHFA Affordable Housing, Inc. will administer Georgia’s HHF program, as HomeSafe Georgia.

For more information about Treasury’s HHF, visit http://www.financialstability.gov/roadtostability/hardesthitfund.html.

DCA’s HomeSafe Georgia pilot is scheduled for December 15, 2010 to March 31, 2011. The pilot allowed DCA to review HHF procedures to ensure completeness, accuracy, and compliance with Treasury’s requirements. HomeSafe Georgia’s launch date is April 1, 2011 and will continue until December 2017 or until the allocated funds are exhausted.

HomeSafe Georgia’s goal is to provide assistance to over 18,000 homeowners to prevent foreclosures. The Program is designed help homeowners who are unemployed, significantly underemployed, or self employed with a significant loss of income, by providing Mortgage Payment or Reinstatement Assistance. Eligible homeowners approved for the Program will close on a subordinate loan similar to a home equity line of credit. The loan will be at 0% interest. Following the assistance period, the loan will be forgiven at a rate of 20% per year for five years.

Under Mortgage Payment Assistance, the homeowner’s monthly mortgage payments are paid to the lender for up to 18 months. The homeowner’s household income will be reviewed for qualifying assistance and a partial amount of the mortgage payment may be required from the homeowner, which may increase during the 18 months. The Reinstatement Assistance is a one-time payment to the lender comprised of up to 6 months mortgage payments and lender fees in arrears.

 

Homeowners who are interested in applying for a HomeSafe Georgia loan should review eligibility requirements and see if their lender is participating in the Program.

Applicants will fill out their loan applications on HomeSafe Georgia’s website. Applicants who do not have a computer at home may have access to a computer at their local library, community center, or unemployment office. On the Homepage, clicking the "Start Now!" button begins the application process. There is no cost to apply, but an email is required for correspondence. The application process consists of an easy to use fill-in format. Once the application process has been completed, the applicant will be asked to print the forms, complete and sign where indicated, collect any supporting documents, and fax the package to HomeSafe Georgia. A checklist is included in the package to help the homeowner ensure the package is complete.

In order to efficiently serve the most homeowners, the HomeSafe Georgia Program may require that the application process be unavailable on certain dates; this will be noted on the Homepage.

 

 

HOMEOWNER UNEMPLOYMENT RESOURCES
If you are an unemployed homeowner it's important that you contact your mortgage company to discuss a forbearance agreement or plan, and also partner with a HUD approved counselor.

A forbearance is not automatically granted, and the homeowner must submit their request to their mortgage company for approval. During the forbearance period the homeowner’s mortgage payment may be deferred, or a partial payment may be accepted, for a specified period of time during which they search for permanent employment. Interest is accrued during the forbearance period; however the foreclosure process could be postponed. Typically forbearances are granted for three (3) months and must be approved by the mortgage company.

While a forbearance may serve as a temporary solution, it may allow the homeowner to look for permanent employment to overcome their current financial situation, and is a far better option than possibly losing their home.

Upon completion of the forbearance agreement and if permanent employment is secured, a homeowner could be considered for a more permanent loss mitigation option such as a loan modification upon approval by their mortgage company.
 
 
 
 Document Checklist
These are documents that homeowners need to bring to an outreach event. The appropriate paperwork and documentation will make the process flow easier and results faster. Information about the monthly gross (before tax) income and expenses for all the borrowers who signed your mortgage (for example spouse) is needed.
  • Most recent tax return with all the schedules and W-2s
  • Two most recent bank statements
  • Two most recent pay stubs (if you receive them) or documentation of your income you receive from other sources (e.g. alimony or child support)
  • Monthly mortgage statement showing the mortgage servicer information and the mortgage loan account number
  • Information about other mortgages on your home, if applicable
  • Account balances and minimum monthly payments due on all your credit cards
  • Account balances and monthly payments on your other debts (such as student loans and car loans)
  • Estimates of monthly expenditures (such as utility bills, food expenses, insurance payments, medical bills)