There's Hope. Avoid Foreclosure.

THE FEDERAL GOVERNMENT'S NEW "MAKING HOME AFFORDABLE" PROGRAM

THE FOLLOWING TERMS APPLY TO ALL “MAKING HOME AFFORDABLE” PROGRAMS

 

1.      All homeowners must contact their lenders directly to participate.

2.      This new program runs from April 1, 2009 through June 10, 2010.

3.      This new program is not automatically given to homeowners at risk of losing their homes. Borrowers must have sufficient income and must meet all program eligibility requirements.

4.      There can be no debt consolidation.

5.      The owner must have lived in the house for three months.

6.      The mortgage must have originated before January 1, 2009.

7.      Owner occupied 1-4 unit family homes including condos and planned unit developments are eligible.

8.      The loan to value on the first mortgage can not exceed 105%.

9.   There is a counseling requirement for homeowners. Although all lenders want homeowners to seek counseling, they are only mandating counseling for clients with a 55% debt to income ratio.

10.  All arrearage plus interest, fees, homeowner’s insurance, real estate taxes and condo fees will be included in the first mortgage.

 

HOMEOWNERS WITH A FANNIE MAE OR FREDDIE MAC MORTGAGE MAY REQUEST ASSISTANCE UNDER THE NEW FANNIE MAE OR FREDDIE MAC REFINANCE PROGRAM (call your lender to find out if you have a Fannie Mae or Freddie Mac mortgage) The following rules apply: 

 

·        No temporary income can be used to qualify, such as unemployment income.

·        The program is designed to assist homeowners who are current but are in variable rate mortgages. The program will also assist homeowners who are struggling to pay their variable rate mortgages or homeowners who own property with declined values.

·        The program will correct high interest rates, variable rates, terms of mortgages and balloon payments.

·        On new refinances the homeowner’s credit score should be 620, but there may be some flexibility in the credit score if the refinance is in the customer’s best interest (Freddie Mac only)

·        There is no minimum credit score required (Fannie Mae only)

·        Borrowers can not have any 60 day late notices on their mortgage history in a 12 month period (Fannie Mae only)

·        Borrowers may only have one late 30 day notice on their mortgage history in a 12 month period (Fannie Mae only)                                                                                                                                                                                                                                                                                                                                                     

HOMEOWNERS WITH NEITHER A FANNIE MAE NOR A FREDDIE MAC MORTGAGE MAY REQUEST ASSISTANCE UNDER THE NEW LOAN MODIFICATION PROGRAM:

 

The following rules apply:

 

IMPORTANT: IT IS STRICTLY VOLUNTARY FOR LENDERS TO PARTICIPATE IN THIS NEW PROGRAM FOR MORTGAGE MODIFICATIONS

 

• Owner-occupied homes with 1-4 units are eligible.
• The homeowner must have a debt to income ratio over 31%.
• The homeowner must be 60 days delinquent or be at risk of mortgage default.
• The lender can not charge any fees associated with this mortgage modification.
• The lender may reduce the homeowner’s current mortgage rate by 2% or more.
• The appraised value of the home will be determined by the lender. The lender will only be using the net value.
• The goal of the loan modification is to get the homeowner’s debt to income ratio as close to 31% as possible, making the mortgage more affordable.
• When a modification is initiated on a first lien, services participating in the Second Lien Program will automatically reduce payments according to a pre-set protocol.
• Servicers must determine an applicant's eligibility under the "Hope for Homeowners" program and offer that option if viable.
• The mortgage modification is for a 5 year fixed term. After completion of the 5 year term, the lender can gradually begin increasing the rate at no more than 1% a year.
• There is a trial period associated with the mortgage modification. The homeowner must make their first three mortgage payments on time before the loan modification is finalized.  If a payment is late or missed during the trial period, they forfeit the mortgage modification.

Please call Western Massachusetts Foreclosure Prevention Center at (413) 233-1622 or toll free (800) 332-9667 x 1622 for more information.  Our HUD-certified counselors provide free and confidential assessments for homeowners.  If you do not qualify for the programs above, our counselors can help you explore other alternatives.

PLEASE BE AWARE: 

There is a deceptive Web site out there that is posing as the Department of Housing and Urban Development (HUD).  This Web site is deliberately deceiving the public by using the HUD name in the web address as well as on the Web site.

The Web site tries to dupe people into giving out personal information (known as “phishing”) - and because they’ve made their site appear to be an official U.S. Government Web site, some people may fall prey to this scam.

The Web site to avoid is  http://bailout.hud-gov.us/.

 

 

A foreclosure can occur when payments have not been made on a mortgaged property. The lender can legally redeem or take the property away from the homeowner for failure to make mortgage payments. In general, lenders will begin the foreclosure process if you have not made payments for three months.

Each state governs the foreclosure process differently. As a minimum, the law requires that the borrower receive sufficient warning or notice from the lender or servicer before the foreclosure can take place. In Massachusetts, as of May 1, 2008, a 90-day right to cure letter must be sent to the homeowner by the loan servicer. Other rights and responsibilities may be outlined in the mortgage or loan documents you signed when you purchased the home.

While the actual process may vary from state to state, typically a trustee/attorney is appointed and announces the sale by auction of your home by informing the public through a legal notice in the local newspaper. The usual announcement includes the name of the lending institution, who the borrower(s) is/are, the amount of overdue debt, your total indebtedness, and the auction date. After negotiations, the trustee/attorney opens the bidding process. Then, either someone purchases the property or it reverts back to the lending institution. Once the property is sold or reverts back to the lender, the eviction process begins.

The goal of loss mitigation is to work out an agreement between the homeowner and the lender that will stop foreclosure proceedings. This allows you to stay in your home and helps to salvage your credit history.

A HUD-approved non-profit housing counseling agency will first help you prepare a realistic budget so that you can decide whether you can afford to keep your home. They are experienced in communicating and negotiating with lenders. They will determine where you are in the delinquency process and what options are available to you. They will know if community resources are available. In western Massachusetts, call the Western Massachusetts Foreclosure Prevention Center at (413) 233-1622 or (800) 332-9667 x 1622. In other areas, visit www.hud.gov or call 800-569-4287 to find the nearest HUD-approved housing counseling agency.

If your monthly house payment (including property taxes and insurance) does not exceed 40% of your gross income, it may be possible to keep your property. If the payment is greater than 40% of gross monthly income, consider selling or transferring the property to avoid negative impacts to your credit.

• Arrange an appointment with a HUD-approved housing counselor to explore your options.
• Cooperate with the counselor or lender trying to help you by providing full disclosure of your financial situation.
• Work with your HUD-approved counselor to call or write your mortgage lender immediately at the first sign of financial difficulty. Your counselor can negotiate with your lender on your behalf.
• Consult your HUD-approved counselor before making partial payments to your lender.
• Minimize damage to your credit. You will need it later.
• Stay in your home as long as possible.
• Beware of scams.
• Do not sign anything you don't understand.
• Do not enter into any agreement over the phone.
• Never sign over your deed to someone else without consulting a real estate attorney.

1. Do not ignore the letter! Call the Western Massachusetts Foreclosure Prevention Center at (413) 233-1622 or (800) 332-9667 x 1622 or TDD (413) 233-1699. If you live in another area, go online to www.HUD.gov to find a HUD-approved housing counseling agency nearest you. If you bought your home with a Veterans Administration (VA) guaranteed loan, see Veterans Services for more information or call the VA office nearest you.
2. Work with your foreclosure prevention counselor to contact your lender immediately. Explain your situation and why you are having trouble making your payments. Provide your counselor with your monthly income and expenses . . . be honest!
3. Do not move out of your home! If you do, it may be considered abandoned and you may not qualify for assistance.

A HUD-approved housing counseling agency can help you determine which, if any, of the options listed below may meet your needs. You should also discuss the situation with your lender. In western Massachusetts, call the Western Massachusetts Foreclosure Prevention Center hotline at (413) 233-1622 or (800) 332-9667 x 1622 to speak with a qualified counselor who can review your situation and your best options with you. Among the alternatives are:

Short-term Repayment Plan - All lenders first try to negotiate a short term repayment plan by asking the borrower to begin paying the full payment due plus a partial payment to get the loan caught up.

• Short-term repayment may be successful for delinquent borrowers who fall temporarily behind but are not experiencing serious financial distress.
• This option is usually negotiated by the collection agent for the lender and is not necessarily a written agreement.
• Short-term plans are generally 90 to 120 days.

Forbearance Agreement - The lender agrees in writing to allow the borrower to "catch up" on the mortgage payments over a period of several months. The homeowner must be careful to keep the commitment or face foreclosure. It is an appropriate option when:

• The cause of the default is specific and temporary but cannot be resolved in a short period of time.
• There is reasonable evidence that with adequate time the borrower will be able to resume making full monthly payments and have enough funds to pay off the past due balance.
• Lenders usually require a financial application before agreeing to forbearance. If the homeowner has a good past payment history, he/she has a better chance of working out a forbearance agreement.

Refinancing - This means applying to the original lender or another bank or mortgage company to re-write the mortgage loan. This would be done to lower the interest rate, establish a fixed rate, lower the monthly payment, or all of the above. The purpose of the refinancing is to make the mortgage payments more affordable and to prevent future default.Being able to refinance your loan depends on several things. If you are already delinquent on your present mortgage, your credit rating will be adversely affected. This could prevent you from getting a new mortgage at a reasonable interest rate. In addition, you may not be able to afford the fees and points that most lenders charge, especially if you have little or no equity in your home. If you do want to refinance, shop around for the best rate and terms possible and beware of predatory lenders.

Modification - Changes one of more of the original terms of the loan, such as the interest rate, payment amount, maturity date or the amount of the unpaid principal balance. A modification can cure the default by adding the arrearage to the end of the loan term and/or reducing the monthly payment to an amount which is more affordable for the borrower. Loan modification may be appropriate when:

• The loan is at least 12 months old and has not been previously modified
• The borrower has equity sufficient to cover the arrearage, or
• Changes in the loan terms such as a reduction in the interest rate, extension of the repayment term of reamortization of the debt would reduce the payment to a level the borrower could afford.
• The borrower demonstrates a strong desire to retain ownership of the property.
• The borrower has a stable income to support the new payment.

Partial or Advance Claim - The lender may be able to help a borrower obtain an interest-free loan from HUD to bring their mortgage current. The borrower will execute a Promissory Note and a Lien will be placed on the property until the note is paid in full. A borrower may qualify if:

• Loan is at least 4 months delinquent
• Mortgage is not in foreclosure
• Borrower is able to begin making full mortgage payments

Straight Sale - If the borrower has sufficient equity, they may be able to sell the property prior to foreclosure and net enough from the sale to pay off the loan. This may be an option if:

• In the opinion of real estate professionals, the house is in marketable condition and, if properly priced, will sell within 90 to 120 days.
• The borrower is willing to offer the house at or below market value to generate a quick sale.
• At the anticipated sale price, there is enough equity in the property to repay the outstanding balance due and sales transactions costs.
• If the lender sees that the borrower has equity and is making serious efforts to market the property, the lender will generally delay foreclosure for a reasonable time to allow the property to sell.
• The lender will probably require the borrower to make full or partial payments during the marketing period to keep the overdue balance from growing.

If you are selling your home without professional guidance, beware of buyers who try to rush you through the process. Unfortunately, there are people who may try to take advantage of your financial difficulty.

Assumption - Some mortgages can be assumed (taken over) by a third party. When a mortgage is assumable, the property can be transferred and the person to whom it is transferred can pick up the payments. If payments were behind when the mortgage was assumed, and there is no workout agreement, the person assuming the mortgage will be in default and subject to foreclosure. The advantage may be that the assuming party is in a better position to deal with the default. A mortgage is always assumable if the contract documents say it is or, in most states, if the documents are silent on this issue. Other mortgages contain a "due on sale" provision which is a clause specifying that transfer of the property requires payoff of the mortgage.

Pre-Foreclosure Sale (also called pre-sale, short sale, or VA compromise) These terms refer to a sale of a property by the borrower for less than the amount necessary to pay off the loan. With this arrangement, the lender agrees to accept the proceeds of the sale (or some other agreed upon amount) to be applied toward the debt. The Lender will consider a short payoff when the borrower:

• Is experiencing a financial hardship.
• Is actively trying to sell the property or already has a buyer willing to purchase at market value
• Is not receiving any cash from the transaction.
• Most investors require that the sale price be at least 95% of the property's fair market value. An appraisal must have been completed by a disinterested third party within the past 90 days.
• The borrower, based on financial ability, may be asked to make a cash contribution to offset the amount of the debt being forgiven.

Deed-in-lieu of Foreclosure (DIL) This is the borrower's voluntary conveyance of title to the lender in exchange for discharge of the debt. In accepting the deed, the lender is also accepting responsibility for all liens against the property including judgments, junior liens, lease obligations, etc. Lenders research title very carefully before accepting a DIL. Consider this option when:

• The borrower has little or no equity in the property
• All other loss mitigation choices have been exhausted
• The borrower has financial hardship and can demonstrate that he is incapable of paying the debt
• The borrower wants to walk away and has made a written request to convey the property

Bankruptcy - Bankruptcy may be an option to stop your foreclosure action. You do need to contact a bankruptcy attorney for legal advice.

The American Bar Association has reported that 96% of homeowners who declare bankruptcy end up losing their home to foreclosure anyway. Bankruptcy is very unlikely to help you save your home. If you declare bankruptcy you could end up with BOTH a bankruptcy and a foreclosure on your credit report. However, there are times when bankruptcy is appropriate and you should consult a reputable attorney if you are considering this option.

Each of the following real estate agents has completed the loss mitigation course for Short Sales offered by the Massachusetts Association of Realtors.  This list is not all-inclusive, and is meant for referral purposes only.  The Western Massachusetts Foreclosure Prevention Center does not specifically endorse any real estate agent(s) to handle short sales.

 

Ms. Elena Acevedo-Gomez

Century 21 A1 Nolan Hometown Associates

1514 Allen St.

Springfield, MA  01118

elenaacevedo1960@yahoo.com

Territory:     Greater Springfield

Ms. Erika Adoryan

Great Homes Realty

103 Broadway

Westfield, MA  01085

564-0554

homeabc@comcast.net

Territory:     Greater Springfield

 

Ms. Bernadette Bain

Witalisz & Associates

5 Noble Ave.

Westfield, MA  01085

568-0005

b.bain@comcast.net

Territory:     Westfield and surrounding towns

 

Ms. Leslie Brunelle

Avalon Real Estate LLC

574 East St.

Chicopee, MA  01020

598-8247

leslie.brunelle@avalonsells.com

Territory:     Hampden County

 

Ms. Concetta Calitri

Century 21

357 North Westfield St.

Feeding Hills, MA  01030

789-1199

conniecalitri@hotmail.com

Territory:     Hampden County

 

 

Mr. Rick Callahan

Barb Hassan Realty Inc.

P.O. Box 1477

Lanesboro, MA  01237

329-6029

rick@bobhassanrealty.com

Territory:     Berkshires

 

Mr. John Ciepiela

RE/MAX Integrity Realtors, Inc.

154 Elm St.

Pittsfield, MA  01201

443-7274

jciepiela@hotmail.com

Territory:     Berkshire County down to Gt. Barrington

 

Mr. Michael Crum

RE/MAX Teamwork Realty

310 North Main St.

East Longmeadow, MA  01028-1803

748-7517

michael.j.crum@gmail.com

 

Mr. Glen Dudek

Carlson GMAC

1847 Memorial Drive

Chicopee, MA  01020-3148

536-1553

gdudek@carlsonre.com

Territory:     Chicopee, Granby, S. Hadley, Ludlow

 

Mr. Matt Erdmann

Keller Williams Realty

66 Dwight St.

Longmeadow, MA  01106

478-3887

matterdmann@kw.com

Territory:     Hampden County, Belchertown, Granby

 

Ms. Sara Gasparrini

RE/MAX Teamwork Realty

2141 Boston Rd.

Wilbraham, MA  01095

sara@sarasells4u.net

 

 

Ms. Priscilla Harman

Keller Williams Realty

94 North Elm St.

Westfield, MA  01085

568-2258

circleofexcellenceteam@comcast.net

Territory:     Pioneer Valley

 

Ms. Kathy Hazelett

Dayspring Realtors, Inc.

55 Church St.

Pittsfield, MA  01201

442-8581

khazelett@nycap.rr.com

Territory:     Pittsfield and surrounding towns

Ms. Geri Johnson

Geri Johnson& Associates, Realtors

66 French King Hwy

Gill, MA  01354

863-9736  x20

gerijohnson@gjar.com

 

Ms. Migdalia Khatib

MBC Realtors LLC

925 Carew St.

Springfield, MA  01104

886-0010

mbcsells@comcast.net

Territory:     Springfield, West Springfield, Wilbraham, East Longmeadow, Longmeadow, Ludlow

 

Ms. Corinne McKeown

Storybook Homes

301 Stockbridge Rd.

Great Barrington, MA  01230

644-9440

corinne.mckeown@roadrunner.com

Territory:     South Berkshire County

 

Ms. Gretchen O'Neil

ERA Laplante Real Estate

37 Main St.

Belchertown, MA  01007

goneil812@yahoo.com

 

Mr. John Pedro, Jr.

John Pedro Real Estate Associates

77 Winsor St.

Ludlow, MA  01056

547-8781

  jpedro@homesbypedro.com

 

 

Mr. Mike Sorrentino

Century 21 Franklin Street

31 Church St.

Lenox, MA  01240

637-8006

mike.sorrentino@century21.com

Territory:     Berkshires

 

Mr. Don Thompson

The Pioneer Group @ Keller Williams Realty

66 Dwight Rd.

Longmeadow, MA  01106

726-9313

don@pioneer-group.com

  Territory:      Springfield, Chicopee, Longmeadow, E. Longmeadow, Ludlow, West       Springfield,  Agawam, Wilbraham, Hampden

Yes, if you have the required deposit. Remember this is a non-refundable deposit and if you are the successful bidder you must be able to refinance the home within the specified period of time required under the terms of the auction.

Yes. Banks are not in the business of owning or selling homes and they do not like to foreclose on property because it is expensive and they usually lose money. The lending institution would rather take a loss on the home than have it remain on their books as a non-producing asset. (see Pre-Foreclosure Sale above)

First, all real estate taxes are paid. Then all mortgages are paid in order of recording. After that, lien holders and/or creditors receive what is owed to them. Finally, you would receive any money left over after all debts are satisfied.

The bank simply takes possession of your property, through eviction if necessary.

There is a legal process for walking away from your home and/or forfeiting your property. You should seek the advice of a real estate attorney because you could face serious consequences if you just walk away.

You should be prepared to vacate the property once the foreclosure sale has been confirmed. If you choose not to vacate the property, an eviction notice will be placed on your door informing you of the date you will be evicted. On that date, the sheriff and/or police will remove your personal belongings from the home. If you are in need of more time, contact the lending institution or assigned attorney immediately to ask for an extension.

This was a law passed during World War II to protect active duty military members from financial difficulty. One portion of the law may be able to stop foreclosure for anyone on active duty if they meet certain requirements outlined in the Soldiers and Sailors Act. Contact a foreclosure prevention counselor to learn how this law may apply to you.

When foreclosure documents are filed they become a matter of public record. Many people review these records for various purposes such as compiling lists to sell to bankruptcy attorneys, investors, real estate professionals and other people interested in either purchasing your home or... helping you save it.

Some of these offers may be legitimate but keep in mind that they come from people who are in the business of making a profit from your foreclosure situation.

You can usually spot a scam because it sounds too simple or too good to be true. Be especially alert for the following:

Equity skimming. In this type of scam, a "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember that signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

Phony counseling agencies or the foreclosure prevention specialist . Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. Or you may be approached by a "specialist" who charges outrageous fees for making a few phone calls or completing some paperwork that you could easily do on your own.  Most of the time these services are things you can do on your own, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. These scams give homeowners a false sense of hope, delays them from seeking qualified help, and exposes their personal financial information to a fraudster. If you have any doubt about paying for such services, call a HUD- approved housing counseling agency . Do this before you pay anyone or sign anything.

The lease/buy back: Homeowners are deceived into signing over the deed to their home to a scam artist who tells them they will be able to remain in the house as a renter and eventually buy it back. Usually, the terms of this scheme are so demanding that the buy-back becomes impossible, the homeowner gets evicted, and the “rescuer” walks off with most or all of the equity.

The bait-and-switch: Homeowners think they are signing documents to bring the mortgage current. Instead, they are signing over the deed to their home. Homeowners usually don’t know they’ve been scammed until they get an eviction notice.

Also be aware there is a deceptive Web site out there that is posing as the Department of Housing and Urban Development (HUD).  This Web site is deliberately deceiving the public by using the HUD name in the web address as well as on the Web site.

The Web site tries to dupe people into giving out personal information (known as “phishing”) - and because they’ve made their site appear to be an official U.S. Government Web site, some people may fall prey to this scam.

The Web site to avoid is  http://bailout.hud-gov.us/.

• Don't sign any papers you don't fully understand.
• Make sure you get all "promises" in writing.
• Beware of any loan assumption where you are not formally released from liability for your mortgage debt and contracts of sale.
• Check with a real estate attorney or your lender before entering into any deal involving your home.
• If you are selling the house yourself to avoid foreclosure, you should first consult a real estate attorney. Check to see if there are any complaints against a prospective buyer before entering into a binding contract. Sources to contact are the State Attorney General's office, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit.