foreclosures

Stopping a Foreclosure

Can a reverse loan be used to stop a foreclosure on a seniors property? Yes, it can but it must meet the other loan requirements per the lender.

Sadly, some senior homeowners have found themselves unable to keep up with their mortgage payments or property taxes because of unexpected events such as a health crisis or a major repair to their home and they end up falling behind on their payments, triggering a foreclosure.

If they are not too deep into the process and apply for a reverse loan, there is a good possibility that it can be stopped and they won’t lose their home.

Here is what a reverse mortgage lender will need in regards to the foreclosure from the potential borrower.

  •  Proof of foreclosure and the dates associated with it.
  •  A letter from the attorney handling the foreclosure confirming that the payoff is not a short pay.
  • Confirmation that the borrower is still occupying the property
  •  Confirmation that the borrower is still the legal, vested owner of the property.
  •  Confirmation that the Sheriff’s sale has not taken place, OR that the borrower is still within the redemption period AND vested in title.
  • The borrower must provide a letter of explanation describing what happened to them and what steps they took to avoid having a foreclosure.

Documentation must be provided by the borrower for the reason they fell into foreclosure, which could have been due to income loss, large and unexpected medical expenses or other viable reasons.

This is a very simple overview about using a reverse loan to stop a foreclosure that is in process, however there are additional qualifications regarding “residual” income , the amount that is “owed” and if there is enough remaining equity in the property to complete the transaction.

Please contact me for more details and/or a quote and I will answer any questions about the process and what you need to know.

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Reverse Loan Lending Limit is Kept in Place

HUD has decided to extend the current lending limit of $625,250 for Reverse mortgages into the next fiscal year and that is very good news for everyone.   There has been a debate about reducing the limit to the previous  figure which was at $417,000 due to declining market conditions and if that had happened it would have had serious consequences for seniors and the Reverse loan industry.

If this had indeed occurred it would have been a serious blow to the senior community making it impossible for some to take advantage of the federal loan program because of the lower cap.   Appraised values would have been capped at $417,000 instead of the current lending limit and if a senior  has a large mortgage that needs  to be paid off and depending on how much they could qualify for  from a Reverse loan, they may not be able to do it and  that would mean they would have to continue making mortgage payments that they may not be able to afford and put them at risk for  foreclosure.

It is with a huge sigh of relief, to know that for at least another year we have the ability to continue to originate loans for seniors who need the higher lending limit to pay off  large mortgages they may have on their property and eliminate their loan payment.  And for the time being the higher limits will remain available but this could change next year and that’s why it’s important for seniors to explore this option now and not continue to wait and see what happens.

Following is an article that discusses this good news:

HUD  Extends $625,250  HECM Loan Limit Through 2011

The mortgage loan limit and max claim amount for for HECM loans will remain unchanged through December 31, according to a mortgagee letter issued today by the Department of Housing and Urban Development. ML 2011-29 specifies that the HECM loan limit of $625,500 will remain for all areas, including high-cost areas such as Alaska, Guam and the U.S. Virgin Islands.

“We’re glad to see FHA take this interim step. It eliminates uncertainty for loan applicants who might have been concerned about not getting their loans before the limits possibly dropped,” Peter Bell, National Reverse Mortgage Lenders Association president told RMD in an email. “Now, we need to focus on persuading HUD and/or Congress to retain this limit beyond calendar 2011.”

For forward mortgages, HUD states that the Federal Housing Administration will implement new single-family loan limits on October 1, which will reduce forward loan limits in the highest cost areas in the U.S., and will maintain current loan limits in most parts of the country.”

Part II on 8/27/11

 

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HUD and a Homeowners Assistance Program

As the nation continues to stumble through the housing crisis, the government is coming up with another program that might be of help to people who are struggling with making their mortgage payments.

It seems that HUD Secretary Shaun Donovan has announced that they are working in conjunction with NeighborWorks America to launch this program in a limited number of states.  And those who are lucky enough to live in one of them , might be eligible for a loan up to $50,000 that could be used to pay part of the homeowners mortgage payment.

Here is the article for further information:

HUD Launches $ 1 Billion Homeowner Assistance Program/ Written by Brett Varner

“As the government debates ways to reduce the size of their involvement in the housing finance market, HUD announced the launch  of a $1 billion assistance program designed to offer interest free loans to borrowers who are at risk of foreclosure.

The program, called the Emergency Homeowners’ Loan Program (EHLP) has been made available in 27 states and Puerto Rico. It offers interest free loans up to $50,000 to pay a portion of their monthly mortgage payments for up to two years.

“Through the Emergency Homeowners’ Loan Program the Obama Administration is continuing our strong commitment to help keep families in their homes during tough economic times,” said HUD Secretary Shaun Donovan. “Working with our community partners across the nation through NeighborWorks® America, we are pleased to launch this program today in 27 states and Puerto Rico to help families keep their homes while looking for work or recovering from illness.”

HUD expects the programs to help about 30,000 distressed borrowers with an average loan amount of $35,000.

Considering that the majority of homeowners who have their mortgages modified re default within a short period of time, adding additional debt to distressed homeowners, even at an interest free rate, may merely delay the inevitable and lead to significant losses of the $1 billion allocated to the program.”

Obviously this won’t make much of an impact on the overall level of foreclosures but if you are the “one’ that is lucky enough to take advantage of the program, it certainly will make a difference in your life, wouldn’t it?

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