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Which Financial Hardship Solution is for You?
Most homeowners who have fallen behind on their mortgages will qualify for one of seven generally accepted solutions. Your negotiator will work closely with you to find the appropriate plan or solution for your particular situation.
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Repayment Plan | top ↑ |
Temporary financial hardship is currently the number one problem of the troubled homeowner. This may be caused by a temporary loss of employment, unexpected medical bills or any of a number of other unforeseen events. In these situations, the homeowner may have no choice but to miss one or more mortgage payments.
In this situation a competent negotiator can often arrange a Repayment Plan with the lender. A repayment plan may allow a portion of the missed payment(s) to be added to your future monthly mortgage until the past due amount is repaid. This option, along with most, will require proof of hardship as well as other financial information to be submitted to the lender. A professional negotiator will help and provide guidance every step of the way.
Special Forbearance | top ↑ |
An alternative option for some individuals, in times of temporary financial hardship, is a Special Forbearance. Your negotiator may work toward a Special Forbearance, allowing the homeowner to make reduced or possibly no payments at all for an agreed upon period of time. Of course, during this time, interest will continue to accrue and the missed payments, or discounted amount, may simply be added to the end of your loan. This may be a workable option for those of who simply need relief from the monthly budget in a time of need.
Partial Claim | top ↑ |
If the homeowner does not qualify for a Repayment Plan or a Special Forbearance they may still be eligible for a Partial Claim. This plan allows the past due payments to be placed in an interest free second mortgage with HUD. The homeowner does not pay on this loan until the first mortgage is paid. This plan cannot contain less than four months, or more than twelve months of past due payments from the original loan. This option may only be viable if the current loan is an FHA loan or a specific Freddie Mac loan. Again, proof of financial stability is a necessary component. This option will allow the homeowner to continue on a normal budget. The subordinate loan will only be payable after the original loan is satisfied.
Loan Modification | top ↑ |
A Loan Modification is "a permanent change in one or more of the terms of a mortgagor's loan, which allows the loan to be reinstated, and results in a payment the mortgagor can afford." In other words, the interest rate may be lowered and/or the current term of the loan extended to result in a lower monthly payment. To qualify, all of the property taxes must be current or the homeowner must be participating in an approved payment plan with the taxing authority. If the homeowner has any additional liens or mortgages with other lenders – they must agree to be subordinate to the first mortgage.
VA Loan Modification / Refunding | top ↑ |
If the homeowner has a loan through the Veterans Administration that loan may be eligible for a Loan Modification through a special VA program.
If your Lender cannot or will not perform a Loan Modification, the VA has an option, called "re-funding". When the VA re-funds a loan under 38 U.S.C. 36.4318, it purchases your loan from the original lender, adds any delinquent payments to the principal balance and re-amortizes the loan to lower your monthly payment to one you can afford.
Deed-in-Lieu of Foreclosure | top ↑ |
If the home has been on the market with a fair asking price for at least 30 days with no success and there are no claims or liens against the home other than the mortgage, the homeowner may be eligible for a "Deed-in-Lieu of foreclosure."
Much like a Short Payoff, this is generally recognized as a last resort. This option allows to the homeowner to move on without having to go through the stresses of a foreclosure. If a Deed-in-Lieu of Foreclosure is awarded; all ownership rights will be conveyed to the lender. The homeowner no longer will have rights to the property, however, the homeowner will also no longer have to live with the stress of an pending foreclosure.
Short Payoff | top ↑ |
A "Short Payoff" is also known as a short sale and is defined as "A sale in which a lender allows the property securing a mortgage or deed of trust loan to be sold for less than the existing loan balance, due to factors such as the borrower's financial circumstances, the property's physical condition, and local real estate market conditions." In a Short Payoff the property is sold for less than it's market value, money gained from the sale belongs to the lender.
To qualify for a Short Payoff, the homeowner must have suffered a long term financial hardship such as an immediate family member suffering a catastrophic illness, an employer transferring the homeowner out of the area, a disabling injury that precludes the homeowner from working, and so on.
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PMC, My brother tells me you might be able to help my husband and I sort through getting our mortgage modified with Wells Fargo. I have been in a never ending loop with them for about 4 mths now and seem to be getting nowhere. He thought you might be able to be of some assistance maybe at least...Read more »
- Sheri
I am quite pleased so far with the attention, diligence and care your company, particularly Angie F., has given my mortgage files and the progress we have achieved up to this point. I have no hesitation in recommending you to others who are looking for a reputable company to assist them...Read more »
- John S
I was contacted by a representative of Principal Mitigation Corporation regarding a loan modification of my current mortgage. I was in a financial crisis that was unmanageable. I was at first apprehensive because I had been granted a modification the year before and was terribly...Read more »
- Patricia
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