Can an FHA loan can end foreclosure? YES!
Loan mods are great; but what if your current mortgage servicer says “no thank you” ? Successful arrangement of an FHA mortgage loan can solve your foreclosure problem. Not everyone qualifies and a 12 month period of Court supervised payments is required.
Homestead SPC is a California social purpose law firm that is also licensed as a Mortgage Loan Originator. We practice at the intersection of LAW and LOAN guidelines. Understanding how the mortgage game works, and when to assert your legal rights, is critical to SAVING your HOME. But what you don’t know, can hurt you.
Tips to improve your chances of saving your home through a FHA refi:
- Do not assume you will receive or are entitled to a loan modification; be ready with a “Plan B” FHA refinancing Your current “loan servicer” (Mr. Cooper, SPS, SLS, OCWEN, Flagstar, Wells Fargo etc.) could not care less about you, your family or your hardships, it’s all about their profit. Loan servicers are the hired collectors of investors; loan servicers typically earn THREE TIMES the monthly fees on a defaulted loan. Loan servicers have little incentive to process your application competently or urgently as they DO NOT OWN YOUR LOAN. Nor do loan servicers hand out better loan mods based upon the severity of your hardship. The decision to modify is purely financial; based on the comparison of the projected return on investment of the loan mod versus foreclosure and re-investment of proceeds. If you have substantial equity or breached a previous loan mod, lenders are more likely to FORCE A SALE to get rid of a risky borrower. To better understand your options, ask Joe)
- Know the “sweet spot” for getting a new FHA loan Obtaining an FHA refinance to save your home is primarily dependent on your FUTURE payment history and your “debt to income ratios” 12-15 months from now. A new lender will apply Department of Housing and Urban Development underwriting guidelines when you apply for an FHA Refi mortgage. It’s all about the RISK of YOU. At the time of the FHA application (12-15 months from now), your income needs to be provable, sustainable and sufficient to pay off the new loan. FICO score needs to be decent, not excellent. Minimum equity is generally 3.5%. Disposable income cannot be so low that you cannot prove your capacity to pay your bills including the new monthly payment, including principle, interest, property taxes, hazard insurance, mortgage insurance and HOA dues, if any. Need help? Ask Joe.)
- If a loan modification is denied, you can request a 12-15 month payment plan from a judge Obtaining an FHA refinance to save your home is dependent on your FUTURE payment history in a Chapter 13 Bankruptcy reorganization. You must re-establish a positive monthly payment history for 12 months, if you are to convince an FHA lender to lend you money. Chapter 13 can provide you protection from foreclosure while you are re-establishing the 12 month perfect payment history that will be needed to satisfy Department of Housing and Urban Development underwriting guidelines. Previous bankruptcies may not be a problem. Need your situation reviewed? Ask Joe.)
Consulting with a reputable foreclosure defense attorney should be your first move, but if you want to try to do it yourself or play lawyer, arm yourself with knowledge!