Answers to your most frequently asked questions about the foreclosure process are a click away
Click on a question below to get answers
Q. How many payments may I miss before I lose my home?
A. After one missed payment on your mortgage, you are in breach of your agreement with your mortgage lender. Although most lenders do not start foreclosure proceedings after only one missed mortgage payment, late charges apply and add up over time.
If you continue to miss your payments, it will make it harder for you to catch up. Most lenders will start the foreclosure process after three late payments.
Q. My lender has started foreclosure proceedings. What should I do?
A. Contact a HUD or MSHDA approved foreclosure prevention counselor. If they advise you to seek the assistance of an attorney, they may be able to refer you to free or low cost services.
For a list of housing counselors in Wayne County, click here.
Q. My income has been cut and I may lose my job soon - is there anything I can do now to avoid losing my home?
A. Learn about your options. You have already made the first step toward educating yourself about available options. Continue to explore this website and learn about foreclosure prevention and community resources that may help you adjust your budget and access other sources of revenue.
Contact a non-profit credit counselor. Take advantage of employer assistance options available through the
State of Michigan or your union.
Dial 2-1-1 to access United Way's information and referral service to link to a variety of community resources.
Q. How can I work with my lender to stay in my home?
A. Loss Mitigation is an effort by the mortgage company (mortgage servicer) to help homeowners avoid foreclosure whenever possible. The mortgage company works with the homeowner to assess their financial situation to determine their best course of action.
The Loss Mitigation Department typically works with a homeowner who is:
- Delinquent and unable to bring their loan current
- Anticipating an inability to pay in the near future
- Requesting a short sale or,
- No longer wants to keep their property.
Loss Mitigation may include finding way to help the homeowner work out an alternative repayment plan or restructure the mortgage loan (i.e. rate deduction, loan term extension and/or capitalization of delinquent mortgage payments). (Source:
HopeNow.com)
A. There are many options you should consider and discuss with your lender and/or a housing counselor. To view a description of the workout options, click on the terms below.
Refinance
Refinancing usually requires substantial equity in the home, a good payment history, and a difference of at least 2% lower interest rate to make the refinancing fees cost effective.
A type of refinancing tool known as a
stream line refinance is not as costly as regular refinancing, as is available to government insured (FHA) loan borrowers. This can be defined as the refinancing of one FHA loan with another FHA loan with different terms and that result in a lower monthly payment.
Interest rates can go up with a streamline refinance only if no closing costs are charged. Otherwise, rates can decrease to current market rates. Terms may be extended to 30 years or 12 years past the current term, whichever is less.
Borrowers must be two months or less delinquent. They are allowed to bring in payments to make the loan no more than two months behind.
Forbearance
An agreement to temporarily allow you to pay less than the full amount of your mortgage payment, or pay nothing at all during the forbearance period.
Mortgage companies may consider forbearance when you can show that funds from a bonus, tax refund or other source will allow you to bring the mortgage current at a specific time in the future.
Reinstatement
This occurs when you pay your mortgage company the total amount you are behind, in a lump sum, by a specific date. This is often combined with forbearance. With a
partial reinstatement, you pay at least half of the back-payments first and agree to a repayment plan for remaining amount.
Repayment plan
An agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of the amount past due with your regular monthly payment. At the end of the repayment period, you will have gradually paid back the delinquent mortgage.
Loan modification
A written agreement between you and your mortgage company that permanently changes one or more of the original terms of your mortgage to make payments more affordable. Common loan modifications include:
- Adding missed payments to the existing loan balance
- Making an adjustable-rate mortgage into a fixed-rate mortgage
- Extending the number of years you have to repay
Reverse mortgage
This is used by senior homeowners age 62 and older to convert the equity in their home into monthly streams of income and/or a line of credit to be repaid when they no longer occupy the home. A lending institution such as a mortgage lender, bank, credit union or savings and loan association funds the FHA insured loan, also commonly known as HECM.
Visit AARP's site for more information on reverse mortgages.
