Loan Workout Solutions
The following are some of the options available to assist you in avoiding foreclosure proceedings or reducing their impact:
Free Counseling Service
In many cases, homebuyers simply need help adjusting to the financial responsibility of homeownership. Through participation with Consumer Credit Counseling Services (CCCS), a nationwide nonprofit organization certified by the U.S. Department of Housing and Urban Development (HUD), PMI assists borrowers in making a smooth transition to homeownership. Services provided by CCCS are available at no cost to
borrowers, and a borrower’s loan does not need to be delinquent to take advantage of the services.
Reinstatement or Repayment Plan
Your lender may be able to help bring your loan current by arranging an increase in your payments. This means that each month you would add an additional amount (determined by the lender) to your regular monthly payment until the amount overdue has been paid.
Forbearance Agreement
To give you an opportunity to resolve your financial hardship, you might be able to enter into a formal, written agreement with your lender to reduce or suspend your mortgage payments for a specified period of time. During this period, you would pay only a portion of your regular payment or would not make any payments, and your lender would agree not to exercise the legal right to foreclose on your property. At the end of the specified period, you would resume your regular mortgage payments.
Loan Modification
To create a new and more affordable loan which cures the default and renders moot any prior foreclosure proceedings, you might be able to arrange with your lender to revise one or more terms of your mortgage, such as the loan interest rate. This option is generally considered for borrowers whose financial problems are expected to be more long term.
Saving Homeownership and Repayment Program (SHARP)
PMI’s SHARP program helps borrowers suffering temporary income loss to keep their homes. A special workout program specifically designed for the delinquent borrower who clearly has the ability to maintain future payments, SHARP pays an advance claim to cover delinquent interest on the defaulted loan.
Loan Assumption
This option allows a qualified buyer to assume your loan obligation (i.e., purchase your home). Lenders often have restrictions on this option, including the types of loans that qualify for assumption.
