DST H.O.M.E.Home Ownership Maintenance and Education

Keeping Your Home:Homeownership Preservation

The Real Estate Headlines

• Credit Crunch Marks End Of Boom• Home Prices Continue To Decline • Short Sales & Foreclosures Increase • More Investors Buying Homes• Housing Related Businesses Are Closing Doors• Housing Inventory Is At An All Time High • The Government’s Housing Package

Terms To Know

• Forbearance lender may decide not to take legal action when a borrower is late in making a payment. Usually this occurs when a borrower sets up a plan that both sides agree will bring overdue mortgage payments up to date.

• Repayment Plan an agreement between a lender and a delinquent borrower where the borrower agrees to make additional payments to pay down past due amounts while making regularly scheduled payments.

• Mortgage Modification a loss mitigation option that allows a borrower to refinance and/or extend the term of the mortgage loan and thus reduce the monthly payments.

• Short Sale in real estate means the lender is accepting less than the total amount due

with temporary reduction of income or increase in expenses

with permanent reduction of income

Cure the delinquency: repayment plan, forbearance agreement, loan modification, or Borrower Assistance Program

Mitigate losses and avoid foreclosure: preforeclosure sale, Deed-in-Lieu of Foreclosure, loan assumption

Homeowner Preservation

Short-term hardship… Long-term hardship…

Homeowner Preservation Options

Borrower AssistanceProgram (BAP)

Loan Modification

Repayment Plan$ + $ + $ =

Forbearance Agreement

BAP/Mod+

Homeowner Preservation - Repayment Plan

The Situation:Temporary curtailment of income which has since been resolved

The Solution:Mortgagor agrees to bringloan current• within a given time frame• by making scheduled

payments toward the delinquent amount

• in addition to normal payments

Homeowner Preservation Options -- Repayment Plan

Questions to ask that helps you figure out what’s best for you:

How much is needed to fully reinstate the mortgage?How much is needed to fully reinstate the mortgage?

Can I keep the loan current after it is cured?Can I keep the loan current after it is cured?

When will I be current?When will I be current?

How much can I pay in addition to my regular payment?How much can I pay in addition to my regular payment?

Homeowner Preservation Options - Forbearance Agreement

The Situation:Borrower has suffered a temporary financial setback…but will soon have funds to pay back the amount owed

The Solution: Servicer and MI companyagree to delay foreclosureBorrower promises to payentire arrearage (or full debt)by a specific date

Homeowner Preservation Options Forbearance Agreement

Where will the borrower obtain the money?Where will the borrower obtain the money?

Questions to consider:

Can These funds be verified?Can These funds be verified?

On what date will the funds be available?On what date will the funds be available?

Can the borrower keep the loan current after it is cured?Can the borrower keep the loan current after it is cured?

Homeowner Preservation Options

The Situation:Do I have...Desire to retain propertyDesire and ability to make paymentsNo equityEmployment (to start within 90 days or steady income source)

The Solution: Borrower signs Promissory Note...• Zero % interest• Term determined by Lender/ MI

Company (average 10 year term)• Investor approval

Homeowner Preservation Workout Options

Does borrower qualify for a forbearance plan or modification?

Does borrower qualify for a forbearance plan or modification?

Does the borrower have equity in the property?Does the borrower have equity in the property?

Can the borrower afford the mortgage payment + additional payment?

Can the borrower afford the mortgage payment + additional payment?

Questions to consider:

Homeowner Preservation Options Loan Modification

The Situation: The borrower has experienced a permanent change in ability to make payments and all facts and circumstances indicate a likely resolution of the delinquency.

The Solution: Modification of...• Interest rate• Product• Capitalization and/or• TermTo effect a permanent cure

Homeowner Preservation Options Loan Modification

Do I desire to keep the property?Do I desire to keep the property?

Will the investor/lender approve of the modification?Will the investor/lender approve of the modification?

Do I ...• have funds to bring loan current...• or qualify for a BAP?• have ability to keep loan current?

Do I ...• have funds to bring loan current...• or qualify for a BAP?• have ability to keep loan current?

Questions to consider:

Questions or Questions or CommentsComments