Lunch N’ Learn@ CAAR

Mortgage Default/Delinquency-What Realtors need to Know

Facilitated byPiedmont Housing Alliance

SunTrust MortgageDecember 4, 2008 12-2pm

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Overview PHA and Housing Counseling Counselor’s Role Realtor’s Role Alternatives for Homeowners Understanding the Processes: Short Term

Repayment Plan, Forbearance, Deed in Lieu, Loan Modification, Pre-foreclosure Sale/Short Sales, Foreclosure, Bankruptcy, Reverse Mortgage

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Cont’d

Government Role: Understanding the H4H, FHA Secure, Hope Now programs

Scams Running RampantPlanning a Move!Recap-How Realtors, Lenders and

Counselors work together

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PHA and Housing Counseling

Mission: Piedmont Housing Alliance is a regional nonprofit

organization that creates housing and community development opportunities for very low to moderate income families and individuals, teaches financial literacy and management, homebuying and homeownership skills, and advocates for affordable housing policies and programs.

Partners: SunTrust, HUD, Wachovia, BOA, City of Charlottesville, Albemarle County, FHLB, VHDA, Legal Aid Justice Center, CACF & CAAR, and a host of community organizations.

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Programs and Services

First time Homebuyer, VIDA, Rentals, Fair Housing Education, Default/Delinquent Foreclosure and Reverse Mortgage Counseling

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Housing Counselor’s Role

To help the client understand and manage challenges and choices. To EDUCATE, not advise.

Ref: VAHC Manual pg. iii-2006

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Realtor’s Role

Resource of information Support & Guidance Know the process & timelines

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Virginia Foreclosure Timeframes

*handout

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Counselor’s Process Intake* Is it Curable or Un-curable?*

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Be Aware!

Recognize the stress that you are experiencing.

Recognize the signs of clients stress. Recognize the stress the lender is under Don’t be afraid to ask questions and seek

help yourself

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Alternatives/Options for Homeowners

Short term Repayment Plan Forbearance Deed in lieu Loan Modification Pre-foreclosure sale Foreclosure Bankruptcy Reverse Mortgage

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Short Term Repayment Plan

Lenders will try to set up repayment plan first

Negotiated by the collections dept. Collections have limits on how long they

set up the repayment plan Usually 90-120 days

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Forbearance

Definition: agreement to suspend or reduce regular monthly payments for a period of time

At the end of the forbearance a lump sum of the pass due amount is due.

Basic documents that lender needs: client needs to write a hardship letter, provide proof of household income, spending plan/budget

Lender must approve

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Deed in LieuDefinition: the homeowner voluntary conveys the title

to the lender in exchange for the discharge of the debt Basic documents that lender needs: client needs to

write a hardship letter, provide proof of household income, spending plan/budget, listing contract-house listed on the market for at least 90 days, CMA and justification summary

Lender must approve-will not do if there is a 2nd or 3rd mortgage on the property

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Loan Modification Definition: any changes to the original terms of

the loan, could be rate, payment amount, or maturity date.

Usually the loan must be at least 1yr old, owner wants to keep their house, has stable income to support the new payments, must be in writing.

Documents needed: hardship letter, proof of income, revised spending plan/budget, certificate of Housing Counseling

Lender approval

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Pre-Foreclosure Sale/Short Sales

Definition: sale of the property for less than amount due on mortgage

Lender might allow the time to sell Must have property listed Basic documents that lender needs: client needs to write a

hardship letter, provide proof of household income, spending plan/budget, listing contract-house listed on the market, CMA and justification summary*

Less impact on credit report Lender must approve and basically tells the 2nd mortgage

holder how much they will give them

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Foreclosure

Lender auctions the house for sale, usually at local court house

Government loans-owners can apply to stay after HUD takes back procession, usually up to 6 mos. But has to complete a form 20 days prior to the auction date.

If house sells-typically the owner has 30-60 days and can request an extension.

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Bankruptcy-Chapter 7 and 13 Legal action to temporarily stop collection on all

of the borrower’s debts Damages the individuals credit rating 13-allows the homeowners to reorganize their

debts and pay it back according to a payment plan developed by the courts

7-homeowner is allowed to discharge all debts Does not protect the homeowner, only stalls for

time Referral to Bankruptcy Attorney

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Reverse Mortgage

62 and older Owner of the home Owner does not owe any federal debt Must seek and complete counseling by a

HUD approved Housing Counseling Agency (Piedmont Housing Alliance)

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Government Options

FHA Secure Hope for Homeowners (H4H)-HUD Hope Now

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Scams running rampant

The purpose is to strip the homeowner of their equity and eventually take the home

Be aware, contact your legislators, it should be illegal

Be a resource of good information Call your local legal aid office (434) 977-

0553 or Virginia Poverty Law Center (804)-782-9430

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Planning a MoveHow you can help clients move. Be aware of the rental market Have information to pass out (i.e., rentals

list)

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Recap & Questions

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