FAQs
The one reality about
today's housing market is that many people have more questions than
answers. The following information is intended to help you or
someone you know better understand your situation.
Do I qualify for a short sale?
The qualifications for a short sale include any or all
of the following:
- Financial Hardship - There is a situation causing you to have
trouble affording your mortgage.
- Monthly Income Shortfall - "You have more month than money." A
lender will want to see that you cannot afford, or soon will not be
able to afford your mortgage.
- Insolvency - The lender will want to see that you do not have
significant liquid assets that would allow you to pay down your
mortgage.
- For Homeowners: Understanding
the Short Sale (PDF)
What is a Home Affordable Refinance?
If Fannie Mae or Freddie Mac owns your mortgage, you may be
eligible for a Home Affordable Refinance. This will allow you to
refinance your home and often lower your payments.
What is a mortgage modification?
A mortgage modification is a process through which your
mortgage lender changes any or all of the following:
- Your interest rate
- Your principal balance (through a reduction)
- Your loan terms (example: from an adjustable to a fixed
rate)
This process can allow borrowers to stay in their property when
they can no longer afford their current mortgage payments.
Why would a lender modify my mortgage?
Lenders have realized that in some cases it is better for them
to work with current borrowers to lower payments or possibly
improve terms in order to keep homeowners in their properties. The
average foreclosure can cost a lender from 35-50% of the value of a
property, so keeping borrowers in their homes is a good option for
everyone.
What do I need to qualify for a mortgage modification?
According to the Making Home Affordable Web site
(www.MakingHomeAffordable.gov), you will need the following
information for your lender to consider a modification:
- Information about your first mortgage, such as your monthly
mortgage statement
- Information about any second mortgage or home equity line of
credit on the house.
- Account balances and minimum monthly payments due on all of
your credit cards.
- Account balances and monthly payments on all your other debts
such as student loans and car loans.
- Your most recent income tax return.
- Information about your savings and other assets.
- Information about the monthly gross (before tax) income of your
household, including recent pay stubs if you receive them or
documentation of income you receive from other sources.
If applicable, it may also be helpful to have a letter
describing any circumstances that caused your income reduction or
expenses to increase (job loss, divorce, illness, etc.).
How do I qualify for a mortgage modification?
The first call you make should be to your lender, have the
information above ready to discuss with them and call their
customer service line to ask them what options you have available.
If the person you speak with does not understand what you are
asking, you can ask to be referred to one of the following
departments (different lenders have different names for these
departments):
- Loss Mitigation
- Mortgage Modification
- H.O.P.E.
Prior to contacting your mortgage lender you can quickly
complete an eligibility test atwww.MakingHomeAffordable.gov.
This test will let you know if you are eligible for a modification
through the government-sponsored Home Affordability and Stability
Program (HASP).
For a list of mortgage lenders and servicers, visit www.HopeNow.com
What if I don't qualify, can't afford my home, and owe more
than it's worth?
You are not alone and foreclosure is not the only option. If
your mortgage lender or servicer will not work with you to reduce
your payment, you may want to consider a short sale. Agents with
the Certified Distressed Property Expert® Designation have
undergone extensive training in how to process and negotiate short
sales.
A short sale allows you to sell your home for less than what you
owe and avoid foreclosure. Speak to your market professional to see
if you may qualify.
What are the qualifications for a Home Affordable
Refinance?
According to the resources released by the government, following
are a list of qualifications:
- You are the owner occupant of a one- to four-unit home.
- The loan on your property is owned or securitized by Fannie Mae
or Freddie Mac (see Useful Links).
- At the time you apply, you are current on your mortgage
payments (you haven't been more than 30 days late on your mortgage
payment in the last 12 months, or if you have had the loan for less
than 12 months, you have never missed a payment).
- You believe that the amount you owe on your first mortgage is
about the same or slightly less than the current value of your
house.
- You have income sufficient to support the new mortgage
payments, and the refinance improves the long-term affordability or
stability of your loan.