Don't wait to get help until you are on the verge of foreclosure.

[clear eye]

There is a sad trend emerging in this miserable economy of people who could have been helped ending up losing their homes anyway b/c they didn't know how to get help until it was too late and they had already been summoned to court.

The help that is available through the Hope for Homeowners Act does not require you to even have missed a payment. If you foresee that you don't have enough income to pay an upcoming balloon payment or if your income has decreased for any reason--high debt, loss of a job, or illness, for example--and you believe you won't be able to continue making your current mortgage payments a network has been set up to help you find options.

Unfortunately banks are particularly quick to foreclose on older homeowners w/ a fair amount of equity in their homes and an already lowish interest mortgage. There have been numerous accounts of such people getting no responses when they tried to contact their lenders to work out alternatives and finding themselves hustled into foreclosure court. If you have a lot of home equity but are in trouble w/ your finances, RUN do not walk to the phone and call one or more of the resources I list below. Do not think that because you have been a good creditor for years, making your mortgage payments in full and on time, the bank will act reasonably toward you. Sometimes they don't. Don't risk it.

The federal gov't is implementing the H4H Act through HUD. The HOPE for Homeowners program will refinance mortgages for borrowers who are having difficulty making their payments, but can afford a new loan insured by HUD's Federal Housing Administration (FHA). The very first thing anyone who looks at their income and looks at their expenses and doesn't see how they can pay their mortgage in future months needs to do is call their 24/7 hotline: [phone]-HOPE. This number screens you for elegibility to the program, and either refers you to your local affiliated agency, or to alternatives such as credit counseling. THEIR SERVICE, AND THE SERVICES OF ANY PLACE THEY REFER YOU, ARE FREE.

Alternatively, you can find the address and contact info of the nearest affiliated foreclosure prevention agency and contact them directly by calling 800-569-4287 and punching your zip code into the automated phone system.

AFTER you have done that, and while your case is in progress, you may want to pursue a couple of other options on your own.

If you think you can make the mortgage if it was only reduced a bit, you might look into refinancing through a credit union. Credit unions often offer lower rate mortgages than banks. To find if there's a credit union nearby that you are elegible to join, check this online credit union locator.

OR if, you have considerable equity in your home, you might want to venture into the tricky world of reverse mortgage loans. Unlike all other types of loans, these do not have any income requirements because they are repaid with the proceeds from the sale of your home after your death. There are predatory players out there and loans masquerading as reverse mortgages that have a repayment date stipulated, which still pose the risk of foreclosure. However, some are federally insured. These are called Home Equity Conversion Mortgages, and are available through FHA lenders. To find which, if any, would be reasonable for you, get HUD-approved counseling. For phone counseling for anyone in the U.S., call one of the groups on HUD's National HECM Counseling Network page. The groups on this list include the Nat'l Council on Aging and the AARP among others. The HUD site also has a tool for finding local HECM conseling affiliates. These are mostly credit counseling organizations and community development groups. https://entp.hud.gov/idapp/html/hecm_agency_search.cfm

But I emphasize again, even if other avenues look promising, your first call should be to 1-888-995-HOPE. They have vast experience helping people save their homes, know resources for helping w/ other financial woes as well, and if worst comes to worst, the local groups know what's available in terms of rental assistance and which affordable housing in the area are okay places to live. The important thing is to act quickly.

[wryter2000]

1. K&R

I ought to take that advice my own self. :hi:

[clear eye]

3. Please do, even if you have hopes of getting more work and income soon.

Things don't always pan out as fast as we hope they will, and it's vital to at least get on the waiting list for renegotiating your mortgage, just in case.

[wryter2000]

5. Thanks

I do make my mortgage payments on time. It's just really hard. I could use some relief.

Still, I'm not in any danger. Thanks for thinking of me. :hi:

[marshall]

2. Sadly that is how many people treat vital issues in their lives

My father was a doctor and he often mentioned how a patient he was treating who was terminal could have been saved if only they had come in earlier, when they first recognized that something was wrong. But for a variety of reasons people were putting off seeking medical help until it reached a crisis.

[Laelth]

4. Excellent public service. Thank you. k&r n/t

:dem:

-Laelth

[imdjh]

6. I might even be OK with just walking away at this point. But can I?

Do I have to try to sell my house (already have) or can I just go with the assessment being about the same as what I owe and walk away?

It isn't so much that I can't make the payments (yet) but that it's simply not a good value to continue to pay in mortgage double what rent would cost me for adequate housing.

[clear eye]

7. Call the hotline.

They can refer you to credit counselors who know the answer to these things even if you don't qualify for their program.

I'm pretty sure you can't just stop paying on the house and "give" it back to the bank w/o major credit implications.

[gleaner]

8. Good advice which I will be taking ...

Thank you so much for posting this. We have put in for assistance under Obama's stimulus bill with Chase Manhattan who holds our mortgage. I do not trust them as far as I can throw them, so I really appreciate this information and the phone numbers.

One thing with a reverse mortgage in California, both parties who live in the home must be 65 or older, so that is not an option for us for about nine years.

[clear eye]

9. Glad I could help.

The HUD program has a lot of clout and a good record in getting banks to renegotiate when there is a reasonable likelihood the homeowner will be able to pay the reduced mortgage.

[gleaner]

14. Thanks Again ......

My husband says we'll call HUD for advice and help on Monday. We know that with Chase Manhattan in the picture there is no such thing as being safe. I wish we could move our mortgage out of there as quickly as we moved our other accounts to a credit union. We are going to try to do that as well as get it renegotiated. This is a family house. My father built it 70 years ago. I grew up here and we moved back to take care of my mother who was dying of congestive heart failure. I have so many memories here. My husband loves it too. Everyone has special feelings for their home, these are just ours. You live in a house and it assumes its own meaning to you and becomes a part of your family life. To Chase Manhattan we are just worthless small depositors whom they don't want anyway and our home is just another figure on a bottom line.

[leveymg]

10. None of these programs help if your mortgage isn't a Fannie Mae or Freddie Mac-backed loan

You're on your own to deal with your predatory lender if the note is privately held.

[clear eye]

11. NOT SO.

Please don't spread misinformation about something so important. The HUD network can help in various ways depending on the situation.

[leveymg]

12. That is what we've been told. What do you know to the contrary?

Please be specific about which HUD program you are referring to.

We've been told that loan modifications are entirely voluntary for the lender if the note isn't federally-backed. How is that disinformation?

[clear eye]

13. Because there are other ways to prevent foreclosures than renegotiating the mortgage.

The agencies the H4H sends people to can also either do or find them credit counseling, and refinancing options the homeowner might not be aware of. Also if you read my post, I discussed reverse mortgages and low-interest credit union mortgages, neither of which are dependent on any program. Income is the most important factor in determining whether the H4H program can save you from foreclosure IF YOU CALL THEM BEFORE WHOEVER IS SERVICING YOUR MORTGAGE BEGINS FORECLOSURE PROCEEDINGS. If your income is clearly too low to pay the balloon payment of a predatory mortgage, but enough to pay a low-interest mortgage, they can usually find you options. They also find you free or very low-cost legal assistance if the finance co. you're dealing w/ is claiming, for instance, that you can't prepay your mortgage when that is not in the agreement.

Even if you are really down on your luck and have so little income that they can't save your house, the counseling agencies can locate decent low-cost rental housing easing the stress of the situation and preventing even one night of homelessness.

I hope your post didn't discourage people who could be helped from calling.

[leveymg]

16. NONE of the "fixes" you describe apply to most people who have privately-held mortgages

Credit counseling isn't even relevant for people whose debts so outstrip their incomes they can no longer afford their mortgages. Reverse mortgages require equity - most people facing foreclosure are underwater. Forget refinancing through a credit union if your credit is shot to shit because of defaults on credit cards - when you get close to losing your home, chances are you've reached the end of the rope on financing and credit. Most predatory lenders will NOT renegotiate principal, lower interest, or reschedule the note.

Your mention of "prepaying a mortgage" for someone facing foreclosure is so irrelevant that I have to wonder about your contact with reality and understanding of the problem. Abandoning a home that has been lived in for decades and moving into "decent low-cost rental housing" is not a solution around here - the cost of rentals around here (DC area) is high.

The problem is, our mortgage is priced over-market for the reduced property value, and our income has dropped. We can't sell and we can't deal with the payments as we originally could. Those are the twin issues facing many middle-class people with reduced incomes that the Obama Administration and Congress refuse to deal with. If we could get a write-down in bankruptcy proceedings, we would. But, under current law, we can't. Our wonderful leaders have done nothing to take on the private mortgage industry. So, there's no incentive for them to negotiate, and my family may be screwed.

If you have any constructive ideas that are relevant, I'd still like to hear. Otherwise, you're just plain wrong, and spreading a myth that the HPP system is set up and able to help homeowners in distress with privately-held mortgages.

[clear eye]

17. Perhaps I was confusing when I said "target income range". Let me explain.

It doesn't mean you have to be a "low-income" person. It means that your current mortgage payment is between certain percentages of your monthly income--too much to be able to pay and still have enough for the rest of your bills, yet a low enough percentage that if it were reduced a doable amount you could pay the new amount. They have a formula that you can either check for yourself on their www.makehomeaffordable.gov/ site or you can call and let them do it for you.

I was speaking about "prepaying a mortgage" in the context of refinancing, and I was only using it as an example of something deceptive a lender could use to prevent the homeowner from refinancing that a free or low-cost lawyer could help with.

The HPP reps who have done this every day for years disagree w/ you about what most predatory lenders are willing to do re negotiating. Their experience may be different from yours when you tried to act alone. Their ability to get better results than individual homeowners can was the basic reason I posted this info.

Yes, the change in the personal bankruptcy law is horrible and it makes things much harder for the many people like you to recover from debt while retaining home ownership.

I'm not sure you're aware of it, but your distress is clouding your thinking. Thing is, you and your family will either get your mortgage reduced to a reasonable amount and stay in your house or have to sell at a loss and move into a rental. The local affiliate groups know the best affordable rentals. The only other option I can think of is if you or your wife has a relative w/ a basement apt. or something similar where your family could stay and get your finances in a little better shape.

Your post has rejected all options including the free counseling described in my OP. This alarms me. This kind of dark, no-way-out thinking even when shown a possible remedy can mean that you are severely depressed. Your reaction is probably, "No s__t, Sherlock, I have a family and we're broke," but your depression is preventing you from acknowledging a possibility for moving on, even if the outcome is disappointing. I encourage you to see a doctor. Let your wife help set up the appointment. This complete hopelessness is dangerous.

[leveymg]

18. I looked into all these angles 15 months ago. I found out why so few people have been able to get

any real assistance. The system was designed to let a very significant segment of the public fall through the cracks -- those whose mortgages are held by private lenders. The DC pols just don't want to fight the big global banks who hold those notes - the American middle-class has been sold-out. Shocked I say, shocked.

You assume we didn't go through the free counseling and have not explored the available options. I did. Who wouldn't be depressed? But, that's not the issue. And, by the way, we're not completely broke. But, we don't make enough to make full monthly payment on the notes. If we sold in this market, we'd lose a quarter of a million dollars. The terrible irony of it is, things are a bit better than six months ago, and we can afford to continue at the hardship level we worked out with the lender, if they choose to modify the note. But, if they raise it back to where it was, and we can't make the payments, they will take the loss. We'll lose everything. The lender will just write it off against the value of some CDS option they bought with federal bail-out money.

Don't tell me to "move on", even if the outcome is "disappointing". I encourage you to continue living and working happily in whatever that alternative universe is that you occupy. Enjoy.

[clear eye]

15. An HPP rep tells me that the majority of the lenders they negotiate with

are negotiating on a voluntary basis. Only a very few lenders have enrolled to receive federal funds that make negotiating mandatory. The Home Preservation Program has been negotiating w/ lenders on a voluntary basis for years before there was a federal program involving money in exchange for mandated rate-adjustments. The Program's affiliates will go to bat for you with any lender if you are w/i the target income range. They have more clout with lenders than individual homeowners. I don't have numbers, but I've been told that they succeed more often than not.

Especially in the cases of homes for which the owner has paid very little of the mortgage, it makes good business sense for the lender to accept revised terms instead of an almost total loss of the loan and a house in an already glutted market.

I hope the person who told you not to bother contacting the hotline wasn't a realtor who wanted to make a commission on the sale of your house. It would be a shame if you took a loss on it and had your life disrupted and diminished when you didn't have to.