A law was created by the federal government known as Helping Families Save Their Home Act. This program expanded the FHA's ability to assist homeowners who are struggling with their monthly payments on their mortgage. The government agency now has an increased ability to use foreclosure prevention, loan modifications, and other loss mitigation tools to assist FHA borrowers.
The goal of the Act is to help them avoid foreclosure, and the program will focus on those borrowers who are behind on their payments. There is a strong emphasis given to people ho are facing an imminent default or that already have a foreclosure notice from their bank.
The assistance program is beneficial to both the lenders and the homeowner. Many studies show that offering loss mitigation, loan modifications, and other types of assistance is beneficial to both borrowers and the Federal Housing Administration (FHA) because those services help families keep their homes while also limiting the amount of money the FHA may lose.
While the FHA has always focused on helping homeowners, the Helping Families Save Their Home Act is putting an increased focus on that. The program is requiring banks and lenders to establish early contact and communication with delinquent borrowers. The earlier this communication starts the better for all parties.
They need to discuss the reason for the person missing a payment, and they need to evaluate reinstatement options and how to get the borrower back on track. As a result of the program, now mortgage servicers will have additional options and resources to offer those borrowers who seek help before they go delinquent. The earlier this process starts, the greater the likelihood that the borrower will be able to retain their home and prevent a foreclosure.
First of all, to be eligible, the Federal Housing Administration defines an FHA borrower facing imminent default as a homeowner who is current or less than 30 days past due on their mortgage obligation. So this gives the program a significant amount of flexibility as to who can enroll.
The borrower must also be experiencing a fairly significant hardship, such as a reduction in income, a medical emergency, or some other type of financial emergency or hardship. The issues needs to prevent him or her from making their next mortgage payment. The FHA will mandate this.
This type of crisis can include a reduction in or loss of household income that was supporting the mortgage loan. A reduction in income may be caused by unemployment, a cut in pay, reduced job hours, or a decline in self-employed business earnings.
Another condition that may make someone eligible for assistance can involve a change in household financial condition, such as a serious or chronic illness, death in family, permanent or short-term disability, or a medical emergency. Once they are found to be qualified, the assistance provided can include :
Several options are available as part of the Helping Families Save Their Home Act. Effective immediately, the loss mitigation options that are offered by the government, as well as FHA's Home Affordable Modification Program (FHA-HAMP), may be used to assist those borrowers who are facing imminent default on their loan.
Contact the FHA or your mortgage servicer for more information. All banks and lenders should have information on the Federal Housing Administration Helping Families Save Their Home Act or similar assistance programs
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