·      REFINANCE – If you have equity in your home you may be able to refinance to a lower interest rate and even get cash back. Or if you have an adjustable rate mortgage you may be able to refinance to a fixed rate mortgage and keep your interest rate from rising.

·         FHA Secure Loan - This is a program offered by HUD (Department of Housing and Urban Development) which allows homeowners who have conventional adjustable rate mortgages or (ARMS) that have gone delinquent due to the increase in payments after interest rates have reset. The original loan must be a non FHA ARM and the borrower must show no late payments for at least 6 months before the reset. Some exceptions are made for delinquent loans if there is sufficient equity in the home. The following are the requirements that homeowners must meet to qualify for a FHA Secure Loan:

v  A history of on-time mortgage payments before the borrower's teaser rates expired and loans reset.

v  Interest rates must have or will reset between June 20 andDecember 2008.
v  Three percent cash or equity in the home.
v  A sustained history of employment.
v  Sufficient income to make the mortgage payment.

MSHDA Save The Dream Refinance Programs - MSHDA offers two mortgage refinance programs to assist individuals who currently have an adjustable rate mortgage or a higher interest fixed rate loan.

1. MSHDA Assist Refinance Program- The MSHDA Assist Refinance program provides qualifying homeowners who currently have an adjustable rate mortgage or a higher interest fixed rate mortgage to refinance their mortgage into a lower interest fixed-rate loan. The following are requirements that homeowners must meet to qualify for the Assist Refinance Program:

v  30-year fixed rate conventional loan.

v  Affordable interest rates. 

v  Combined loan amount up to 100% of the current appraised value of the home (97% first mortgage and 3% second mortgage).

v  Maximum mortgage amount/appraised value of $224,500.

v  Borrowers must occupy the home as their primary residence (no second homes or investment properties).

v  Annual household income can not exceed $108,000 per year.

v  Property must be a single-family home or site condominium (no manufactured housing or attached condominiums allowed).

v  Minimum credit score of 620, but loans are reviewed on a case by case basis.

v  Homeowner education required.

2. MSHDA Rescue Refinance Program – The rescue refinance program allows qualifying homeowners who have had up to three 30 day late payments on their mortgage, the ability to refinance into a lower interest fixed-rate loan. The following are requirements that homeowners must meet to qualify for the Rescue Refinance Program:

v  30-year fixed rate conventional loan.

v  Affordable interest rates.

v  Loan amount up to 100% of the current appraised value of the home.

v  Maximum mortgage amount/appraised value of $224,500.

v  Borrowers must occupy the home as their primary residence (no second homes or investment properties).

v  To be eligible, applicants must qualify under federal and state income and maximum mortgage limits.

v  Property must be a single-family home or site condominium (no manufactured housing or attached condominiums allowed).

v  Minimum credit score of 575 with a maximum score of 619, but loans are reviewed on a case by case basis.

vHomeowner education required.         

·         WORKOUT – The following are types of workouts that may be negotiated with your lender.

a.       Loan modification – Your lender may modify your loan. If you have an adjustable rate they may switch it to a fixed rate bringing your payment current and keeping your interest rate from rising, making your mortgage payments manageable.                                                                       

b.      Forbearance – An agreement made between a mortgage lender and delinquent borrower in which the lender agrees not to exercise its legal right to foreclose on a mortgage and the borrower agrees to a mortgage plan that will, over a certain time period, bring the borrower current on his or her payments.

d.      Partial claim – HUD may give you an interest free loan for the past due amount. This will bring your payment current and will only be called due if the home is sold or when the original loan is paid off. (You must be at least 4 months behind in payments to qualify for a partial claim).

·         SHORT SALE – If you have not qualified for any of the previously stated remedies and/or decided that selling your home is in your best interest, your lender may agree to allow you to sell your home for less than what you owe, without holding you liable for any deficiency amount. If you have a FHA or VA mortgage your lender may pay you up to $1,000.00 for successfully completing the short sale of your home. For FHA and VA mortgages, after the sheriff sale has occured your lender will not accept any short sale offer. Your only options are to bring your mortgage payments current. Either by refinancing, paying the past due amount plus all fees or to payoff the mortgage in full.

·         DEED IN-LIEU – This normally happens if you have unsuccessfully attempted to sell your home. Typically your home will have to be listed for at least 90 days. Your lender may agree to allow you to deed your home back to them instead of foreclosing on the property, again without holding you liable for any deficiency amount. If you have a FHA or VA mortgage your lender may pay you up to $2,000.00 for successfully deeding your home back to them in-lieu of foreclosure.

·         BANKRUPTCY – Chapter 7 and Chapter 13 bankruptcies are the most common for homeowners. When filing chapter 7 or 13 bankruptcy the court automatically issues an order called an “order of relief”. Which includes an “automatic stay” that directs creditors to cease all collection activities immediately. As an effort to avoid foreclosure this will buy you time and can be lifted by the courts at the request of a creditor known as a “lift of stay”. (RSD Real Estate Services is a bankruptcy petition preparer, should you need assistance in preparing your bankruptcy documents).

Chapter 7 - Chapter 7 bankruptcy is sometimes called "liquidation" bankruptcy -- it cancels your debts, but you might have to let the bankruptcy court liquidate (sell) some of your property for the benefit of your creditors. ("Chapter 7" refers to the chapter of the federal Bankruptcy Code that contains the bankruptcy law.)

The whole Chapter 7 bankruptcy process takes about four to six months, costs $299 in filing and administrative fees, and commonly requires only one trip to the courthouse. You must also complete credit counseling with an agency approved by the United States Trustee.

You won't be able to use Chapter 7 if you already received a bankruptcy discharge in the last six to eight years (depending which type of bankruptcy you filed) or if, based on your income, expenses, and debt burden, you could feasibly complete a Chapter 13 repayment plan. To file for bankruptcy, you fill out a petition and a number of other forms and file them with the bankruptcy court in your area.
             

Chapter 13 - Chapter 13 bankruptcy, sometimes called reorganization bankruptcy, is quite different from Chapter 7 bankruptcy. In a Chapter 7 bankruptcy, most of your debts are wiped out; in exchange, you must relinquish any property that isn't exempt from seizure by your creditors. In a Chapter 13 bankruptcy, you don't have to hand over any property, but you must use your income to pay some or all of what you owe to your creditors over time -- from three to five years, depending on the size of your debts and income.

Chapter 13 bankruptcy isn't for everyone. Because Chapter 13 requires you to use your income to repay some or all of your debt, you'll have to prove to the court that you can afford to meet your payment obligations. If your income is irregular or too low, the court might not allow you to file for Chapter 13.

If your total debt burden is too high, you are also ineligible. Your secured debts cannot exceed $1,010,650, and your unsecured debts cannot be more than $336,900. A "secured debt" is one that gives a creditor the right to take a specific item of property (such as your house or car) if you don't pay the debt. An "unsecured debt" (such as a credit card or medical bill) doesn't give the creditor this right.

Before you can file for bankruptcy, you must receive credit counseling from an agency approved by the United States Trustee's office. These agencies are allowed to charge a fee for their services, but they must provide counseling for free or at reduced rates if you cannot afford to pay. In addition, you'll have to pay the filing fee, which is currently $274, and file numerous forms. RSD Real Estate Services charges a fee of $249 for bankruptcy petition preparation. The fee includes the preparation of all pertinent documents and schedules, including credit report(s).