Mortgage Delinquency and Foreclosure Prevention
Consumer Credit and Budget Counseling, a HUD approved housing counseling agency helps delinquent homeowners and those that are facing foreclosure. They help clients examine their current situation and help them determine if keeping the house is possible, and the steps the clients will have to take to keep their home.
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HUD Approved Agency
Unfortunately for some who have found themselves in this position keeping their home is no longer a viable solution. However, interestingly enough, foreclosure is not always the best solution. There are other options available and the CC&BC mortgage delinquency and foreclosure prevention counselor will discuss them with the client.
Counseling does NOT stop a foreclosure. However many servicers agree to put the foreclosure process on hold during modification negotiations or while the homeowner is exploring an appropriate workout for the delinquency or default on the mortgage.
During the foreclosure counseling session the counselor will:
- 1. Take a look at the client’s current financial situation
2. Help them take a hard look at their current spending.
3. Help develop a budget that will determine the maximum possible funds available to make mortgage payments.
4. The reasons for the default will also be explored and documented, (these reasons will be the basis for preparing a hardship letter).
- 5. The counselor will review the workout options available to the client and help determine whether the default can be resolved.
The counselor is expected to be brutally honest. In fact the client may not like the options available. But the counselor HAS to put together a REALISTIC proposal; this is to the client’s benefit because a failed workout can leave the homeowner in a worse position.
If the client decides they do not like the options the counselor suggests, they will be encouraged to explore other solutions. However, they need to be warned to be careful of any offers that sound too good to believe, because they usually are. There are predators that prey on homeowners grasping for any solution.
6. Together the client and the counselor will put together an action plan that will outline the options available and the recommendations that were developed during the counseling session.
Regardless of the workout options that are appropriate for the client the mortgage servicer is going to need certain documentation to approve a workout.
The client and the Counselor will need to begin to assemble some important papers:
- 1. Hardship Letter
- 2. Current Financial Position (a worksheet is completed)
- 3. Current Paystubs
- 4. Tax Return and W2’s
- 4. Utility bill to prove the client is still living in the home
- 5. The Emergency Budget that the counselor develops
- 6. Information about the client’s mortgage.
- - Statements
- - Closing documentation
- - Authorization to Release Loan Information
The counselor must then review the file and documents to determine if there is a predatory lending issue that needs to be reported.
The next step in the process involves the actual negotiation with the lender. Most lenders need the file developed with the client to be sent via fax or e-mail. Then a conference call is initiated with the lender, the client and the counselor. The counselor should discuss the case with the lender and listen to what the lender proposes.
The proposal needs to be carefully examined to insure that it within the abilities of the client and their budget. If the proposal is not viable, then the counselor should make suggestions to the lender on compromises that may be appropriate for the client.
The pros and cons of the workout need to be carefully explained to the client, but the final decision rests with the client.
All parties in the mortgage delinquency and foreclosure prevention counseling process have to understand that the entire process takes a lot of time – three to six months or more in most cases. The counselor and the mortgage servicer understand that the homeowner is anxious about their situation, but the process does not happen overnight. The proposal needs to be examined for its merits and the information presented verified. And more to the point, counselors and servicers are overwhelmed with the volume of homeowners seeking assistance. Each of the parties must be patient with the process and each other.
New Jersey Residents call 888-738-8233
Florida Residents call 800-344-5153
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