Foreclosure Prevention - QC DollarWise

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					Foreclosure Prevention
 Help for Homeowners Workshop Series



       Funding for this program is
         provided in part by the
         Rock Island Community
               Foundation
                      Agenda
   Q&A Cards
   Taking the First Step
   Alternatives to Foreclosure
   Understanding Your Household Budget
   Preparing to talk with your Lender or Servicer
   Making Home Affordable – National Plan
   Avoiding Scams
   Additional Resources
   Break & Collection of Q&A Cards
   Packet Review
   Answers to Your Questions
Q&A Cards
               Q&A Cards
 Write down your questions on the attached
  cards and they will be collected at break.

 If we can’t answer your question at the end
  of this workshop, answers will be later
  posted at www.qcdollarwise.org.

 Click on the “Help for Homeonwers Link” to
  find the answer.
Taking the First Step
        Taking the First Step
 We all go through tough times & your
  situation is unique to you.

 The goal today to give you the tools you
  need to take action.

 Please treat this as a “safe place” and
  respect others’ confidentiality.
         Taking the First Step
 By being here today, you’ve made a big first
  step toward understanding your options.
 You’re not alone - 1 in 3 Americans are
  somehow impacted by foreclosure.
 The circumstances that brought you here
  may have been out of your control. What
  matters is you’re here.
 This won’t be easy. It will take hard work,
  but we hope to provide with some practical
  tools to help you keep your home.
          Taking the First Step

Don’t Hide in the Sand!

 Ignoring the problem makes it worse!

 Lenders are much more willing to work with you if
  you honestly communicate.

 Ignoring letters may speed up their actions to
  foreclose.

 Your lender does NOT want your house.
         Taking the First Step

You have more time than you Think!

 The foreclosure process is lengthy in Illinois.

 It can take up to 16 months for the typical
  proceeding from start to finish.

 You have time to explore your options with
  your Lender.
Alternatives to Foreclosure
    Alternatives to Foreclosure
 Forbearance: A lender lets a borrower pay less
  than the full amount of the mortgage or skip a few
  payments if there is a reasonable plan to become
  current on the loan.

 Reinstatement: A homeowner is able to make a
  payment that covers all of the previous late
  payments.
    Alternatives to Foreclosure
 Repayment Plan: Allows a borrower who has fallen
  behind to make additional payments each month
  until the amount past due is paid.

 90 Day Grace Period: Troubled Illinois
  homeowners can receive a 90 day grace period
  under a law signed in April of 2009 by Gov Quinn.
    Alternatives to Foreclosure
 Home Loan Modification: An agreement between
  you and your lender to permanently adjust the
  terms of your mortgage. (Federal Making Home
  Affordable Program –to be discussed)

 Loan Refinance: Allows you to use the equity that
  you have established in your home to pay the
  delinquent amount. Depending on the interest rate
  of your new loan, your monthly payments might be
  reduced. You can explore refinancing with your
  existing Lender as well as with any Lender of your
  choice.
Understanding your
 Household Budget
   Understand your Household Budget

 You must take the time to understand your income
  and expenses thoroughly.

 Review your budget to determine:
    Where your money goes
    Non-critical items to reduce / cut out
    Do you need to work another job temporarily?
    What you can afford for housing now - and if the
     foreclosure took place
    Can you afford to keep your house long term?
  Understand your Household Budget

Worst case scenario: After examining their
 budget, some households may determine
 that homeownership has become
 unaffordable for them. In this case, be
 prepared and make plans to:
   Set money aside. You will need a place to live
   Work with an agent to sell your home
   Accept that it may be two to seven years before
    you can consider home ownership again
   Understand your Household Budget

“Front-End” Debt to Income Ratio
 Front end ratio should be below 30 %
 Martha and Steve’s total monthly income is
  $3,800.
 Their total housing expense -- loan principal,
  interest, taxes & insurance -- is $1,200.
 $3,800 / $1,200 = 31.5%
 Martha and Steve have a slightly higher
  front end DTI than recommended
  Understand your Household Budget
“Back-End” Debt to Income Ratio
 Martha and Steve’s monthly income is
  $3,800.
 Their monthly expenses -- housing, car
  payment, credit cards, child care, etc. --is
  $1,750.
 $3,800 / $1,750 = 46 % back end DTI
 Back end DTI ratio should be below 42 %
Preparing to Talk to your
Lender or Loan Servicer
Preparing to talk to your Lender
Once you have a full picture of your options, and
your household budget you are ready to talk to your
lender or loan servicer.

  If dealing directly with your Lender or Servicer
   ask to speak with someone in loss mitigation or
   ask about a modification of your loan terms.
  Do not speak with Collections – their role is
   simply to collect past amounts due – not work
   with your need to modify your loan.
  Have your account info handy
  Summarize your financial problems and why you
   fell behind (illness, work hours were cut back,
   etc).
Preparing to talk to your Lender
   Have recent income statements & copy of your
    household budget.

   Be absolutely honest & realistic in your budget.
    You must show that you could make your
    monthly payment if not delinquent

   Let them know you are working with a HUD
    Approved Housing Counseling Agency.

   Ask them about options (forbearance, loan
    modification, reinstatement, payment plan).
Preparing to talk to your Lender
 Questions to ask your lender:

    How much time will lender give you to make
     payments – if arranged?
    Specifics - what is due and when?
    Will foreclosure proceedings be put on hold
     while you work on a plan for repayment?
    Will they give you additional time if working with
     a HUD Approved Housing Counseling Agency?
    Will they waive fees?
Making Home Affordable
         Making Home Affordable
 The Federal plan to rework mortgages

 Loan modification for eligible homeowners to make
  monthly payments more affordable

 Not a handout - homeowner must show ability to
  pay if loan was modified

 Loans can only be modified ONCE

 Borrowers who maintain payments may qualify for
  incentives
          Making Home Affordable
 For loans before January 1, 2009

 Primary loan; owner occupied; unpaid balances of
  up to $729,750

 No vacant or condemned properties

 Modifies loan until Dec. 31, 2012

 Reduces monthly payment to no more than 31 % of
  gross monthly income
         Making Home Affordable
 Is your payment more than 31 % of your current
  gross income?

 Is the home your primary residence?

 Are you having temporary issues repaying your
  mortgage?

 Eligibility test: www.makinghomeaffordable.gov
         Making Home Affordable

 Must fully document income
   Budget
   IRS 4506-T form
   Tax return
   Written hardship letter
   2 most recent pay stubs

 Visit www.makinghomeaffordable.gov

 Call 1-888-995-HOPE
Avoid Scams!
                Avoiding Scams
 Scam artists target homeowners mentioned in
  public records.

 Watch out for “foreclosure specialists” that call, visit
  or mail you, especially if they ask for large deposits
  upfront.

 Scams are on the rise in Illinois.

 Beware of any third party who claims they can stop
  foreclosure for a fee.
              Avoiding Scams
 Contact your lender yourself as soon as you have
  trouble making payments.

 Contact a HUD approved lending counselor if
  received a letter threatening foreclosure.

 Contact an attorney if you have a pending lawsuit
  against you.

 Never sign away ownership of your house without
  seeing a lawyer.
                Avoiding Scams
 Never make loan payments to anyone other than
  your lender.

 Never sign a contract under pressure.

 Get all promises in writing.

 Check reputations with the Better Business Bureau
  before doing business.

 Be especially suspicious of offers to “lease back”
  your home
Additional Resources
  HUD Approved Counseling Agencies

 RI Economic Growth - City of Rock Island
  residents only
    309-788-6311 or www.LiveRI.com

 Project NOW - Henry, RI, Mercer counties
   309-793-6391 or projectnow.org

 Greenpath Debt Solutions
   1-800-550-1961 / 309-788-6323
 HUD Approved Counseling Agencies

 United Neighbors - Iowa side
   563-322-7363 or unitedneighbors.com
 Neighborhood Housing Services of
  Davenport
   563-324-1556
   B_hayes-upton@mvnhs@org
   www.mvnhs.org
Going through your Packet
Questions and Answer Session

				
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