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AVOIDING FORECLOSURE

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									                                      AVOIDING FORECLOSURE
    WHAT TO DO & WHAT TO EXPECT WHEN YOU CAN NO LONGER AFFORD YOUR MORTGAGE



A home mortgage is a debt secured against your home. In New York, if you do not make the payments required by
your mortgage agreement, the holder of the mortgage can bring a foreclosure action in court to sell your house.

                                 If this happens, you could lose your home.

If you are having trouble, or think you may be facing future payments that you cannot afford, do everything in your
power to make up the missed or late payments. Prioritize your mortgage payments.

If you have already fallen behind or are in default or foreclosure, you may feel scared or overwhelmed. It is
important that you act quickly to explain your situation to your lender, know what your options might be and
reach out for the help you need. The longer you wait the fewer options you may have to save your home or avoid
foreclosure. You should:


    CONTACT YOUR LENDER IMMEDIATELY
    If you do fall behind and are unable to catch up then you probably cannot afford the mortgage you currently
    have and must act quickly. Do not ignore their letters or calls. Let them know that you are having difficulty
    and are willing to do whatever is necessary to stay current on payments and keep your house. You may be
    able to negotiate a restructuring of your loan.
    Send information requested by your lender or servicer quickly, get confirmation that they have received it
    and keep records and copies of everything.


    CONTACT A HOUSING COUNSELOR
    Housing counselors that handle foreclosure related issues can give you advice on other options and
    resources at little or no cost and negotiate with your lender. They can also help you find free legal
    services. To find an approved not-for-profit housing foreclosure counselor in your area, call the Banking
    Department at 877-BANK-NYS or check the Department’s website at www.banking.state.ny.us.
    Homeowners in New York City can call the Center for New York City Neighborhoods (CNYCN) at 646-
    786-0888. CNYCN partners with more than 50 agencies and coordinates foreclosure prevention and
    intervention services in all five boroughs. It can help you find the right services for your needs.
    Homeowners seeking counseling or advice can also call the 24-hour HOPE NOW HOTLINE toll-free at
    888-995-HOPE (888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers,
    investors and mortgage lenders that provide free foreclosure prevention assistance.


    SEEK LEGAL ASSISTANCE
    If legal proceedings have already started, you should immediately seek legal advice. Call the New York Bar
    Association’s Lawyer Referral Program at 800-342-3661 or visit www.Lawhelp.Org on the Web to find free
    legal aid near you. A housing counselor or the Banking Department can also help you find legal help.
    KNOW YOUR OPTIONS
    If you have fallen behind on your payments, consider discussing the following foreclosure prevention options
    with your lender or loan servicer:

    Reinstatement: In reinstatement, you agree to pay the lender the entire past-due amount, plus any late
    fees and/or penalties, by a certain agreed-upon date. This option may be appropriate if your problem paying
    your mortgage is temporary.

    Repayment plan: In a repayment plan, the lender splits the late payment(s) up and adds them to future
    monthly payments. This option may be appropriate if your problem paying your mortgage is temporary.

    Forbearance: In forbearance, the lender may agree to temporarily reduce or suspend your monthly
    payments for a short period such as six months. At the end of the forbearance period, you have to make
    your regular payments and an extra amount to make up for payments missed during the forbearance period.
    This option may be appropriate if your problem paying your mortgage is temporary.

    Loan Modification: In a loan modification, the lender may adjust the terms of the loan to make it more
    affordable. They may lengthen the term of your loan, lower the interest rate or include the past due amount
    into the loan and re-amortize the new balance (i.e. recalculate your payment schedule) so that you can pay
    the additional debt back over time.

        Home Affordable Modification Program (HAMP) is part of the federal Making Home Affordable
        program and is designed to help struggling homeowners avoid foreclosure by modifying loans to a level
        that is affordable now and sustainable over the long term. You may qualify for a HAMP modification if
        your home is your primary residence, the amount you owe on your first mortgage is equal to or less
        than $729,750, you got your mortgage before January 1, 2009; you are paying more than 31% of your
        current gross income on your first mortgage (including principal, interest, taxes, insurance and
        homeowner’s association dues). To find out more about the program and which lenders and servicers
        are participating, visit the MHA website at www.MakingHomeAffordable.gov.

    Refinancing: Although refinancing options are not as widely available as they have been in the past, you
    should still check to see whether your lender or another lender will refinance your mortgage.

        Home Affordable Refinancing Program (HARP) is part of the federal Making Home Affordable
        program and is for homeowners with loans guaranteed or owned by Freddie Mac or Fannie Mae. You
        may be eligible for refinancing under HARP if you own a 1-4 family dwelling, your first mortgage does
        not exceed 125% of the current market value of your home and you have not been more than 30-days
        late on your mortgage payment in the last 12 months. To find out more about the program, visit the
        MHA website at www.MakingHomeAffordable.gov.

    Short sale/Deed in lieu of foreclosure: If you do not qualify for a repayment plan, loan modification or
    refinancing, you may have to consider giving up your house without going through foreclosure. In a short
    sale, the lender lets you sell the house for less than the outstanding loan amount, takes the proceeds and
    forgives the remaining debt. With a deed in lieu of foreclosure, you surrender the home to the bank and
    they sell it.

    Bankruptcy: Filing for bankruptcy will temporarily halt the foreclosure process and may force a lender to
    accept a more borrower-friendly repayment plan. Bankruptcy should be considered only as an absolute last
    resort. A bankruptcy will remain on your credit report for ten years.

    Be aware that workout options may include expenses and fees added to your mortgage. Be sure that you
    understand all of these expenses and fees before signing any agreement.




www.banking.state.ny.us                                                                          1-877-BANK-NYS
    KNOW YOUR LEGAL RIGHTS

    New York is a judicial foreclosure state: Your lender must go to court to recover your home. The
    foreclosure process in New York currently takes about 445 days from the date of the first missed payment
    to the sale of the home after a judgment of foreclosure. Your house can be sold at auction if you fail to
    appear and answer the foreclosure action or to reach a settlement or if you lose the foreclosure action.

    Pre-foreclosure notice: If you have a high-cost, subprime or nontraditional home loan, the lender or loan
    servicer must give you notice at least 90 days before commencing foreclosure. This 90-day window gives
    you the opportunity to try to work with your lender to find an alternative to foreclosure. The notice must
    also give you the names and telephone numbers of at least five government approved not-for-profit housing
    counseling agencies serving the region where you reside.

    Mandatory settlement conference: If you have a high cost, subprime or non-traditional loan, the court
    must schedule a settlement conference within 60 days after the lender files proof of service of the
    complaint. This conference is a chance for you to reach an agreement with the lender.

    Home Equity Theft Protection Act (HETPA): HETPA protects New York homeowners in default or
    foreclosure from home equity theft scams involving the sale of your home to someone (other than a close
    family member) who offers to purchase your home as an investment (not to live in). HETPA gives you the
    right to a detailed contract and the right to cancel that contract within five business days. If a buyer fails to
    fulfill any of HETPA’s requirements, you may be able to void or legally cancel the contract and the sale and
    sue the buyer for damages. HETPA also permits buyback agreements, allowing the buyer to take ownership
    of your home in exchange for things like bringing your mortgage current and making your mortgage
    payments. If you repay the buyer for services provided and payments made, the buyer must reconvey the
    deed to you. If you cannot afford to buy your house back, the buyer must pay you at least 82% of the
    home’s fair market value minus any amount you owe for rent and other services. Buyback agreements
    almost always benefit the buyer and not you, and we therefore do not recommend them.


                         BEWARE OF FORECLOSURE RESCUE SCAMS!
        Particularly people who ask you to pay a fee upfront or to sign over title to your house

        •   BEWARE of anyone who asks for an upfront fee for getting you a loan modification, “saving” your
            home from default or stopping a foreclosure. In most cases, New York law prohibits such fees.

        •   BEWARE of anyone who says they can “save” your home if you sign or transfer over the deed to
            your house so you can catch up on your mortgage payments or refinance your loan.

        •   NEVER pay fees for foreclosure prevention help. There are well trained, professional, not-for-
            profit housing counselors who can help you negotiate with your lender free.

        •   NEVER submit mortgage payments to anyone other than your lender without their approval.


    QUESTIONS?
    If you still have questions about where to turn for assistance or do not know who to call first, the Banking
    Department can help. Our staff can answer your questions about mortgages, personal debt and the
    foreclosure process and can help you find professional help and resources in your area. We can also assist
    you in filing a complaint against a state-chartered or state-licensed financial institution. Call the New York
    State Banking Department Helpline:

                                      (877) BANK-NYS | (877) 226-5697



www.banking.state.ny.us                                                                               1-877-BANK-NYS

								
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