Frequently Asked Questions – Foreclosure
There are various options if the property that is in foreclosure is your primary residence and the mortgage is in your name. The mortgage company will consider retention options based your financial capacity. The lender will consider if you can reinstate the mortgage or enter into a repayment agreement, then a mortgage modification.
Consider a modification as a brand new mortgage that you are entering between you and the bank. Missed payments and fees that were accrued on your original mortgage are added to the unpaid principal balance. Depending on the investor, the modification can reduce interest rates to current levels or extend the mortgage terms to a new 30 or 40-year loan term to make the payments more affordable.
What is the first document that the lender will send indicating that foreclosure action is about to proceed?
In Pennsylvania, the Act 91 Notice or the Notice of Intention to Foreclose needs to be sent by the lender prior to referring your case to their legal counsel to initiate foreclosure. The earliest they can send these documents to the delinquent borrower is on the 61st day of delinquency. The foreclosure process can not begin until the borrower is more than 120 days delinquent.
If you received an Act 91 Notice from the lender, then you are eligible to apply for the Homeowners Emergency Mortgage Assistance Program (HEMAP) through the Pennsylvania Housing Finance Agency. You will need to show that mortgage delinquency was the result of actions beyond your control and that there is a reasonable prospect of resuming mortgage payments within 24 months of the initial date of delinquency. If approved, HEMAP will offer the delinquent borrower a loan to bring the mortgage current.
The sheriff sale date is when property ownership is transferred from the homeowner back to the bank. Prior to that date borrowers are able to submit workout documentation for the bank to consider mortgage retention options.
Each lender is different with respect to which income documents are acceptable. Standard documents include:
- Pay stubs
- Award letters from social security or pension
- Bank statements to show consistency in wages or fixed income
- Tax returns
- Checks for self-employment income
- Rental or boarder income
- Income from a contributor (must be living in the property)
A certified foreclosure counselor is knowledgeable in a myriad of options, such as the Making Home Affordable program and the guidelines that govern acceptable foreclosure action through the Consumer Financial Protection Bureau. We will explore other income based programs that you may qualify for such as utility or medical assistance to help improve your quality of life.
In the past, many lenders have misplaced client workout packages, requiring re submission of documents and causing long delays in the process. Working with a housing counselor circumvents that possibility.
If the borrower is deceased then we will ask if the deceased borrower left a will and to whom did they will the property to. If there is no will then the property be given to the next of kin, either a surviving spouse or child. They will have to begin probating the estate and take the steps to get the deed recorded into their name. After the deed is recorded in their name they can pursue an assumption/modification. If the new owner has good credit standing and the house has equity, another option is to refinance the mortgage into their name.
What are the first steps for receiving housing counseling assistance through Affordable Housing Centers of Pennsylvania?
The borrower, or the heir to the property, is asked to complete the “Foreclosure Prevention Intake and Authorization” form. Prior to scheduling any appointments, we must first receive your completed intake package. Applications are accepted via mail, email, fax, or in person. Once submitted, we will contact you within 3 business days to schedule an appointment with you at our earliest convenience.