1 FORECLOSURE INTERVENTION PRESENTED BY BRIGHTON CENTER FINANCIAL SERVICES
2 WHAT IS FORECLOSURE Foreclosure is a legal remedy used by a mortgage company to assume ownership of a property when the required loan payments are not made Actual process varies state by state. Depending on your state law foreclosure can occur in a short time or it may take several months After the foreclosure sale is completed, eviction will occur if the home is occupied
3 FORECLOSURE AFFECTS EVERYONE! One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage. Information provided by: Suzanne Merusi, Consulting LLC
4 FORECLOSURE AFFECTS EVERYONE! Foreclosures affect individual families and entire neighborhoods. Foreclosures are costly for the neighborhood and municipality in which the property is located. The building often becomes abandoned, unwanted by the owner or lender. Information provided by: Suzanne Merusi, Consulting LLC
5 FORECLOSURE AFFECTS EVERYONE! Foreclosures uproot families, destroy credit, and lock individuals out of the housing market while destabilizing neighborhoods and lowering property values. Information provided by: Suzanne Merusi, Consulting LLC
6 HOMEOWNERS FACING FORECLOSURE More than 60% of homeowners delinquent in their mortgage payments are not aware that help is out there and DO NOTHING! Homeowners fail to contact the mortgage company because they are embarrassed, don t believe the lender can help and/or believe it would cause them to lose their home more quickly. Information provided by: Suzanne Merusi, Consulting LLC
7 DEFAULT TIMELINE OVERVIEW Mortgage company call and sends letters Important to act quickly because if you fall further behind in your payments there are fewer options to avoid foreclosure Miss First Month Mortgage Companies have the right to refuse partial payments and charge late fees each month You may be able to reinstate by paying the delinquent amount including all fees First & Second Month Miss Second Month Mortgage company continues to call and send letters 30 day default letter sent Calls and letters continue Loan is transferred to the foreclosure department Notice of intent to foreclose is sent Miss Third Month Third Month If you can t afford to keep your home, talk to your counselor or the mortgage company about other options. An eviction will hurt your credit and your opportunities to find rental housing when you need to move. Submit a workout plan to the Mortgage company s Loss Mitigation Dept. to avoid foreclosure. Options are available to retain the home or to transition out of the home.
8 WARNING SIGNS OF FORECLOSURE 1. Loss of employment or reduction in hours 2. Major illness or injury 3. Divorce or separation 4. Death in the Family 5. ARM reset Information provided by: Suzanne Merusi, Consulting LLC
9 SUB PRIME RISK LAYERING Adjustable No Escrows Balloon Sub Prime No Doc PPP Information provided by: Suzanne Merusi, Consulting LLC
10 Unemployment/Underemployment Boone County consists of 64,296 members of the state s labor force This accounts for 28% of Kentucky s labor force 5,823 members are currently unemployed Accounts for 9.1% of the county labor force Statistics provided by the Kentucky Department of Labor
11 Rise of Foreclosure In the state of Kentucky, foreclosures rose to 20,111 households in Since 2009, this represents a 9.3% rise of foreclosures through court reports. In Northern Kentucky, foreclosures rose even faster at a 13.7 percent rate, resulting in 2,528 foreclosure cases. Boone, Campbell, and Kenton counties accounted for 1 of every 8 foreclosures in the entire state of Kentucky in Statistics provided by Alexander Coolidge of the Cincinnati Enquirer
12 Assisting Boone County Since July of 2010 to March 2011, Brighton Center has been able to service 57 residents of Boone County regarding foreclosure. In that time, Brighton Center has successfully helped 17 Boone County homeowners receive loan modifications and prevent foreclosure on their homes.
13 2011 Foreclosures In January of 2011, there were 176 foreclosures in Northern Kentucky Accounts for approximately 15% of foreclosures in the state of Kentucky 46 of the 176 foreclosures occurred in Boone County Statistics provided by Realtytrac.com
14 2011 continued Boone County experienced an additional 19 foreclosures in February. 14 of those foreclosures were filed in Florence. Currently, there are 25 properties in Boone County listed on the Master Commissioner s Sale for the month of April alone. Statistics provided by Realtytrac and Boone County Commissioner Sales Office
15 EARLY STEPS TO PREVENT FORECLOSURE More options are available for homeowners the earlier they seek foreclosure prevention assistance Homeowners who do not respond to lender correspondence or civil summons are more likely to lose by defaulted judgment. Open your mail daily and contact the mortgage company to let them know the problem you are facing and be honest Contact a reputable HUD Approved Housing Counselor to assist you in the process
16 WHAT YOU NEED TO KNOW ABOUT YOUR LOAN What is your loan balance Do you have any equity What is the amount of your regular payment What are your ARREARS Arrears is the total amount you current owe the Lender including fees that have been charged to you Are there taxes, insurance, condo fees or other debts owed How much Are funds being escrowed for taxes and insurance Have you received any notices to include a foreclosure date You need all of this information for each lien or second or third mortgage you have against your property
17 THE DON TS OF FORECLOSURE DON T fall prey to a for-profit loan modification predatory scam. DON T move out of your home without finding out options first DON T ignore the problem DON T convince yourself you can afford a home if you can t DON T fall victim to a rescue scam Information provided by: Suzanne Merusi, Consulting LLC
18 State and Federal Programs Kentucky Unemployment Bridge Program Making Home Affordable
19 Kentucky Unemployment Bridge Program A new loan option for eligible homeowners to assist them in paying their monthly mortgage payments Homeowners must have experienced job loss or loss of income, through no fault of their own, to be eligible. The job-related event must have occurred after January 1 st, 2009.
20 KUBP Continued The maximum amount of assistance is $20,000 or 12 months, whichever comes first. $7,500 of the maximum amount may be allocated to for use of reinstatement- all related fees and payments to bring the loan(s) current.
21 KUBP Continued Maximum of 2 liens permitted on the property. Maximum amount of the liens on the property can not exceed $275,000. Borrower s principal, interest, taxes and insurance (PITI) must be greater than 31% of their monthly gross income or..
22 KUBP Continued Borrower must experienced a 15% reduction in income. Maximum liquid reserves is 6 months PITI (excluding retirement funds) Borrowers must sign hardship affidavit acknowledging the reduction income due to no fault of their own. UBP is only available to borrowers whose mortgage company agrees to partner with Kentucky Housing Corporation
23 PROTECT MY KENTUCKY HOME Project of Kentucky Housing Corporation Hotline Families can contact the hotline if they are in default or fear losing their home to foreclosure. Kentucky Housing Staff will make a referral to local HUD counseling staff in their local area. Contact local HUD certified agency to submit application for the Kentucky Unemployment Bridge Program. Information provided by: Suzanne Merusi, Consulting LLC
24 MAKING HOME AFFORDABLE In 2009, Making Home Affordable program was presented as a voluntary assistance program for lender s to assist homeowners who have become delinquent or facing imminent default. Borrowers must have a qualifying mortgage in order to apply for HAMP. Qualifying mortgages are : FHA, VA, Fannie Mae or Freddie Mac
25 Making Home Affordable Borrower s principal, interest, taxes and insurance (PITI) must be greater than 31% of their monthly gross income. Purpose of MHA, is to create affordability for the borrower. MHA affordability guidelines range from 31% to 38% of the borrowers monthly gross income.
26 Making Home Affordable Loan Modification : adjustment of original terms to create monthly payment of affordability Adjustment of terms includes : rate, term, and balance. Loan Modification review timeline solely rests upon the lender.
27 MHA Concluded Making Home Affordable will be available to homeowners until December 31, Contact local HUD certified agency to assist homeowners for eligibility for MHA.
28 LENDER RETENTION DEFAULT IS CURABLE Repayment Plan Forbearance Modification Partial Claim or Advance Claim Community Funded Assistance Refinance Reverse Mortgage Information provided by: Suzanne Merusi, Consulting LLC
29 LENDER TRANSITION DEFAULT IS INCURABLE List the Home for Sale Hardship Assumption Pre-Foreclosure/Short Sale Deed-in-Lieu Foreclosure Information provided by: Suzanne Merusi, Consulting LLC
30 WATCH OUT!!!! Avoid a high interest rate loan as a solution Avoid offers to resolve your foreclosure for a high fee Look out for Lease-backs Watch out for inflated appraisals on re-financing Avoid offers that suggest you make your mortgage payment to someone other than the mortgage company Always consult an attorney before signing a Power of Attorney (POA) over to anyone
31 CONTACTING LENDER TIPS The willingness of a Lender to work with you partly depends on your good history with them Get full names, phone numbers, city and department name of all persons you speak with regarding your mortgage Be prepared to document all conversations with Lender Give the Lender all the Documentation they request Do Not go looking for an argument or fight they are in control of the situation and outcomes Do Not withhold any information Be Realistic Once you have an ACTION PLAN you MUST DO EXACTLY WHAT YOU COMMIT TO DO No matter what!
32 BORROWER S RIGHTS May remain in the home through the confirmation of the sale or even longer according to state law Before the sale date the borrower has a right to enter an appearance and contest the foreclosure A borrower can defend the foreclosure because there were problems with the procedure (notice not served correctly) or because there is a substantive defense to the mortgage Substantive defenses include the fact that the borrower is current or that the lender violated state or federal law in making the loan. Information provided by: Suzanne Merusi, Consulting LLC
33 WE NEED YOUR HELP! Please help us to be part of the solution and become a messenger for the Protect My KY Home campaign and the Kentucky Unemployment Bridge Program. By understanding the foreclosure process and what may lead up to it, consumers may be in a better position to recognize and address potential problems. Information provided by: Suzanne Merusi, Consulting LLC
34 FOR ADDITIONAL INFORMATIONCONTACT: PROTECT MY KENTUCKY HOME AT or OR Brighton Center, ext 2323 OR
35 Brighton Center Financial Services Brenda Tignor Financial Services Administrative Assistant Phone : ext Mary Epping Financial Services HHF Clerical Support Phone : ext Presented by : Ashley Pate Financial Services Specialist
Ohio Mortgage Help Workbook A Tool to Educate Ohio Homeowners About the Foreclosure Process Presented by Save the Dream Ohio to the Citizens of Ohio Adapted from the Foreclosure Prevention Workbook created
SHORT SALE INCENTIVES Why the banks will give you cash to sell the home you can t afford $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ Discover why many lenders are paying significant cash incentives ranging from $2,500
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