Default, Delinquency, Foreclosure Counseling

Download Default/Foreclosure Counseling Steps

CALL MARY AND ASK FOR AN INTAKE PACKET, it can be mailed, emailed or faxed. 434-817-2436

Default/Delinquency/Foreclosure Counseling Process
Piedmont Housing Alliance provides comprehensive homeownership counseling for clients in a default/delinquency or foreclosure situation. Our goal through one-on-one confidential counseling is to listen to you to determine your concerns, motivations and capability to analyze the available options. We do not have funds to help bring your mortgage current. Default counseling is a cooperative process where the counselor acts as a facilitator rather than a lending expert. Listed below is an overview of the process and steps from Piedmont Housing Alliance Default/Delinquency/Foreclosure Counseling:

Step 1 – Intake
A) Initial Interview
B) Overview of the Completed of Intake Form, Authorization to obtain information, Spending Plan and review of Credit Report.
C) Determine the borrowers desire to keep the home
D) Review of gathered Documentation:
• Copies of 1 years IRS tax returns and corresponding W-2s
• Copies of 30 days Pay stubs and/or proof of alternative income (child or spousal support)other than employment (if applicable)
• Copy of divorce decree (if applicable)
• Copy of bankruptcy documents (if applicable)
• Copy of all mortgage loan correspondence, loan documents and current statement, Deed of Trust
• Copy of all bills (credit cards, personal loans, cable, telephones, etc.)
E) Credit Report Review and Financial Situation Summary

Step 2 – Action Planning
A) Review of the Counselors Analysis Guide
• Determine if the financial hardship is curable or incurable (what caused the inability to pay, review of spending plan, etc.)

Step 3 – If Curable
A) Determining the realistic options (is the delinquency curable and does the borrower have the future ability to repay the debt)
B) Review curable options (contacting lender, setting up repayment options, hardships letters, etc.)

Step 4 – If not Curable
A) An overview of Foreclosure Process
B) An overview of the options available (straight sale, pre-foreclosure sale, deed-In Lieu)



Avoid Predatory Lending and Work with Responsible LendersPredatory Lending is a Problem-
Responsible Lending is the Solution

If you are applying for a loan to purchase a home, for a second mortgage or home equity loan, or refinancing, be a smart borrower; avoid predatory lenders. Don't be conned into a loan you cannot afford to repay, because you may end up with too much debt or the loss of your home.

What is Predatory Lending?
Predatory lending involves abusive lending practices that include targeting vulnerable consumers with high-cost home loans without regard to the borrower's ability to repay the loan. Predatory mortgage loans sometimes end in foreclosure. Predatory mortgage lending is a subset of the subprime mortgage industry. Legitimate subprime mortgages are loans that have higher than market-rate interest rates to compensate for borrowers deemed to be higher credit risks.

How avoid predatory lending:
-Work with responsible lenders and consider your options carefully. Shop around and compare terms and conditions of loans.

-Consult with a housing counselor or an attorney.

-Read carefully and ask questions before signing--make sure you understand the documents adn are satified with your ability to repay the loan.

-Keep copies of all documents.

WARNING SIGNS- AVOID A LENDER WHO:

-Tells you, or requires you, to falsify information on the loan application. For example, the lender tells you to say that your loan is primarily for business purposes when it's not.

-Pressures you into applying for a loan or applying for more money than you need.

-Pressures you into accepting monthly payments you can't make.

-Fails to provide or tells you not to read required loan disclosures.

-Misrepresents the kind of credit you're getting.

Promises on set of terms when you apply, and gives you another set of terms to sign-with no legitimate explanation for the change.

-Tells you to sign blank forms-the lender says they'll fill them in later.

-Says you can't have copies of documents that you're signed.
)Adapted from the Federal Treade Commission's Consumer Alert! "Need a Loan? Think Twice About Using Your Home as Collateral". )

COMMON ABUSES OF PREDATORY LENDING:

1. Excessive fees (more than 3 to 4% of the loand amount).

2. Prepayment penalties that trap borrowers in high-cost loans.

3. Steering borrowers to h igh-cost subprime loands on the basis of race, ethnicity, age, or gender, instead of on legitimate factors.

4. Credit insurance premiums that are financed into the loan and paid for upfront.

5. Repeated refinancing that does not benefit the borrower, just increases the loan ()flipping).

6. Mandatory arbitration clauses in loan documents that may give lenders an unfair advantage by restricting borrowers' rights in a dispute.
(Adapted from Principles for Responsible Lending, Coalition for Responsible Lending.)

BE A SMART BORROWER

If you have questions contact a Housing Counselor 434-817-2436