Alternatives to Foreclosure

Options to Keep You in Your Home

Your lender will work with you to determine if you are eligible for any of the following workout options. Keep in mind that your lender wants to help you; they do not want your home.

1. Refinance
2. Forbearance
3. Reinstatement
4. Repayment Plan
5. Modifications

1. Refinance

Mortgage Refinance

If you have an adjustable-rate mortgage that is adjusting or want to secure a lower interest rate than your current mortgage, refinancing may be able to reduce your monthly payments to a more sustainable level. If you have not missed any mortgage payments, refinancing can completely replace your current mortgage loan and provide you with new terms and a new monthly payment.

Refinancing may make sense if you:

• Have enough equity in your home to qualify for a new loan.
• Are current on your mortgage payments.
• Have acceptable credit.
• Want to secure a lower rate, longer term or a different type of loan.

Home Affordable Refinance Program

If you are unable to qualify for a mortgage refinance, you may be able to refinance through the Home Affordable Refinance Program (HARP), part of the federal Making Home Affordable Program.

HARP may make sense if you:

• Have a loan that is owned by Freddie Mac or Fannie Mae. Visit our Loan Look-up tool to see if we own your loan.
• Have little or no equity in the home.
• Have the financial ability to afford the new payments.

If your loan is owned by Freddie Mac, learn more about our implementation of HARP.

More information:

• View our list of the most frequently asked questions about this program.
• Use our interactive map to find a participating lender to determine your eligibility for HARP

2. Forbearance

Forbearance

If you are facing a short-term financial hardship and need temporary assistance with your mortgage, your lender may offer you a “forbearance.” With this option, your lender is temporarily reducing or suspending your mortgage payments for up to six months while you get back on your feet.

Forbearance may make sense if you:

• Are facing a short-term financial hardship.
• Think you may fall behind on your mortgage payments, or have already missed one or two payments.

Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments when your financial situation has stabilized.

Unemployment Forbearance

Unemployment is a reality that many homeowners currently face. To provide you with a greater measure of security and more time to find new employment, your lender may be able to provide you with short-term unemployment forbearance (6 months) and, if necessary, extended unemployment forbearance for up to an additional 6 months if you are unemployed.

Unemployment Forbearance may make sense if you:

• Have a loan that is owned by Freddie Mac. Visit our Loan Look-up tool to see if we own your loan.
• Are facing financial hardship due to unemployment.
• Are looking for assistance with the mortgage for your primary residence.

If you are unemployed and were or currently are in an existing short-term forbearance plan, you can also be evaluated for an extended unemployment forbearance under this policy.

3. Reinstatement

With a reinstatement, you may be able to make your loan current and avoid foreclosure if you have the funds to repay the missed payments on your mortgage and any associated fees and late charges (typically a lump sum payment on a specific date).

A reinstatement may make sense if you:

• Are recovering from a short-term financial hardship.
• Are behind on your mortgage and have received a notice of default.
• Can demonstrate to your lender that you can repay your debts and afford your monthly mortgage payment.

Be aware that there may be late fees and other costs associated with a reinstatement plan.

Reinstatement is often combined with forbearance when you can show that funds from a bonus, tax refund, new employment or other source will become available at a specific time in the future.

4. Repayment Plan

If you are a few months behind on your mortgage due to a short-term financial setback, but are now financially secure, you may be eligible for a repayment plan. This option will enable you to make up your missed payments, and late fees, over a fixed amount of time by combining a portion of what is past due with your regular monthly payment. By the end of the repayment period you will have paid back the amount of your mortgage that was delinquent.

A repayment plan may make sense if you:

• Have recovered from a short-term financial hardship that caused you to miss a few mortgage payments and receive a notice of default.
• Can demonstrate to your lender that you have the funds to repay past-due amounts – along with any associated fees and late charges – and can afford your mortgage payments.

Repayment plans are often combined with forbearance when you can show that funds from a bonus, tax refund, new employment or other source will become available at a specific time in the future.

5. Modification

Loan Modification

For homeowners who are several months behind on their mortgage – or expect to fall behind soon – a loan modification of the mortgage terms may provide a solution. With a loan modification, you and your mortgage company will have a written agreement that changes one or more of the original terms of your note (such as the interest rate or duration of loan) to make your payments more affordable and sustainable.

A modification may make sense if you:

• Are not current on your mortgage.
• Do not qualify for the federal Home Affordable Modification Program (HAMP)
• Do not qualify for the federal Home Affordable Refinance Program (HARP).
• Can afford the modified mortgage payments.

Home Affordable Modification Program (HAMP)

If you’re behind in your mortgage payments, in the foreclosure process, or current on your payments but are about to default due to a recently experienced hardship, you may be able to modify your loan to a lower rate through the Home Affordable Modification Program (HAMP), part of the federal Making Home Affordable Program. This program is available through December 31, 2013.

HAMP may make sense if you:

• Have a loan that is owned by Freddie Mac, Fannie Mae or a participating lender. Visit our Loan Look-up tool to see if we own your loan.
• Took out your mortgage on or before January 1, 2009.
• Currently live in the property as your primary residence.
• Do not qualify for the federal Home Affordable Refinance Program (HARP).
• Are behind on your mortgage, or you are current but will be unable to afford your mortgage payments because of a documentable financial hardship.
• Spend more than 31 percent of your pre-tax income on your mortgage payment (including principal, interest, taxes, insurance and homeowner’s association dues).