would deed in lieu of forclosure be available to fha loans?

go4jenny · Joined: 01 Jan 2009 Posts: 1 1.48 Dollars($)

We have an fha loan, from what I have been told, they are different than all others. Heres my problem. My husband lost his job due to the company closing, we paid every month, but after he got another job we got three months behind trying to catch everything up. We have just stayed three months behind and the late fees and ect.. are adding up because we dont have the lump sum to pay the three months up to date. We wanted to keep our house but some really bad things happened in my family 3 days before Christmas and we need to get our children away from the town we live in. How can I avoid a forcloser on our credit? But move now. Our house was appraised at 125,000 in october of 2007 and we owe 100,000. Thanks

jameshogg · Posted: Thu Jan 01, 2009 7:12 pm Post subject:

Hi go4jenny,

You will have to speak to the lender and check if you can get a forbearance. In the process of forbearance, the lender will judge your condition and either suspend or reduce your payments. The payments will be reduced or suspended for a certain period of time depending upon your situation. The lender will also give you a alternative repayment plan which will help you in paying of the dues. This will also help you in saving your property. To know more about forbearance, check out the given page:
http://www.mortgagefit.com/forbearance.html

As far as a deed in lieu foreclosure is concerned, yes, it is available on FHA loans. You can apply to the lender for a deed in lieu by writing a hardship letter. If the lender accepts it, he will sell the property to recover debts and forgive the deficient amount resulting from the sale. However, deed in lieu will lower your credit by 250 points.

Thanks

Samantha · Posted: Fri Jan 02, 2009 6:24 am Post subject:

Hi Jenny,

Welcome to the forum.

Since you're behind on the loan for 3 months, the lender may allow you for a workout option such as short sale or deed in lieu instead of foreclosing on your home.

You need to get an appraisal done on your home. Only then you'll come to know how much it's worth. Also, what's the current housing market situation in your area? Are homes selling at their usual prices? If yes, then you can go for a usual sale of your home and pay off the mortgage with the proceeds. However, if your house is less than what you owe, then you can consider doing a short sale.

A short sale affects your credit score by 80-100 points which is much less then the impact of a deed in lieu. However, you do need to pay the deficiency if in case you attempt a short sale. the payment of deficiency isn't required of you opt for deed in lieu. I suggest that you consider the pros and cons of both the workout options and then choose the one that will suit you the best.

May god bless you.

Samantha

gmakerley · Posted: Fri Jan 02, 2009 8:19 am Post subject:

discussion with the lender is imperative.

selling the house is the best bet and the smartest move you can make, gor4jenny. it's clear you don't wish to stay there, so speak with a realtor, speak with your lender and find out if you have sufficient equity to sell at this time. if you don't then you'll want to discuss short sale with the lender, of course.

do these things as quickly as you can.

Guest

thanks for all the replies, we did write a hardship letter to the mortgage company and have heard nothing, short of losing the house, our only option seems to be to catch the loan up with our tax money and stay here, i feel trapped! It would be impossible to sell before it forclosed. No houses are selling in my area...none. Most are owned by family who have never sold and have owned them for decades. If I wrote the mortgage company a letter, will disregard it if i pay my loan up to date or can they hold me to my request? I am talking about countrywide who does not have a good reputation for helping homeowners in distress.

sara · Posted: Mon Jan 12, 2009 3:16 am Post subject:

Hi jenny,

If the housing market isn't doing well especially in your area, I'd suggest that you negotiate with the lender for a deed in lieu. In such a case, the lender will sell off your property and recover the dues. And by the laws, he cannot ask you for payment of the deficiency. It's true that a deed in lieu will bring down your credit score but right now I guess this option suits your situation.

Take Care

Guest

I am in your same situation with Countrywide except they told me to catch up using my open balances of my credit cards! My lawyer told me fha loans are not accepted by fha so deed in lieu is your best bet and you are never trapped maybe stuck in a huge head ache but find a lawyer and a good realtor and it will make a world of difference when working with countrywide as they are good at the shell game. Be sure to get an fha certified loan consultant at countrywide otherwise you will have to start over again and waste valuable time.

Guest

Correction in my last entry I meant to say "My lawyer told me short sales are not accepted by fha so a deed in lieu is your best bet"

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