Advice & Resources for Homeowners

The challenge of being able to meet your housing costs is one of the most stressful situations you can go through. It is especially true today with rising inflation affecting nearly every aspect of our lives. For homeowners, their home is their most important asset. But it’s also much more than just that, so protecting its stability is crucial. Going through foreclosure or eviction will negatively impact the lives of homeowner and their families. The good news is that there is support available to help you achieve housing stability.

The good news is that you’re in the right place. KOFE has numerous resources that can help you. Below these resources, you’ll find general information on how you can keep your housing situation solvent.

Homeowner Assistance Fund (HAF)

The purpose of the Homeowner Assistance Fund is to prevent mortgage delinquencies and defaults, foreclosures, loss of utilities, and displacement of homeowners who experienced financial hardship after January 21, 2020. The U.S. Treasury distributed $9.961 billion promised by Congress to states, territories, and tribes. The allocation of money varies, so check on the programs available to you in your area.

To be eligible to qualify, homeowners must:

  • Own a one to a four-unit residence where one unit serves as their primary residence
  • Experienced financial hardship before January 21, 2020, but continued thereafter
  • Have a household income that is less than or equal to 150% of the area’s median income or 100% of the median income in the United States, whichever is greater

To receive an allocation of funds, an eligible entity must develop and submit a plan for its use of HAF funding. These plans must describe the needs of homeowners within the relevant jurisdiction in detail. The Treasury plans to open a portal online for HAF participants to submit their HAF plans while extending each state’s deadline. Each submitted plan must include:

  • Homeowner needs and engagement – Must provide information and data which they’ve used to design their plan, including financial hardships and mortgage delinquencies.
  • Program design – Must describe what they will use the HAF funding for.
  • Performance goals – Must establish goals and benchmarks for assistance using HAF funds.
  • Readiness – Must describe the system(s) that will ensure the effectiveness of the plan.
  • Budget – Must provide a budget, broken down by each expense category, in accordance with the Treasury’s template.

Know your options to prevent foreclosure

There are many different options available for homeowners who are struggling to meet their mortgage payment deadlines and may be staring foreclosure in the eyes. Below is an overview of each of the options you may be able to use:

Deed-in-lieu of foreclosures allows the mortgagor to convey the ownership of the property back to the lender in exchange for being released from liability of paying the monthly loan payments. The deed of the home is returned to the mortgage company so they can sell that property to recoup their losses.

 

An important aspect to know is that the lender in some cases may try to file a deficiency judgment against the mortgagor should the property sell for below the remaining balance of the mortgage.

 

Some of the benefits include:

  • Elimination or reduction of mortgage debt
  • Relocation assistance in certain cases
  • Faster credit recovery than should a foreclosure take place
Should a mortgagor not be able to meet their monthly mortgage payments, forbearance is an agreement proposed by the lender to temporarily reduce or suspend the payments for a specified period. It allows time to budget to regain financial control before your monthly payments are reinstated.

It’s important to know that loan servicers (those who collect payments but do not own loans) may be less willing to work with mortgagors on forbearance relief because they do not bear as much financial risk.

 

Some of the benefits include:

  • Time to improve your financial stability
  • Less damaging on credit scores than foreclosure
  • Allows you to stay in your home

Mortgage modification is an agreement between the mortgagee and the mortgagor that allows the changing of the terms of the original mortgage. This can include the payment amount, length of the loan, amortization schedule, and more.

 

These options are available to those homeowners who are facing the reality that their home is worth significantly less than the value of the original mortgage.

 

Some of the benefits include:

  • Reduce mortgage payments to be more affordable
  • Credit score recovery is less intrusive than if a foreclosure were to occur
  • Avoid foreclosure

Refinancing a mortgage allows the mortgagor to secure a new loan with new terms, including interest rates or a monthly payment schedule. This replaces your old loan, making payments more controllable. Should the home have decreased, where it is worth less than that of the first mortgage, there is still a chance to refinance.

 

Some of the benefits include:

  • Lower more affordable monthly payments
  • No negative credit score impact
  • Stay in the property while avoiding foreclosure
A personal agreement between the mortgagee and the mortgagor in which an allotment of time is given to bring the mortgage back up to date. Many mortgage lenders are willing to work with homeowners to make these special arrangements. This allows them to avoid the expenses and potential losses that would be affected by foreclosure.

 

Some of the benefits include:

  • Catch up on previously missed payments over a predetermined amount of time
  • Not as much of a negative impact on credit scores
  • Keep living in the same home without fear of foreclosure

Short sales are signs of a financially distressed homeowner who needs to sell the property before it is seized in foreclosure. In a normal sale, the sales price is more than what is still owed on the mortgage, but with a short sale, the home is sold for less than the balance remaining on the mortgage. To sell the home as a short sale, a financial hardship letter must be presented to the lender from the borrower explaining the need to sell the home for less than they owe. Should they agree, you can sell the home and use the profits to pay off the mortgage balance.

 

Should the sale not cover the remaining mortgage balance, the lender may require repayment of the balance still owed. This is known as a deficiency judgment.

 

Some of the benefits include:

  • Faster credit recovery
  • Reduce mortgage debt or eliminate it
  • Assistance with relocating

 

HUD-certified housing counselors are experts in foreclosure prevention and can discuss any and all options that could assist you with your delinquent home loan. You can work with a counselor to create a personalized action plan that can help you become a successful homeowner.