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For Viewers On The Web www.fsisc.org. To Hear Audio 1. Dial: 866-200-5786 2. Enter Conference ID: 5681117 3. Press: * 1744 #

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Presentation on theme: "For Viewers On The Web www.fsisc.org. To Hear Audio 1. Dial: 866-200-5786 2. Enter Conference ID: 5681117 3. Press: * 1744 #"— Presentation transcript:

1 For Viewers On The Web www.fsisc.org

2 To Hear Audio 1. Dial: 866-200-5786 2. Enter Conference ID: 5681117 3. Press: * 1744 #

3 The Modification Information Session is designed to provide helpful information and tools for homeowners who are behind or anticipate falling behind on their mortgage payments. After completing the session, many of you will be considering whether to move forward and become a client of The Homeownership Resource Center through the Mortgage Default and Foreclosure Counseling program. It is very important to note that due to lender restrictions and other circumstances, we will not be able to assist the following: Owners of Mobile or Modular Homes: We strongly recommend you contact your lender or service provider and try to construct a workable repayment plan. These types of providers do not work with third parties and generally do not provide modifications of their loans.

4 Rental/Investment Properties, Tenants, Relatives/Friends: If you dont live in the property and/or if your name is not on the loan and the deed we will not be able to assist you. Homeowners With The Following Lenders (these lenders prefer to work directly with homeowners not third party agencies): BB&T Bank First Citizens Bank Any State Chartered Bank such as Conway National, Enterprise, SC Federal Credit Union, etc. Habitat for Humanity SC Housing and Finance Authority USDA Greentree Vanderbilt Walter Mortgage

5 Homeowners in any of the previously mentioned categories who need assistance should contact the HOPE Hotline at 888-995-HOPE.

6 To receive your certificate, you must be present for the entire session. The Moderator is the only one who can advance the presentation; participants do not have that ability. At the end of this presentation you will be directed to our website where you can download a copy of this presentation to review at your own pace, access helpful information, resources and links to lender workout packages. We strongly recommend you have your budget and bank statement on hand during the session.

7 To keep background noise and interruptions to a minimum, we ask that you Mute your phone during the presentation. To Mute: Press *6 To Un-Mute: Press *7 There will be times throughout the session and at the end when you will have an opportunity to submit questions and comments. Unless it is absolutely necessary, please hold your questions and comments until those times.

8 You have the option of posing questions to the Moderator in the following ways: Click on the hand icon across the top of your screen to Raise Your Hand and the Moderator will let you know when you can un-mute your phone to pose your question. Press *7 to un-mute your phone and ask the Moderator directly. On the bottom right-hand corner of the screen you have the ability to send messages directly to the Moderator. Only the Moderator is able to see your name and message. Other participants cannot. Please remember the Moderator is conducting the session and will get to your question at the appropriate time.

9 Welcome to The Homeownership Resource Centers Modification Information Session. We are glad you have taken this critical first step in finding a way to potentially solve your mortgage issues. At the end of this 90-minute session you should have a better understanding of where you are in the foreclosure process and what options may be available to you. We encourage you to take lots of notes for future reference. While we deeply regret you are having difficulties, we must ask that you refrain from conveying personal stories. We have a lot of information to provide so you can obtain your certificate of completion. General questions will be answered, but please no personal situations. We appreciate your cooperation.

10 Since 1888, Family Services, Inc. has been providing human services to residents of the Lowcountry and in recent years to residents statewide. FSI offers a full array of services and programs including: Conservator and Representative Payee Services Behavioral Health Services Consumer Credit Counseling Services Bankruptcy Counseling The Homeownership Resource Center

11 The Homeownership Resource Center, a division of Family Services, Inc., was established in 2003 and currently offers a variety of housing resources including: Foreclosure Prevention Services Modification Information Sessions Mortgage Default and Foreclosure Counseling First Time Homebuyer Education Workshops Credit Improvement Workshops Budget Counseling

12 The HRCs Mortgage Default and Foreclosure Counseling Program, which is becoming a nationwide model, started in late 2006; the clinic model, the predecessor to the Modification Information Session you are participating in today, began a year later. Since its inception, The Homeownership Resource Center has provided more than 10,000 clients with homeownership resources, counseling and assistance. In 2009, the HRC counseled more than 4,800 families facing foreclosure with approximately 67 percent of them achieving a successful outcome.

13 Understanding the Foreclosure Process Assess Your Current Situation Options to Foreclosure Dealing With Bankruptcy Making Home Affordable (MHA) Real Life Examples A, B, C & D What Lenders Are Looking For Tips For Drafting Your Hardship Letter Review

14 In South Carolina, foreclosing on a home is a legal process that must go through the court. If you miss one payment on your mortgage, your lender may not contact you right away. If you miss a second and/or third payment, the collection calls will explode. By the fourth month, if you have not caught up on your payments, have not made payment arrangements, or remain unresponsive, your lender will send your file to a local foreclosure attorney, who will prepare the Summons and Complaint (Lis Pendens), which is the official notice of default. The Summons and Complaint will be published in the local newspaper.

15 You have 30 days from the date of receipt of the Lis Pendens to respond. We recommend that you do respond. You may wish to contact an attorney at Legal Aid for further assistance. What happens next? If you do not respond to, do not call, and/or do not work something out with the lender within 30 days, you will receive notice of a court date in 30 to 45 days.

16 And after that…what happens next?? If you have decided to let the home go, this is the time to make plans. If you are still trying to save the home, the sale date can usually be postponed if you contact your lender and send in requested documents. Time is on your side because it will take on average three months to get a decision from the lender after sending the documents in, but….

17 While youre waiting to hear from your lender… This is the time to live as frugally as possible. If your lender is not accepting mortgage payments and you are still working, the mortgage money should be saved each month. This is very critical because if you are not making the mortgage payment, where is the money going? Your lender wants to know. You may or may not be required to make a contribution or a down payment, so please be prepared.

18 How far behind are you? Have you spoken to your lender? Have you been served by an attorney? If so, did you send a response? If not, can you still send one? What options are you considering regarding your home?

19 Repayment Plan: Spreading the defaulted payments out over a series of months, usually not more than six. To Qualify: Must have the ability to make one payment Must have proof of income Must have a positive budget Must have the ability to pay current mortgage payment plus a portion of defaulted payment Forbearance: Your lender may be able to arrange a repayment plan based on your special financial situation (medical, unemployed, home listed for sale). To Qualify: Must be able to pay your current mortgage payment Must have a positive budget Must be able to prove special circumstances

20 Partial Claim: You may be able to obtain a loan from the Department of Housing and Urban Development (HUD) (Federal Housing Administration (FHA) loans only) to bring your loan current. You must be a minimum of four months behind. To Qualify: Must have an FHA loan Must have FHA mortgage insurance Must be able to afford current mortgage + FHA loan terms Must have a positive budget Trial or Permanent Modification: The lender may decide to reduce the interest rate, monthly payment, extend the term of the loan or all of the above. To Qualify: Must have a positive budget Steady employment A good reason for modification

21 Deed-in-Lieu: Voluntarily give back your home to the lender. This will not save your home but it may help you to qualify to buy another home in the future. To Qualify: Must be willing to move quickly Be willing to forfeit any equity Short Sale: To sell your property prior to foreclosure for less than the mortgage amount. To Qualify: Must be in the early stages of foreclosure Your lender must approve A buyer must be found

22 Reverse Mortgage: A unique loan enabling senior homeowners, ages 62 and older, to convert a part of the equity in their home into tax-free income without having to sell the home, give up the title or take on a monthly mortgage payment. To Qualify: Homeowner must be at least 62 years old Must have equity in the home Loan must be repaid when last homeowner passes away Counseling session by a qualified agency and certificate of completion are mandatory Existing mortgage, including all late payments, are paid in full

23 Bankruptcy: By federal law, individuals or couples are allowed to wipe out a portion, if not all, of their unsecured debt when specific criteria is met. Consumers can file either Chapter 7 or 13 bankruptcy. A homeowner would file Chapter 7 if they are trying to eliminate credit card debt, medical bills, or any type of unsecured loans. Chapter 13 is another type of bankruptcy that will stop the foreclosure process. The homeowner's total debts, including the back payments on their mortgage, are calculated and repaid over a two-five year repayment period. To Qualify: Monthly obligations cannot exceed income Homeowner must engage a legal representative, Legal Aide or a bankruptcy attorney Must attend pre- and post-filing counseling sessions with a qualified agency and receive a certificate of completion

24 This information is by no means all-inclusive, but lets cover a few key points as they relate to your home. If you filed a Chapter 13 bankruptcy to save your home, you have entered into a repayment plan that requires consistent, monthly payments. If the payments are not made, your mortgage company can ask the court to lift the protection. If this happens, you can lose your property. If you filed a Chapter 13 bankruptcy and want to modify your loan, we may still be able work with you. You will have to get a letter from your bankruptcy trustee giving us permission to contact your lender. Without permission from your trustee, we cannot provide any assistance.

25 If you had a lot of credit card debt or medical bills and filed a Chapter 7 bankruptcy, which liquidates all unsecured debt, it is very important that you continue to make your mortgage payment each month.

26 Before March 2009, homeowners had a very tough time contacting lenders, verifying that paperwork had been received, and getting the final modified agreement when it became available. Just as the pot was about to boil over with customer frustration, the U.S. Department of the Treasury unveiled the Making Home Affordable Plan (MHA). The terms The Obama Plan, The Home Affordable Modification Program and HAMP all refer to the MHA Plan. The MHA Plan is designed to help struggling homeowners: avoid foreclosure by requesting help in advance refinance properties that are under water (have lost significant value).

27 For the first time, MHA provided clear and consistent guidelines for modifying home loans. To participate in MHA, borrowers must meet five areas of eligibility: They must be an owner/occupant in a 1-4 unit property. The unpaid principal balance must be less than $729,750. The loan has to have been originated before January 1, 2009. The homeowner has to have experienced a significant change in income or expenses to the point that unmodified mortgage payment is no longer affordable (imminent default). The unmodified mortgage payment including taxes, insurance and homeowners association dues must be more than 31% of the homeowners gross monthly income.

28 Determining the 31% threshold: The homeowner grosses $2,500 per month. $2,500 x 31% = $775 With a mortgage payment of $775 or higher, this homeowner appears to meet the threshold. Of course, there may be exceptions as lenders reserve the right to modify their criteria according to their investor guidelines.

29 HOMEOWNER A Homeowner A is 2-3 months behind, but wants to keep the home. What should she do? Call the lender; ask if they are participating in the MHA plan. If not, ask what help is available. Organize requested documents, write a hardship letter and submit it to the lender. Eliminate unnecessary spending; keep budget as lean as possible. Call every 10 days; keep a log of contacts and numbers. Persist until a response is received.

30 HOMEOWNER B Homeowner B is current now, but struggling to make payments. Because the loan is current, he should follow the same plan as Homeowner A, but he should plan for and expect a longer response time. Note: If you request a modification on a current mortgage your credit score can drop during the process. Call lender; ask for the eminent default department and ask if they are participating in the MHA plan. If not, ask what help is available. Organize requested documents, write a hardship letter and submit it to the lender. Eliminate unnecessary spending; keep budget as lean as possible. Call every 10 days; keep a log of contacts and numbers. Persist until a response is received.

31 HOMEOWNER C Homeowner C wants to refinance. She should: Visit www.makinghomeaffordable.gov to determine who owns the loan. If owned by Fannie Mae or Freddie Mac, great!www.makinghomeaffordable.gov Call the lender to get list of requested documents. Submit documents to the lender. If declined, find out why. Correct the situation if possible and reapply. If the loan is not owned by Fannie Mae or Freddie Mac, she should: pursue a refinance with another lending organization have a credit score of at least a 680 or higher have no 30-day late payments over the past 12 months.

32 HOMEOWNER D Homeowner D has been denied a modification because of a lack of income. He is facing foreclosure but wants to keep the home. First, he should determine if and how quickly he can generate more income. If the dollars can be generated quickly, he should call the lender to resubmit his financials. If the lender refuses to work with him, he should: reconsider if this is a good time to own a home; determine if the house should be listed for sale consult with a bankruptcy attorney about filing Chapter 13 to save the home.

33 Credible Hardship (a vacation interfering with mortgage payment is not credible…) A Budget With The Potential For Success Other Obligations Under Control Stable Payment History Cooperation And Responsiveness To Lenders Calls And Requests

34 An effective letter: explains why payments are not current advises that the problem is resolved confirms that money is saved states the desired goal is usually one page. An ineffective letter: is unorganized and rambles with extra details that are not relevant does not document that money is saved provides no plan for stability.

35 Do you understand the options available for getting your mortgage payments back on track? Will any one of them work for you? What do you need to do now?

36 Reviewing Your Budget Reviewing Your Expenses Final Steps Assess Your Budget The Bank Statement Review

37 In this section, we will review your emergency budget to ensure it supports the mortgage payment in addition to your living expenses. If your budget does not reflect that it can support the mortgage payment, you have a key piece of information about adjustments that need to be made. Another key piece is your income and the income of others who are supporting the household. Every income in the house is important. The goal in this section is to provide a thorough review of the budget and the bank statement.

38 Fixed Expenses If your real estate taxes and insurance are escrowed, do not put anything in the space allotted. Flexible Expenses How viable are eating out, buying clothes, extras for pet care, the beauty salon, cable TV, and/or extra features for the cell phone? Periodic Expenses If you pay bills quarterly, figure out the yearly amount and divide by 12. Remember property (car and boat) taxes come once a year.

39 Please add up all your household expenses and put the total in the box on the bottom right-hand side of page two. On page three of your budget form, you should have listed all credit cards, payday or title loans and/or personal loans. Make sure you have written the total amount being paid to creditors and subtracted your expenses from your income.

40 What is the final status of your budget? Do you have money left over? Are you short? By how much? How can you overcome the gap and how quickly? Is your budget ready to be signed and dated today or does it need more work?

41 Lets shift gears and look at your bank statement. Ideally, the bank statement should support the budget. In reality, however, the bank statement tends to show the truth about where money is really going each month. For example, how many times did you go shopping, eat out, buy gasoline, etc? How much did you really spend versus what is on the budget? What does your bank statement indicate about your spending? When sending your bank statement to your lender, be sure to include all pages with the front and back copied.

42 Your spending patterns are very important because in our experience as counselors, we know that people are spending much more money than they realize and many times those extras can interfere with the mortgage being paid on time. For example, a few weeks ago, we learned about a family that was denied for a modification because the bank statement clearly illustrated how much extra spending they were doing. The loan did not need to be modified, they could afford the payment; however, they were making very bad spending choices.

43 Does your completed budget support your mortgage payment? Does your bank statement support your budget? Can you afford to keep this house with the resources you have?

44 What Happens Next The Next Steps If There Is A Sale Date Expectations

45 If you want to work with our counselors and have The Homeownership Resource Center initiate the process of submitting a workout package for you, all of your completed, signed and dated paperwork must be received within 10 days of this session. If we do not receive any documents, we will assume you are working directly with the lender. Once we have received, reviewed and packaged your paperwork, we will fax or email the package to your lender and follow up within three to five business days to ensure that everything was received and nothing else is required.

46 When your package has been submitted to the lender, you will receive a letter from us with your lender's name, phone number, your loan number and the current fax number. This letter will provide instructions for working with your lender until a resolution is reached.

47 If it is still possible, we will do our best to get your sale date postponed so you have time to submit a package. What can be done at this point depends entirely on how much cash you have available and how quickly paperwork is submitted to the lender. If the sale is postponed and we submit a workout package, you will get a letter from us with your lender's name, phone number, your loan number, the current fax number and instructions for following up with your lender.

48 Communications While we are preparing your package, it is critical that we are able to reach you via phone or email during the business day, between 8:00 a.m. and 5:00 p.m., with any questions or requests for missing documents that we may have. Please check your voice messages and emails regularly. With respect to communication, we maintain a three-strike rule: If we try three times to contact you and you fail to respond, your file will be closed and you will be sent a letter documenting the closure.

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50 My lender is not participating in the MHA Plan. What do I do? Dont panic. Many lenders who are not participating have their own in-house packages and options. When you call, ask to speak to someone on the retention team or in loss mitigation. The decisions are made in these departments. Why do I have to keep sending the same documents over and over? Lenders are requiring financial information to be updated more frequently than in the past. Instead of viewing this as an intrusion, try to view the request as helping to support your claim that your finances are stable every month. We do understand your frustration. Remember to put your loan number at the top of each page.

51 I am not on the mortgage, can you help me? Unfortunately, if you are not on the mortgage we will not be able to speak with your mortgage company or lender. We recommend the same steps mentioned in our examples about Homeowners A, B, C & D for the person who is on the mortgage. I think its best if I sell the property. Can you help me? Yes, we have a list of experienced, knowledgeable and licensed real estate professionals.

52 The sale date for my home is less than a week away. Is there any hope? We will try to get the sale postponed, but at this point cash is required. The best scenario involves the availability of cash that can be wired quickly, a positive budget and immediate contact with the lender. The other last-minute option is to file bankruptcy and many attorneys can do this electronically. You, however, must have the cash to pay the attorney for their services.

53 My parents are in trouble because of medical bills. What options are available for them? If your parents are 62 years or older and have approximately 50% equity in their home, a reverse mortgage might be possible. Its a unique loan that pays the balance on the current mortgage, may generate some cash, and allows the senior to remain in the home. It does require a reverse mortgage specialist and a counseling session to make sure it is a viable option for the senior. How do late payments and foreclosure impact my credit? If you have been making late payments on your mortgage, your credit score is being affected every month. If your house goes into foreclosure and is sold, expect a reduction in your credit score anywhere from 85 to 160 points.* *(Based on information released from FICO in November 2009.)

54 How do late payments and foreclosure impact my credit? (cont.) Lenders have the final say as to how they report to the credit bureaus. If you enter a trial modification plan, your lender may or may not report you current" until the trial period ends. This will continue to affect your score each month. We encourage you to check your credit report two to three times per year. Visit www.annualcreditreport.com where you can get one free copy of your credit report from each of the three major credit reporting agencies per year. You will have to pay a fee to get your credit score.www.annualcreditreport.com

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56 At the end of this meeting, you will automatically be redirected to our website which has links to lender workout packages, state-by-state foreclosure laws and much more. Please be sure to save/bookmark the webpage as one of your favorites. (www.fsisc.org/topic.asp?pid=96) You can also find access to it in the MIS section on the Foreclosure Prevention page of our website.www.fsisc.org/topic.asp?pid=96 LIVE ONLINE CHAT: If you have additional questions, you can chat live with one of our counselors online during the hours of 8:30AM-4:30PM, Monday through Friday, excluding holidays. Visit our website at www.fsisc.org and click on the Online Live Support button. If you need assistance outside of those hours, click on the chat button, leave a message and one of our counselors will get back to you as quickly as possible.www.fsisc.org

57 For access to resources and information on other topics, visit our website at www.fsisc.org.www.fsisc.org For general information and questions, call our hotline at 843-735-5522 or 888-320-0350 ext.5522, Monday through Friday from 8:00AM until 5:00PM.

58 The Homeownership Resource Center A Division of Family Services, Inc. 4925 Lacross Road, Suite 205 North Charleston, SC 29406 Phone: 843-735-7862 Fax: 843-735-5898 Toll Free: 888-320-0350 Email: reception2@fsisc.orgreception2@fsisc.org www.fsisc.org

59 You have the option of posing questions to the Moderator in the following ways: Click on the hand icon across the top of your screen to Raise Your Hand and the Moderator will let you know when you can un-mute your phone to pose your question. Press *7 to un-mute your phone and ask the Moderator directly. On the bottom right-hand corner of the screen you have the ability to send messages directly to the Moderator. Only the Moderator is able to see your name and message. Other participants cannot. Please remember the Moderator is conducting the session and will get to your question at the appropriate time.


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