The Federal Housing Administration (FHA) insures mortgages for homeowners who may not be able to qualify for traditional mortgages. These loans offer lower down payment options and require a lower credit score than a conventional mortgage, making it a popular alternative for low-income or new homeowners.
While a conventional mortgage and an FHA-insured mortgage have many similarities, they also have some differences that homeowners should be aware of before committing to a long-term contractual agreement. The information you find on the internet for stopping a conventional foreclosure may not relate to an FHA foreclosure. As well, FHA loans usually offer a pre-foreclosure period which is not offered with conventional foreclosures.
Knowing how the FHA pre-foreclosure process works and what options you have available to you for your particular situation could help you in the long run when it comes to stopping an FHA foreclosure.
FHA Loan Foreclosure Process
Like a traditional mortgage, a borrower with an FHA mortgage will receive a Notice of Intent (NOI) to foreclose when they default on paying their monthly mortgage payments.
The difference between a traditional mortgage and an FHA mortgage in these scenarios is that the NOI will kickstart the FHA’s pre-foreclosure process. During an FHA pre-foreclosure period, the borrower has the chance to sell their home, along with other options, to pay for the remaining mortgage loan that they owe their mortgage company.
One benefit of the FHA pre-foreclosure program is that even if the homeowner cannot sell their property for the amount they need to pay off the remaining mortgage, the borrower’s debt is still considered satisfied. That means you won’t have to deal with deficiency judgments like you would with a traditional mortgage.
While this could mean that selling your home may be a good option to stop foreclosure, you may lose the equity you’ve built up in your home and hurt your personal finances in the long term. Instead of deciding to sell your home, you may have other options to stop an FHA foreclosure.
How to Stop an FHA Foreclosure
Homeowners interested in stopping an FHA loan foreclosure have a few options available:
- Get a loan modification. A loan modification allows you to modify the original loan you owe to your mortgage lender. That could include reducing the interest rate, splitting the payment into smaller payments, or extending the loan to reduce payment amounts.
- Enter forbearance. Traditional mortgage forbearance is an agreement that allows homeowners some relief, during which monthly mortgage payments are reduced or suspended to give homeowners a chance to avoid default and foreclosure. Forbearance agreements are not a long-term solution but rather a temporary solution for homeowners experiencing a short-term rough patch.
- Join the pre-foreclosure sales program. The sales program aims to help homeowners with an FHA mortgage loan who are in default. Under this program, the homeowner can sell their home to satisfy the loan debt even if the proceeds don’t cover the remaining balance owed.
- Talk with a foreclosure defense attorney. Stopping a foreclosure without the right experience and resources can be near impossible. A trusted foreclosure defense attorney may be able to help you get a loan modification, enter forbearance, join a pre-foreclosure program, or find another option available for you and your unique situation.
Work With A Trusted NJ Foreclosure Defense Attorney
Whether you are trying to stop a traditional foreclosure or an FHA foreclosure, the process can be complicated and risky to take on by yourself. Without the right experience or resources, you risk the possibility of losing your home or losing the equity you’ve already built up in your home.
Denbeaux & Denbeaux Law is a trusted New Jersey foreclosure defense law firm committed to helping our clients through the foreclosure process and defending their homeowner rights. We’ve seen firsthand how mortgage companies take advantage of homeowners during a very vulnerable and confusing time in their lives. With a foreclosure lawyer, you can have peace of mind knowing that someone with your best interests is defending you and your home.
Looking for a foreclosure defense attorney to help you and your particular situation? Set up a free consultation today to find out how Joshua Denbeaux may be able to help find the best solution for stopping traditional and FHA foreclosures.