As a follow-up to last week’s article introducing you to NACA, I decided to let you know about one of their programs aimed at helping people going through foreclosure. Even if NACA can’t help you, the info in on this page is very helpful.
HOME SAVE SOLUTIONS
All of the below solutions provide for an affordable mortgage payment over the long-term. In fact the Restructuring sometimes lowers the fixed interest rate to less than a NACA Refinance. As opposed to the refinance, a Restructure is available throughout the country and is not based on factors such as equity, debt ratios and credit score. NACA through its Mortgage Consultants and Home Save Department will make a determination of the solution that is most appropriate for your particular situation.
NACA’s Home Save Program provides four long-term solutions. The NACA process considers the individual characteristics for each homeowner but provides a framework and standardization to provide for the most effective long-term solution. The Affordable Budget provides an analysis of your current financial situation. If completed accurately and completely, it will show the mortgage amount you can afford. The solutions are based on what you can afford based on a tight budget.
NACA’s home save options are based on what you can afford based on our comprehensive Affordability Budget. They are provided in the order that is most appropriate for your situation. The most viable and appropriate solution for most homeowners is the Restructure. Servicers and investors are now more willing to restructure a loan given the collapse of the mortgage market and the significant loss they would incur with a foreclosure.
1. PAYMENT PLAN (i.e. forbearance agreement):
A Payment Plan is an arrangement with the servicer for you to become current within a twelve month period. This is appropriate if your interest rate is reasonable and your mortgage payment is affordable. Payment Plans are effective when life’s circumstance (i.e. illness, short-term job loss, or personal issues) have created a short term financial setback. The past due amount is spread as an additional payment over a number of months and on completion you would be current. While Lenders/Servicers often advocate for this, it will not prevent an eventual foreclosure if your existing mortgage payment is unaffordable or will become unaffordable.
A Modification of a loan is where the past due amounts are added into the remaining balance or made payable upon loan payoff (i.e. refinance or selling of the house) This works if you have an affordable payment but have experienced a long-term financial set back and cannot become current in 12 months. The monthly payment does not decrease and often increases due to the higher loan amount (Interest rate reduction modifications are considered a Restructure Solution as described below).
3. RESTRUCTURE (modification):
A Restructure requires either a reduced interest rate and/or reduction in the mortgage amount. This is the most powerful tool for many homeowners to save their home. NACA has been extremely successful in making dramatic reductions in interest rates saving homeowners hundreds and thousands of dollars a month in their mortgage payments. You would work with your NACA Mortgage Consultant to determine a mortgage payment you can afford based on the above described Affordability Budget. The monthly taxes and insurance are deducted from the available payment leaving the principal and interest payment. The NACA Restructure Solution locks in the principal and interest for the remaining term of the loan thus allowing you to achieve true homeownership. The NACA Restructure Solution requires that the mortgage payment reflects this affordable monthly payment. This can be accomplished by adjusting either or both the interest rate and outstanding mortgage amount. The Restructure is not conditioned on the three major limitations for refinances:
1. Equity in the home (i.e. loan-to-value)
2. Debt-to-income ratio
3. Payment History (i.e. credit score)
The mortgage payment for principal and interest is submitted to the servicer of your loan (the servicer may not be the original lender). The servicer would reduce either or both to achieve the mortgage payment over the remaining term of the loan. The servicers has certain authority to change the terms of your loan. They may need to get the investors approval for such a solution. If the investor rejects this solution, NACA may appeal the decision since your Affordability Budget documents the maximum amount you could afford for a mortgage payment. If the servicer and investor still refuse the Restructure Solution then NACA could work with you as part of the Homeowner Advocacy campaign as described below.
4. NACA REFINANCE:
The NACA Refinance provides an important option for homeowners to achieve an affordable long-term mortgage payment. The NACA Refinance is one product that is the best in America. It is at a below-market 30 year fixed rate interest (Currently at 5.125%), no points, no closing costs, and no fees. There are also NO abusive terms: No yield spread premium; No pre-payment penalty; No balloon payment; No required credit life, and No other unnecessary or overpriced insurance. NACA has committed One Billion dollars to help homeowners who have an unaffordable mortgage keep their homes in the wake of the mortgage crisis. This continues to be the most significant refinance option for homeowners at-risk of foreclosure in this mortgage crisis.
While the NACA Refinance is the best in America, there are eligibility criteria that are not limitations with a Restructure Solution. These include Loan-to-value, Debt-to-Income Ratio, Payment History, property located within a NACA service area, and other criteria. There would also be additional documentation of income, previous mortgages and other documentation requirements. All properties to be refinanced must have thorough inspections.
NACA does not consider selling your home or a deed-in-lieu to be viable solutions. If you are determined to keep your home and are willing to engage in the Homeowner Advocacy there is a good chance that you will not lose it. If selling or doing a deed-in-lieu is your desire, we may be able to assist and work with you to reestablish yourself to become a homeowner in the future with an affordable mortgage payment. To purchase another home would likely take a significant period of time.
For more information on NACA or their Home Save Program, please check out their web site. There’s a “Home Save” menu button on the menu at the top of every page. If you’d like to be notified whenever we add posts to the Truth in Foreclosure site, please fill out and submit the form below.Tags: counseling, forbearance, loan modification, refinance