Alternative ways of Asset Management & Disposal

Prudential Arizona Properties and Adrian Cluff do not suggest using a particular method for asset management or disposal. We do not provide legal, financial, or tax advice. Any decisions you make concerning management or disposal of your assets should be in your best interests and is strictly your decision. Information is provided as requested and it is your responsibility to research your alternatives in hardship cases of asset management and disposal. Below are listed some of the choices you have at your disposal. Web sites are listed as a service only and the information gathered there is at the risk of the researcher. All clients have the right to use any method they choose. All selections are made at the sole discretion of the homeowner.

Repayment Plan: Distributes the owner's delinquent payments over a period of time; usually no more than 10 months. The monthly amount is added to the usual mortgage payment. Brings the account up to date within a specified time-frame. With a goal in sight, the owner can move forward knowing that the home is secure.

Forbearance Plan: An agreement to temporarily allow a homeowner to pay less than the actual amount due on their mortgage or it will suspend payments entirely the forbearance period. More commonly associated with Fannie Mae, Freddie Mac, FHA, and VA. Each has various requirements a homeowner must meet. It is very situation specific so the homeowner should contact the lender directly to see if forbearance is an option. The goal is to put the homeowner back on track to resume full regular payments.

Loan Modification: Applies any past-due interest and escrow amounts to the unpaid principal balance, which is then reamortized over a new term. Changes the mortgage note itself, giving the owner a fresh start on managing their home loan. Brings the account up to date immediately. There are many requirements. The homeowner must contact the servicing lender for details of their individual circumstances.

Partial Claim (only for FHA loans): The Department of Housing and Urban Development (HUD) advances a loan to repay the past-due interest and escrow amounts. HUD loan is interest-free. Brings the account up to date immediately.

Short Sale: Allows the owner to sell the home and use the proceeds to pay off the mortgage if they are unable to maintain payments, even if the home's market value is less than the total amount owed. Avoids the lengthy legal process involved in foreclosure. Generally less damaging to the credit rating than foreclosure.

FHA Pre-Foreclosure/Short Sale Requirements: The property is owner-occupied or reasonable circumstances exist if it is not. The loan is at least 2 months delinquent. The house can sell within 3 to 5 months. A new appraisal (obtained by your lender) shows that the value of your home meets HUD program guidelines. It has been reported that FHA does not allow for short sales, which is inaccurate. FHA does allow them.

Deed in Lieu of Foreclosure: Allows an owner to transfer your property voluntarily to the servicing bank if the seller is unable to maintain payments and cannot sell the home at market value. Avoids the lengthy legal process involved in foreclosure. May be less damaging to the credit rating than foreclosure.

The Servicemembers Civil Relief Act (SCRA): A federal statute passed by Congress to allow military members to suspend or postpone some civil obligations so that the military member can devote his or her full attention to military duties. The SCRA is designed to protect active duty military members, reservists who are in active federal service, and National Guardsmen who are in active federal service. Some of the benefits under the SCRA extend to dependents of active duty military members as well. Under the SCRA, a military member can cap the interest rate at 6% for all obligations entered into before beginning active duty if the military service materially affects his or her ability to meet the obligations. This can include interest rates on credit cards, mortgages, and even some student loans (except for Federal guaranteed student loans) to name a few. To qualify for the interest rate cap the military member has to show that he or she is now on active duty, that the obligation or debt was incurred prior to entry on active duty, and that military service materially affects the members' ability to pay. To begin the process, the military member needs to send a letter along with a copy of current military orders to the lender requesting relief under SCRA.

Disaster Relief: Victims of storms, hurricanes, tornado, flood or other disaster whose property has been damaged or destroyed may find solutions under disaster relief. It is imperative to contact the lender to find out the guidelines for such circumstances.

More information is available at:

Mortgage Loss Mitigation Options: NeighborWorks; 888-995-HOPE; www.aw.org