Knowing Your Options To Work Out A Fannie Mae Foreclosure

Presently, the government has various programs to work out a Fannie Mae foreclosure. These programs are readily available to help homeowners facing foreclosure by providing funding to lenders rather than providing mortgages directly to the homeowner.

Fannie Mae’s workout options are broadly divided into two categories – Special Relief Measures and Loss Mitigation Alternatives; the first being meant for homeowners experiencing a temporary financial setback while the latter designed to assist borrowers experiencing a substantial financial setback.

Options Available To Work Out A Fannie Mae Foreclosure

Fannie Mae Foreclosure Options

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Loan Modification

Fannie Mae normally only considers loan modification programs that reduce the interest rate, extend the loan term, restructure the mortgage from adjustable to fixed rate interest, or amortize skipped payments during the duration of the loan. Homeowners are required to make a cash payment up front to begin the plan, though and may be charged by servicing companies up to $500.

Repayment Plan

This program allows homeowners to begin making their regular payments, including a portion of their skipped payments each month so that over time, the homeowners are able to pay back all arrears and be updated with their mortgage payments.

Temporary Indulgence

A thirty-day grace period is given to borrowers to give them time to pay back all missed payments at once. This option is ideal for homeowners expecting a large sum of money in a short period of time, who are in the process of selling a home or expecting an insurance or lawsuit settlement.

Pre-Foreclosure Sale

Before the pre-foreclosure sale is set into motion, all options must be considered first. Essentially a short sale, this option allows homeowners to sell their home for its fair market value, regardless of how much they still owe on the mortgage. The lender and Fannie Mae will take a hit, however, foreclosure will be avoided. The mortgage servicing company’s pre-foreclosure sale of $1,000 is shouldered by Fannie Mae.

Deed-for-Lease

In the Deed-for-Lease program, homeowners sign over their home title to their lender using a deed-in-lieu of foreclosure. Normally, when deed in lieu is in place, the homeowner is required to vacate the home immediately, but with this program, homeowners that qualify for the program have the option to lease their home from the bank for at least a year.

Forbearance

This program provides special military members with Fannie Mae loans whereby loan installments are temporarily reduced to help borrowers become current with their loan. Forbearance agreements are mostly in place for no longer than 6 months but qualified service members may be able to extend their agreements for an additional six months. Borrowers must settle the full amount of missed payments once the agreement expires.

Qualifying for any program to work out a Fannie Mae foreclosure requires homeowners to experience a financial hardship that are involuntary in nature and involves a reduction in income or increase in expenses.

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