Call the Lender You may need to make a half dozen phone calls before you find the person responsible for handling short sales. You do not want to talk to the "real estate short sale" or "work out" department, you want the supervisor's name, the name of the individual capable of making a decision.

A partial claim: If you have fallen behind in your mortgage payments by more than four months but less than twelve months, and if you are able now to begin making your monthly payments, you might qualify for the partial claim. This means that the FHA Insurance Fund will make a one-time payment to your lender to catch you up to current levels. The lender will file the claim on your behalf and if approved, HUD (Housing and Urban Development) will pay the lender the amount that you fell behind. In this case, you will sign a promissory note and a special lien will be placed upon your property until the note is paid back in full. The repayment for the HUD loan is interest free. It becomes due when you pay off your first mortgage or when you sell your property. 

Pre-foreclosure sale: You can avoid foreclosure by selling your property. The appraisal, which your lender will acquire, must state that your home is worth at least 70% of the amount you owe and that the price you receive in the sale is 95% of the appraised value. If your loan is two months in delinquency or more, you succeed in selling the home in three to five months and the new appraisal states that the value of your home meets HUD guidelines, you may qualify for this option, and you may receive assistance with the closing costs. 

Deed in-lieu-of foreclosure: With this option, you choose to give back your property to your lender. Although you lose your house and any profit you might have made through selling it, this option saves you from having a foreclosure on your credit report. Seek out this option if you are in serious delinquency on your monthly payments, you cannot qualify for any of the other options listed here, you have tried to sell your house and have failed or you have no other FHA mortgages in default.




It is annoying to think there are people out there who hope that you will be unable to make your mortgage payments. They are ready and willing to rip you off, if you let them. Follow these tips to avoid being victimized.

 First, be aware that there are many phony counseling agencies. They look legitimate and act professionally, but they are not legitimate or professional. Beware of any "counseling agency" that approaches you. They have probably found out that you are in danger of foreclosure or have begun foreclosure proceedings. They will offer all kinds of solutions, none of which are free. If they offer to renegotiate a new mortgage payment with your lender, understand that this is something you can do yourself. You don't need any agency to do it for you. See the end of this article to learn how to find a real counseling agency. 


If someone approaches you and offers to pay off your mortgage or give you money when your property is sold and wants you to move out and deed the property over to him or her, don't do it! In this scam, if you fall for it, the scam artist does not make any mortgage payments, and the house eventually goes into foreclosure. Generally, the scammer collects rent on your house for awhile and pockets the money. Signing your deed over to someone will not get you off the hook. You will still be responsible and the foreclosure will end up on your credit report. It is much better to deal with the lender or a HUD approved housing counseling agency.

If you decide to sell your house to avoid foreclosure, watch out when a potential buyer tries to rush you through the process through intimidation or excuses of any kind. If a buyer makes an offer, get it in writing. And never sign a document that you don't completely understand. 

When you try to sell your home to avoid foreclosure, check with your state Attorney General's office or the Real Estate Commission for Consumer Fraud to see if there are any listed complaints about your prospective buyers. 

If you are considering allowing someone to assume your loan, you must make sure that you are truly released from responsibility for the mortgage debt and any contracts. The best way to do this is to speak with a lawyer or your mortgage lender. 

If someone comes along with a deal that sounds too good to be true, believe your instincts. Most likely, the dealer isn't being genuine and you'll be the one forced to deal with the mess that gets left behind. 

HUD Agency Contact Information
The U.S. Department of Housing and Urban Development (HUD)
451 7th Street S.W.
Washington, DC 20410
TTY: 202.708.1455 

800-877-8339 (TTD)

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