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HUD Training > Foreclosure > Flashcards

Foreclosure Flashcards

1
Q

Define Delinquent

A

A borrower is delinquent on the mortgage when all or part of a monthly payment is unpaid after the due date. The mortgage remains delinquent as long as the payment remains due but unpaid.

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2
Q

Define Default

A

A conventional loan is considered in default when a payment has not been paid after 60-90 days. For FHA loans, a loan is considered delinquent after 30 days.

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3
Q

What are Mortgage Servicing Guidelines?

A

1: Servicer must make efforts to contact the borrower after 36 days of delinquency.
2: Servicer must send borrower written notice to contact them before 45 days of delinquency and provide info about housing counselors.
3: Servicers must assign personnel to be available to help delinquent borrowers.
4: Servicers must notify borrowers promptly and in writing that a loss mitigation appt. is complete.

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4
Q

True or False: Servicers must make a first notice or filing for foreclosure before the borrower is more than 120 days delinquent.

A

False

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5
Q

After ____ days, servicers can’t begin the foreclosure process while borrower is being evaluated for a Loss mitigation plan.

A

120

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6
Q

True or False: Servicers must be able to tell homeowners the circumstances under which the servicer may make a referral to the foreclosure

A

True

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7
Q

True or False: Servicers are not required to evaluate the borrower for all the foreclosure avoidance options for which the borrower may qualify.

A

False

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8
Q

What is Judicial Foreclosure?

A

Judicial foreclosure is a lawsuit, so the process is formalized. To obtain permission for foreclosure, the servicer files a lawsuit in the state court.

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9
Q

Judicial or Non-Judicial: The servicer issues the homeowner a notice of the lawsuit, called a summons or a complaint.

A

Judicial

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10
Q

What happens in Judicial Foreclosure after the homeowner contests the foreclosure?

A

The court sets a date for the homeowner and servicer to go before a judge and present arguments. The judge may decide on the case to order a trial if there is a difference of material facts.

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11
Q

What is a Non-Judicial Foreclosure?

A

Courts are not involved, communication occurs between the homeowner and the servicer or the servicer’s appointed representative in the foreclosure process.

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12
Q

Judicial or Non-Judicial: The servicer issues a Notice of Default.

A

Non-Judicial

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13
Q

What happens in a Non-Judicial foreclosure, if the delinquency is not cured after the Notice of Delinquency is delivered?

A

The homeowner receives a Notice of Sale. The NOS gives the homeowner a certain number of days before the house will be sold, which varies by state.

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14
Q

How many days before the sale date in a Non-Judicial Foreclosure does a homeowner typically have to cure delinquency?

A

5-10 days

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15
Q

What is the Loss Mitigation Submission Process?

A

1: Determine reason client is behind on mortgage payments.
2: Determine if homeowner wants to remain in the home or transfer out of the home.
3: Determine the type of mortgage
4: Gather required financial documentation and determine affordability
5: Complete the necessary forms to request the loss mitigation option.
6: Submit the request to the servicer
7: Respond to additional requests for information.
8: If request is approved, discuss if it is affordable. If it is denied, determine why.

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16
Q

What is Imminent Default?

A

Describes a borrower who is not yet in default but is currently delinquent with a high risk of defaulting.

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17
Q

What is a possible indicator that a client won’t be able to remain in the home?

A

Temporary or permanent disability of the homeowner, which prevents them from working.

18
Q

True or False: Illness or disability of a family member, which requires the homeowner to stop working is not a sign that your client won’t be able to remain in the home.

A

False

19
Q

True or False: Death of an income-earning borrower is an indicator that your client won’t be able to remain in their home

A

True

20
Q

What is the purpose of the Home Affordable Modification Program?

A

To assist homeowners who are struggling to make mortgage payments.

21
Q

What is the benefit of the Home Affordable Modification Program?

A

Lowered mortgage payments to make them more affordable and sustainable in the long-term.

22
Q

What is the purpose of Fannie Mae and Freddie Mac?

A

To provide an easier, flexible way of helping more borrowers qualify for a loan modification in a changing housing environment.

23
Q

How can a borrower qualify for Fannie Mae and Freddie Mac?

A
  • Borrower must be 60+ days delinquent and occupy the property as a primary residence.
    OR
  • Be current or less than 60 days delinquent, occupy property as a primary residence, and be in imminent default.
24
Q

What does a Borrower Response Package include?

A
  • Completed and signed Form 710, Uniform Buyer Assistance Form
  • Eligible hardship document
  • Documents to verify stable income to support monthly payment
  • Imminent default hardship documentation for borrowers less than 60 days delinquent
25
Q

All servicers that offer FHA-insured mortgages must review retention options first, and are required to consider all options in this order

A

1: Attempt to bring the mortgage current
2: Determine eligibility for informal and formal forbearance plans.
3: Determine eligibility for Special Forbearance - Unemployment Agreement
4: Determine eligibility for FHA-HAMP Loan Modification
5: Consider a pre-foreclosure sale.
6: Consider a deed-in-lieu

26
Q

What is the purpose of Informal/Formal Forbearance?

A

To assist borrowers who are temporarily struggling to make mortgage payments

27
Q

True or false: One Key Eligibility for Informal/Formal Forbearance is that the borrowers occupy the home as primary residence

A

True

28
Q

What is the minimum limit of surplus income for Informal/Formal Forbearance?

A

85%

29
Q

What is the purpose of the Special Forbearance-Unemployment Agreement?

A

To assist unemployed buyers.

30
Q

What is the benefit of the Special Forbearance-Unemployment Agreement?

A

Suspends/reduces the current monthly mortgage payment, ensuring that forbearance installments are based on the borrower’s availability to pay.

31
Q

What is the purpose of the FHA-HAMP Loan Modification?

A

To assist borrowers who are struggling to make mortgage payments because they are no longer affordable and do not qualify for other FHA options.

32
Q

What is PITI?

A

Principal, Interest, Taxes, and Insurance

33
Q

What is Surplus Income?

A

Net monthly income - PITI - Expenses = surplus income

34
Q

What is Surplus Income Percentage

A

Surplus Income/Net Income = S.I.P.

35
Q

What are Arrearages?

A

of mortgage payments missed x PITI = Arrearages

36
Q

What is Forbearance Qualification Criteria?

A

Arrearages / (85% x surplus income) = # mo. for payments

37
Q

What is Foreclosure?

A

A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower. Foreclosure laws are based on the statutes of each state.

38
Q

What is a short sale/preforeclosure sale?

A

Also called a preforeclosure sale, a short sale is a procedure where the mortgage co. allows the homeowner to sell the house for an amount that falls “short” of the amount still owed.

39
Q

What is deed-in-lieu?

A

A process that allows homeowners to avoid foreclosure by providing a deed “in-lieu” of foreclosure to the lender.

40
Q

True or False: A foreclosure will remain on your credit report for up to 7 years and lowers credit score significantly

A

True

41
Q

What are benefits to short sale programs?

A

1: Completely releasing the homeowner from mortgage debt, or deficiency judgment.
2: Has a less negative impact on a credit score than a short sale conducted with only a servicer
3: Might provide homeowners with cash benefits for relocation assistance.

HUD Training (9 decks)

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