The Role of the Housing Counselor
Understand the Homeowner's Objectives and Needs
The housing counselor provides assistance once they understand what the homeowner is trying to accomplish. This requires very specific information. The more information provided, the easier it will be for the housing counselor to assess the homeowner's expectations and situation.
Determine Any Time Constraints
The housing counselor needs to identify any deadlines the homeowner faces, especially the foreclosure sale date. The homeowner must to call a housing counselor immediately if mail comes regarding foreclosure. If the homeowner is not aware of a sale date, the housing counselor will contact the lender.
Establish Reasons for Default
The homeowner partnering with the housing counselor to draft a hardship letter that establishes and explains reasons for the default. The letter should be in the homeowner's words.
Assist Homeowner in Preparing a Spending Plan
The homeowner should put together a spending plan and take it to their housing counselor, who will go over it line by line. Once it appears all debts have been identified, the housing counselor will suggest using any surplus towards the delinquent mortgage. However, if it appears there is a deficit, the homeowner decides what can be removed from the spending plan, for example, cable television. The homeowner must take ownership of the spending plan because they are the ones who have to follow it.
Consider Ways to Increase Homeowner's Income or Available Cash
The homeowner needs to work with the housing counselor to find other sources of income. Perhaps a family member in the house can bring in additional money with a part time job. Maybe family members can assist; or, perhaps their Church has an assistance fund.
Assist Homeowner in Reducing Other Debt
Other mortgages or liens associated with the house must also be taken into consideration when it comes to foreclosure intervention. The housing counselor, along with the homeowner, tries to determine if: there are any property taxes unpaid; federal or state taxes due; homeowners insurance up to date; default mortgage insurance behind; other junior liens exist; utilities past due or cut-off; and-, any home repair needs.
Certain unpaid utilities could make the house uninhabitable for all family members;- water is one of them. The housing counselor will try to get any past due utilities on the smallest payment schedule possible.
Some home repairs_may make the house uninhabitable. It is in the best interest of the homeowner to make the housing counselor aware of these situations.
The housing counselor goes over all debt and makes cash-flow suggestions. One such suggestion may be not to pay any credit card debt. While it will have a negative impact on the homeowner's credit history, the credit more than likely has already been impacted by the late mortgage payments. Rather than paying the credit cards, that money could be used to bring the mortgage current. Once the critical needs are met, the housing counselor will work with the homeowner to revise their spending plan.
Student loans must be kept current since they are federal debt and any tax refund can be seized. The housing counselor may suggest the homeowner try to get a deferment of payment if possible.
The homeowner must make cuts in their spending if their goal is to keep their home.
Ask Homeowner to Set Aside Funds to Prevent Foreclosure
Once a realistic spending plan has been developed, the housing counselor will ask the homeowner to save the funds that have been set aside to pay the arrearages on the mortgage loan.
The housing counselor will help the homeowner decide if they want to try to keep their house. If the homeowner decides it isn't a realistic goal, then the money set aside can be used to make other housing arrangements.
Get Exact Totals on Current Payments, Arrears, & Loan Balance
The housing counselor and homeowner will need this information, which can be obtained from the lender of the service, to decide the best foreclosure avoidance plan. The servicer works on behalf of the lender to collect and put payments in the homeowner's account. In order for the housing counselor to get this information, the homeowner will need to sign an Authorization to Release Loan Information form.
Work with the Homeowner to Make Realistic Choices
Once the spending plan is complete and the past mortgage due amount determined, the housing counselor will again review if whether the homeowner's goals are realistic. The housing counselor will review takes into consideration all options available to the homeowner based on the type of loan they, i.e. Fannie, Freddie, VA, FHA. The homeowner should ask questions until they fully understand the decision they must make, as well as the options available to them.
Start Paperwork If Homeowner Chooses to Try to Save House
The housing counselor provides the lender or servicer with the income and expense information they require. Income needs to be verified and the housing counselor will communicate what method the lender or servicer wants to use-income tax returns and/or most recent pay stubs. Expenses may need to be verified as well, so the homeowner may be required to provide copies of bills.
Request Delay of Foreclosure Sale Date
The housing counselor is an advocate for the homeowner in getting a delay on the foreclosure sale date. It is necessary for the home-owner to stay in contact with their lender and keep an eye on the sale process.
Determine Appropriate Options
Depending on the homeowner's goals and resources, and the available options for the specific loan type, the housing counselor makes a final determination as to which workout plan should be submitted. In addition, the housing counselor will still go over options that do not require the lender's consent. For example, the homeowner may decide to file bankruptcy to protect their home. Or, if the homeowner feels there has been an error in past due amount, they may decide to go to court. Also, the homeowner may decide to stay in the house until they receive an eviction notice.
The housing counselor will keep the homeowner updated as things progress. If the work-out option submitted to the lender or servicer is rejected, the housing counselor will updated the homeowner and help them explore other options.
Housing Counselor and Homeowner Are Partners
The housing counselor and homeowner work together for a satisfactory resolution. Each must do their part so don't let yourself down.
