RESOURCES

Helpful information for you

Below are facts related to:
MISCONCEPTIONS THAT HOMEOWNERS HAVE BECAUSE OF LACK OF EDUCATION FROM THEIR LENDER.

In addition, there are links to some agency information that may be helpful to you.

After my Forbearance Plan ends, my missed payments will automatically be put at the back end of my loan.

FACT: You will have to qualify for a Loan Modification once your Forbearance Plan ends. There is NO guarantee that your Loan Modification will be approved.

My Trial Modification payments will be the same as my permanent Loan Modification payments.

FACT: Your Loan Modification payments will most likely be higher than your Trial Modification payments because the Trial Modification may not include escrow payments, real estate taxes or insurance.

Because I am behind in my payments, I will automatically be approved for a Loan Modification that will lower my mortgage payment.

FACT: If your debt-to-income ratio is too high, your Loan Modification will most likely be denied. If you already have a low interest rate, your mortgage payment will increase NOT decrease unless your Lender increases the maturity date of your loan.

I received a Loan Modification and my principal balance was reduced. I don’t have to pay that money back.

FACT: When your Lender reduced your principal balance, they created a 2nd lien against the property at 0% interest and no payments due unless the property was refinanced or sold. The principal reduction would then be due in full.

Short Sale will show up on my credit report the same as a Deed-In-Lieu of Foreclosure.

FACT: There is no code in the credit bureau system for Short Sale. A Short Sale will show up as a settlement on your credit report. A Deed-In Lieu of Foreclosure will show up as a voluntary Foreclosure on your credit report.

I will automatically be approved for a Deed-In-Lieu of Foreclosure.

FACT: You will have to qualify for a Deed-In-Lieu of Foreclosure by going through a financial review with your Lender. The property must be in marketable condition and be broom swept with no personal items remaining in the property.

If I file for a Bankruptcy, I cannot do a Short Sale on my house.

FACT: If you are under an active Chapter 13 Bankruptcy, you can request a Short Sale from your Bankruptcy Trustee. If your Chapter 13 Bankruptcy has been dismissed, you can request a Short Sale from your Lender. If your Chapter 7 Bankruptcy has been discharged or dismissed, you can request a Short Sale from your Lender.

My Bankruptcy attorney told me to just let the house go to Foreclosure and not enter into a Short Sale because I am protected under a Bankruptcy

FACT: If you let your house go to Foreclosure after a Bankruptcy, a Foreclosure will also show up on your credit report. If you enter into a Short Sale after your Bankruptcy has been discharged, a Bankruptcy will only show up on your credit report because you are no longer financially responsible for the mortgage.

If I let my house go to Foreclosure, I don’t have to worry about the remainder of the balance once the house is sold.

FACT: If you let the house go to Foreclosure and are not protected under a Bankruptcy, your Lender CAN pursue the deficiency (remainder of balance after house is sold) and sell the balance to a third party to collect. The third party CAN garnish your wages if you decide not to enter into a payment plan arrangement with them.

Links that may be helpful for you

Federal Trade Commission Consumer Advice – Click HERE

Maryland Department of Labor Financial Regulation – PDF Fact Sheet – Click HERE

Maryland Department of Labor – PDF Avoid Foreclosure Fraud – Click HERE

Maryland Department of Labor – PDF Reverse Mortgages – Click HERE

Internal Revenue Service – Home Foreclosure and Debt Collection – Click HERE

Internal Revenue Service – Canceled Debt – Click HERE