Archive for the ‘Learning Center’ Category

Making Home Affordable Program

Eligibility Requirements for a Modification Under The Making Home Affordable (MHA) Program

  • Is current on the mortgage
  • Is owner/occupant of a 1 to 4 unit property
  • Has reasonable ability to pay the new mortgage payment
  • Owned or guaranteed by Fannie Mae or Freddie Mac
  • First mortgage cannot exceed 125% of property’s current market value
  • Refinance must improve affordability or sustainability

Home Affordability Modification Program (HAMP)

  • Has financial hardship and is delinquent or in imminent default
  • Is owner-occupant of 1 to 4 unit property
  • Has sufficient, documented income to support the modified payment
  • Amount owed on first mortgage equal to or less than $729,750
  • Mortgage originated on or before January 1, 2009
  • First mortgage payment (PITI + homeowner association/condo fees) is greater than 31% of homeowner’s monthly gross income

Home Affordable Unemployment Program (UP)

  • Is owner/occupant of 1/4 unit property.
  • Makes request before seriously delinquent (three months due, unpaid).
  • Is unemployed at time or request and eligible for unemployment benefits.
  • Has not previously received UP forbearance.
  • Amount owed on first mortgage equal to or less than $729,750.
  • Mortgage originated on or before January 1, 2009.
  • Is delinquent or default is foreseeable.
  • Loan has not been previously modified under HAMP.

Home Affordable Foreclosure Alternative (HAFA)

  • Before evaluating for HAFA, servicer must consider other retention programs.
  • Homeowner must be evaluated within 30 calendar days of the following:
    • Homeowner does not qualify for HAMP.
    • Homeowner does not successfully complete a HAMP Trial Period.
    • Homeowner is delinquent on a HAMP modification.
    • Homeowner requests a short sale or DIL.

Second Lien Modification Program (2MP)

  • Works in tandem with HAMP. When 1st lien modified, participating 2MP servicers must offer to modify 2nd lien.
  • 2nd lien must have been originated on or before January 1, 2009.
  • Homeowner who makes timely payments receives principal reduction of up to $1,250: $250 per year for 5 years.
  • No new 2MP modifications after December 31, 2012

How To Spot a Loan Scam

Predatory lenders are usually friendly and always seem as if they are trying to help you. Here are some ways to help you identify loan fraud from a lender, banker, or contractor. Be cautious if:

  1. anyone contacts you first – most good lenders don’t show up at your door.
  2. you’re having trouble paying your mortgage, a lender might even ask you to sign over your deed “temporarily” to prevent foreclosure.
  3. you are encouraged to give false information on your loan application.
  4. they want you to sign forms that have blank pages or missing amounts on the form.
  5. you are pressured to sign paperwork before you’ve had a chance to review it.
  6. you are pressured into taking on a loan that is larger than you need.
  7. you are offered a loan with a stiff prepayment penalty.
  8. you are offered a loan with a risky adjustable rate mortgage.
  9. they want you to accept a loan with a large balloon payment at the end of the loan term.
  10. a lender will not give straight and clear answers to your questions.


To find out more about predatory lenders and how to avoid loan modification scams, please call 1-877-SAVE-183 (1-877-728-3183) or use our online intake form for free advice and consultations.

Foreclosure Help and Mortgage Assistance

Please take advantage of the foreclosure prevention resource we’ve provided below.

10 Tips to Prevent Foreclosure

  1. Take charge, don’t ignore the problem. The longer you wait or ignore the problem, the harder it will be to re-establish your loan. Make the time to seek help from your lender and advice from “Know the Facts” Housing Counselors.
  2. Talk to your lender. If you are at risk of falling behind on your payments, staying in touch with your lender will help you understand your options.
  3. Take the time to understand your mortgage agreement. Some of the terms can be intimidating and confusing, but know that our on-line Glossary is a great place to start. Our counselors will also be able to explain the terms of your agreement and give you peace of mind.
  4. Stay informed. At, we’ve listed NY State foreclosure laws and foreclosure time frames in our Learning Center section.
  5. Research foreclosure prevention options. “Know the Facts” counselors are on call to explain these options when you need them. Call 1-877-SAVE-183 (1-877-728-3183).
  6. Budget. Do your best to modify your spending with healthcare first and housing second. Create a monthly budget and cut down on extras, such as going to the movies, vacations, gym memberships, eating out, and cable TV. The money you’ll save can go towards your home.
  7. Know what you have. If you have any personal property such as jewelry, second cars, or life insurance policies (assets), you may be able to sell those assets to re-establish your loan.
  8. Consider creating additional income. If anyone in your household is able to get a second or extra job, this may demonstrate to your lender that you are working hard to reinstate your loan.
  9. Avoid “foreclosure prevention” companies or sales people. Assistance in foreclosure prevention should be free and HUD-certified, such as that provided by the partners of “Know the Facts”. Anyone charging a significant fee may have questionable intentions.
  10. Protect yourself from scammers. Do not sign over your deed to a third-party. Avoid predatory lenders who will take advantage of your situation. Ask our counselors to help you understand the terms of your contract.


To find out more about foreclosure prevention, please call 1-877-SAVE-183 (1-877-728-3183) or use our online intake form for free advice and consultations.

Foreclosure Prevention Counseling Checklist

You must bring the following items to your first counseling session.

  • Loan Papers: In order for the Foreclosure Prevention Counselor to create an action plan to assist you, the counselor must have access to all your loan documentation.
  • Pay Stubs/ Bank Statements: The last two months of pay stubs are needed in order to create a budget based on the your income. Two months bank statements are also needed for verification of income and review of monthly expenses.
  • Rental Income Documentation: If you have a multi-family home, with paying tenants we will need documentation of your rental income such as, rental leases or copies of rent receipts given to tenants each month. We recommend that all rental income be deposited in your bank account immediately upon receipt with the deposit highlighted on your bank statements.
  • Monthly Mortgage Statements: The last three months of statements you received from your lender.
  • Supporting Documents: Any paperwork you received from your lender.
  • Hardship Letter: In order to write a comprehensive hardship letter, the homeowner must submit reasons and explanations to why they have not been able to pay their mortgage, actions the homeowner has taken to reduce expenses and increase income, and reasons why the homeowner believes this proposal will be successful.

Bringing documents listed above to your first counseling session will allow the counselor to express the variety of options available to the homeowner. Not having this documentation during the initial counseling session will delay the process of reaching a solution.

Foreclosure Glossary


An option given to lenders through an “acceleration” clause in the mortgage or deed of trust requiring the borrower to pay the entire balance of the loan all at once if their loan is in default.


A sworn statement in writing usually given while under oath or in the presence of a notary.


The process in which a licensed or authorized person gives an estimate of property value.


The difference between the increased value of the property and the original value.


The transfer of property to be held in trust or to be used for the benefit of the creditors (lenders.)


The amount offered for a property for sale at auction.

Certificate of Sale

A document given to the winning bidder at a foreclosure sale stating their rights to the property once the borrowers redemption period has expired.

Clear Title

A title that is not burdened with defects.

Credit Bid

A bid on behalf of the lender at a foreclosure sale. The bid amount must be less than or equal to the balance of the loan in default.


A judicial decision.


A signed document that transfers ownership of property from one party to another.

Deed-in-lieu of Foreclosure

An instance where borrowers voluntarily convey their rights in a property to the lender.

Deed of Trust

A three party security instrument conveying the legal title to real property as security for the repayment of a loan. The three parties included in a deed of trust are the borrower, lender and trustee.


A mortgage or deed of trust is said to be in default when the borrower fails to make the payments as agreed to in the original promissory note.

Deficiency Judgment

A personal judgment against the borrower for the remaining balance on the loan after a foreclosure sale.

Equitable Title

The present right to possession with the right to acquire legal title once a preceding condition has been met.

Fair Market Value

The price a property would sell for on the open market.


The forced sale of property pledged as security for a debt that is in default.

Free & Clear

Ownership of property free of all indebtedness.

Judicial Foreclosure

A foreclosure that is processed by a court action.


A charge upon real or personal property for the satisfaction of a debt.

Legal Description

A formal description of real property sufficient to locate it by reference to government surveys or approved recorded maps.


A person who lends money for temporary use on condition of repayment with interest (i.e., the bank, mortgage company, etc.)

Lis Pendens

A recorded notice of pending lawsuit.


A written pledge of property that is used as security for the repayment of a loan.

Non-judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of their default.


A public officer licensed by the state to attest to and certify the validity of signatures of others. A notary is often referred to as a notary public.

Notice of Sale

A notice giving specific information about the loan in default and the proceedings about to take place. This notice must be recorded with the county where property is located and advertised as stated in the security document or as dictated by state law.

Personal Property

Property other than real property consisting of things temporary or movable.


To publish, announce or advertise by physically attaching a notice to an object.


Postponement means to put off to a later time. In the case of a foreclosure sale, this is generally done by announcement at the original sale or by posting notices establishing the new date and time the foreclosure sale will take place.

Right of Redemption

A borrower’s right to reacquire property lost due to a foreclosure.

Request for Notice

A recorded document requiring a trustee send a copy of a Notice of Default or Notice of Sale concerning a specific deed of trust in foreclosure to the person who filed the document.

Subject To

The purchase of a property with an existing lien against the title without assuming any personal liability for the liens payment.


The instrument that is evidence of a person’s right in real property (i.e., a deed.)


A neutral party who advertises the foreclosure property for sale and conducts the auction to sell said property to the highest bidder.

Trustee Sale

An auction of real property conducted by a trustee. Also known as a Sheriff’s Sale.

Upset Bid

A recorded bid placed after a foreclosure sale has ended that is higher than the highest bid received at the actual foreclosure sale.


An order or mandatory process in writing issued in the name of a court or judicial officer commanding the person to whom it is directed to perform or refrain from performing a specified act.

Information provided by: Foreclosure Summary copyright, ©

New York Foreclosure Law Summary

Quick Facts

  • Judicial Foreclosure Available: Yes
  • Non-Judicial Foreclosure Available: Yes
  • Primary Security Instruments: Deed of Trust, Mortgage
  • Timeline: Typically 120 days
  • Right of Redemption: No
  • Deficiency Judgments Allowed: Yes

In New York , lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.

Judicial Foreclosure

The judicial foreclosure process is one in which the lender must file a complaint against the borrower and obtain a decree of sale from a court having jurisdiction in the county where the property is located before foreclosure proceedings can begin. Generally, if the court finds the borrower in default, they will give them a set period of time to pay the delinquent amount, plus costs. If the borrower does not pay within the set period of time, the court will then order the property to be sold by the sheriff of the county or a referee.

Typically the foreclosure sale is advertised for 4 to 6 weeks. The sale is made by public auction to the highest bidder. Anyone may bid, including the lender.

After the property has been sold, the officer conducting the sale must execute a deed to the purchaser. The officer must also pay, out of the proceeds, the amount of the debt, including interest and costs, to the lender and then obtain a receipt for the payment from the lender.

Within thirty days after completing the sale and executing the deed to the purchaser, the officer must file a report of sale, which must include the receipt from the lender, with the clerk of the court. Unless otherwise ordered by the court, the sale can’t be confirmed until three months past the filing of the report of sale.

Non-Judicial Foreclosure

The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A “power of sale” clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of they default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee.

Although this type of foreclosure is permitted in New York, it is rarely used by lenders.

Understanding The Making Home Affordable Loan Modification Program

The Making Home Affordable Program is part of the Obama Administration’s broad, comprehensive strategy to get the economy and the housing market back on track. Part of that strategy is Loan Modification. Simply put, Loan Modification restructures the mortgage so that payments are more affordable for the homeowner and helps save the home from foreclosure. Loan modifications help homeowners who are struggling to keep their loans current or who are already behind on their mortgage payments. Contact a Housing Counselor at 1-877-SAVE-183 (1-877-728-3183) to find out if you’re eligible for a loan modification under the program.

Generally speaking you may be eligible if you:

  • Are the owner-occupant of a one- to four unit home
  • Have a first lien mortgage that was originated on or before January 1, 2009
  • Have a monthly mortgage payment (including taxes, insurance, and home owners association dues) greater than 31% of your monthly gross (pre-tax) income,
  • Have a mortgage payment that is not affordable due to a financial hardship that can be documented.

If you are eligible, a “Know the Facts” Housing Counselor will work with you and your servicer to bring your payments down to 31% of your gross income. Your mortgage may be restructured using one of the following methods:

  • Lower the interest rate.
  • Extend the term. If an interest rate reduction does not result in a payment that is affordable your loan may be modified with an extended payment term of up to 40 years.
  • Forbearance (defer) principal. If your payment is still not low enough, your servicer may defer a portion of the principal amount you owe until the maturity of the loan. This is called a principal forbearance. With a forbearance you will still owe the principal; but repayment is deferred until a later date.

We can help.

10 Simple Steps for a Successful Loan Modification

If you are behind on your mortgage or having trouble making payments, “Know the Facts” Housing Counselors can help you find a solution to save your home through the Making Home Affordable Loan Modification program and other resources.

While this is an important process, follow these 10 tips to help ensure a smooth and successful outcome:

  1. Explain your hardship. Why are you behind? Was it a result of unemployment, or excess medical bills, or family emergencies that are making it difficult to make your mortgage payments? You’ll need to be able to explain your circumstances to your counselor and your mortgage company. Start by writing a hardship letter to illustrate to your lender exactly why you fell (or why you are falling) behind.
  2. Document your income. Now is the time to gather your paystubs, bank deposits etc. – whatever documentation you can provide that will show your total income. If you’re self-employed, you’ll need to provide a profit and loss statement for the last 3 months or more.
  3. Outline your expenses. In order to determine your mortgage payment’s affordability, the lender will evaluate your income vs. your expenses. As accurately as possible, write a list of your monthly payments for groceries, utilities, child care, medical expenses, loans and credit cards, car payments, insurance, student loans, etc. Note: Current affordability guidelines require that your mortgage payment be no more than 31% of your total gross monthly income.
  4. Gather your Federal Tax Returns. You’ll need to provide federal tax returns for the past two years as part of your financial picture.
  5. Provide proof of insurance. You’ll want to have proof of insurance on hand to provide to the lender/counselor, as well.
  6. Be prepared to interview with a counselor. As part of the process, you may need to meet with a counselor. At that meeting, on the phone or in person, the Counselor will explain how the program works, determine the best options for your situation and explain what happens next.
  7. Stay connected. Follow up with all appointments, meetings, phone calls etc. and stay in contact with your counselor. Provide current contact information so that you can be reached quickly during the process.
  8. Deliver documents as requested. Be sure to provide all documentation and information the lender and counselor requests as quickly as possible. Failure to follow up with any requests for information may delay the processing of your loan modification.
  9. Keep careful records. Be diligent and document your conversations, the names of the people and organizations you spoke with, their phone numbers, when you spoke with them and what was discussed. Keep copies of all communications – letters, faxes, emails etc. – exchanged throughout the process.
  10. Protect Yourself. Check out “Know the Facts” website link “How to Spot a Scam” to learn simple guidelines to avoid Foreclosure and Loan Modification Scams.

Refinancing vs. Loan Modification

Homeowners who are struggling to make mortgage payments in these tough times are looking for the best solution and often face the choice of refinancing or loan modification. The two options sound very similar but the difference can mean thousands of dollars to struggling homeowners looking for a fresh start.


Refinancing is rewriting the original terms of the mortgage and it’s an option for homeowners with a good credit score, cash on hand, and a home that has retained its value. When you do the math, however, you may find that the total new payment amount is higher than your original mortgage, which may not be the best option for the struggling homeowner. Here’s why:

Credit Score: You might consider refinancing to a lower interest rate mortgage but that will depend on your credit score. If you’ve missed even one mortgage payment, your credit score may have dropped enough to disqualify you from getting the best rates.

Closing Costs: Usually, you’ll pay around 5% of the total mortgage price at closing. So, on a $200,000 mortgage you’d need to come up with $10,000 to close the deal. If you don’t have $10,000 cash on hand, you can add it to the new mortgage, but that would increase your monthly payments.

Property Value: Refinancing depends on your home’s market value. Let’s say your home was worth $200,000 when you bought it. It is now worth only $175,000, but you still owe $200,000. You owe more than the property is worth, so refinancing won’t be an option.

Loan Modification

Loan modification also rewriting the terms of a mortgage, but loan modifications are specifically designed to help the struggling homeowner. Here are the key points to remember:

Restart Your Mortgage: Loan Modification is a remedy used to bring homeowners current on their mortgage. Mortgage servicers will restructure the terms of the mortgage – lowering the interest rate, extending the terms from 30 to 40 years, or deferring payments altogether – to make it affordable for the homeowner who may have fallen behind on payments.

Financial Hardship: The key factor to be considered for a loan modification is a documentable hardship, like unemployment that reduced the household income, increased expenses, or costly medical bills paid out of pocket.

If you’re struggling to make your mortgage payments and you want to save your home from foreclosure then a loan modification is your best chance for a fresh start.

Q: What is Loan Modification?

A: For struggling homeowners who are behind on their mortgage, or are having trouble making mortgage payments, there is a program that can prevent foreclosure and make a fresh start: Loan Modification. A Loan Modification is a permanent change in one or more of the terms of a mortgagor’s loan, which allows the loan to be reinstated, and results in a payment the mortgagor can afford. Simply put, if you’re a homeowner who has experienced a financial hardship Loan Modification is a way of resetting the clock on your mortgage to you catch up.

Q: What is a financial hardship and how do we document it?

A: You must be able to identify and document the hardship that caused you to fall behind on the mortgage. For example, unemployment, unexpected medical bills, or family emergencies are hardships that jeopardize your mortgage payments. If you can document these hardships with paystubs, bills, unemployment benefits paperwork, etc. you may be eligible for a loan modification.

Q: What happens when my loan modification is approved?

A: When your mortgage company approves your application, you will receive a written modification agreement outlining the new mortgage rate, payment amount, terms, etc. At this point, all you need to do is close the deal. You’ll sign the documents (usually with a notary) and return the forms (and sometimes the first payment under the new terms) to the lender.

Q: I’m interested. How do I get started?

A: Call the “Know the Facts, Keep Your Home” hotline at 1-877-SAVE-183 (877-728-3183). You’ll be assigned a counselor who will help you assess your situation, your options and your next steps – free of charge. The process of applying for a loan modification can seem just as involved as when you first purchased your home. But if you’re struggling to make payments and you want to save your home from foreclosure then a loan modification is your best chance for a fresh start.

Q: What else will my housing counselor help with?

A: Your housing counselor may recommend a loan modification through a reduction in your mortgage interest rate on your mortgage, or an extension of the terms – whatever means are available to make your mortgage affordable. They will also help you package your documents, and submit them to your mortgage servicer for consideration.

Q: I was laid off three months ago and money was tight for a while. I just got a new job so there will be income coming in again, but we are now two payments behind on our mortgage and I’m afraid we might lose our home. Can a loan modification help us?

A: Yes, a loan modification is probably the best solution to give you a fresh start on your mortgage. If you’re behind on your mortgage because of unemployment, or expensive medical bills, or other hardships that have put a strain on your family finances, a loan modification is designed to help homeowners avoid foreclosure.

Q: My new job pays less than my old job, so our household income is reduced. Could we still qualify for a loan modification?

A: Yes, loan modifications are designed to restructure your loan to make it affordable to your current household income. In fact, current mortgage guidelines require that your monthly mortgage payment (including taxes, insurance and home owner’s association dues) be less than 31% of your monthly gross (pre-tax) income. In your case, not only would you be looking at possibly deferring payments with a loan modification, but you may be making lower mortgage payments as well.

Q: A loan modification would reduce my payments? How?

A: The mortgage company may lower the interest rate which would lower the payment. Another option would be to stretch your mortgage payments out over 40 years instead of 30, lowering the monthly payment and giving you more time to pay. Your mortgage company may also decide to defer the part of the mortgage until a later date, also known as forbearance. Our counselors will explain your options when you meet.

Q: How does the process work?

A: Our housing counselors can work with you to determine your eligibility. First, you’ll need to provide information and documents pertaining to your mortgage and your household income. Then we’ll work together to complete the loan modification application and submit it to your mortgage lender for approval.

Q: That sounds expensive. How much does this service cost?

A: There is no fee for these services. The Know the Facts campaign provides this counseling as a service to the community.

Q: How do we get started?

A: Call the Know the Facts hotline at 1-877-SAVE-183 (877-728-3183) and learn about opportunities to make your monthly payments more affordable and save your home.