HUD and FHA Foreclosure Assistance

The FHA's new foreclosure assistance program is known as FHASecure. It can help some homeowners save their homes, but you also have to be ready to help yourself.

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HUD's Foreclosure Advice
If you're in danger of being foreclosed, first visit HUD's tips for avoiding foreclosure. The sooner you act, the more likely you are to save your home. If you don't qualify for the FHASecure program, HUD also approves housing counselors who can help you find other options. Visit the above link to locate a housing counselor in your state.

FHA Foreclosure Prevention Options
FHA offers a similar list of steps for avoiding foreclosure. In addition to these steps, you can contact the FHA at (800) CALL-FHA if you have an FHA loan already and are at risk of being foreclosed. Lenders are required to meet FHA's loan servicing standards when they provide FHA loans. If they're not, please report them to the FHA's National Servicing Center at (888) 297-8685.

Help for Servicemembers
If you're a service member on active duty, you may also be eligible for a reduced interest rate under special FHA rules. You can apply to temporarily reduce your interest rate below 6% if you acquired the mortgage before enlisting, or before being called to active duty. Your lender is prohibited from foreclosing on your home while you're on active duty or within 90 days of ending your service.

FHASecure Program
The FHASecure program was introduced in late 2007. It's designed for homeowners who are at risk of foreclosure due to rising interest rates. The program operates through local lenders who refinance existing loans into new FHA-insured loans.

The FHA doesn't provide direct assistance to most homeowners. Instead, they refer you to local lenders and counseling agencies who can offer specific advice for your specific situation. However, if you're at risk of losing your home due to fraudulent lending, the FHA wants to know.

Advice for Protecting Your Credit
The most important thing you can do to avoid losing your home and protect your credit is to act quickly. Both HUD and the FHA advise contacting your lender as soon as you become aware of the problem. Don't wait for a notice of default. Acting sooner gives you more time to find an equitable solution for everyone, whether that solution is entering into a loan modification program or selling your home.

If you can't avoid foreclosure, your credit will be damaged, however working with your lender to mitigate some of the damage is better than simply mailing back your keys. Fannie Mae, which works with the FHA, announced that it will disqualify borrowers who walked away from their homes from receiving new Fannie Mae-backed loans for five years. They will also require a minimum credit score of 680. Finally, the IRS may also opt to tax homeowners who walk away on the full unpaid balance.

Whether or not you have an FHA loan, FHA and HUD resources are available to help you. Visit their websites to find local help or check your FHASecure eligibility right here.