Foreclosure

Q: From start to finish, how long does the process of foreclosure usually take in Florida?
A: This process varies from lender to lender. However, from the date of your first missed payment to the date of the foreclosure auction, it is possible that as much as six months could elapse. It depends on many variables but the two biggest factors are your local enforcement and your mortgage holder's desire for moving quickly.

Q: Can I be evicted from my home during the foreclosure process?
A: It would be very unusual. Only when a foreclosure sale has happened and there is a new owner do you normally no longer have the right to occupy the house.

Q: Would my lender try to work with me regarding my late payments?
A: Your lender is generally not highly motivated to be flexible in working with you if you are already in the foreclosure process. The larger lenders have millions of loans on the books. Most people find that trying to work out arrangements with lenders themselves often only results in frustration. Endless attempts to contact their lender by phone and endless paperwork only seem to get them nowhere.

Q: If the foreclosure process has begun, can it be stopped?
A: Yes. If you start exploring your options when you are only late with your first payment, there are quite a few different options. However, as the time between your initial late payment and the time you get started addressing your problems drags on; your options begin to get more and more limited. The time to act is now - not later.

Q: What is the latest that I can wait until I have no options left?
A: You always have some options. Realistically, even after a foreclosure and eviction, you could still buy your house back. Realistically, if you haven't been able to make a deal to save your house before eviction, the chances are very good that you will be unlikely to structure a deal to buy the house back. This is largely based on the assumption that you hired a capable attorney and had the ability to strike a deal. If so, you would have done so long before a sheriff removed you from the house.

Q: What exactly is the foreclosure process?
A: The foreclosure process is as follows:

1. You miss one or more payments on your mortgage.
2. The lender will usually send you a late notice and try to contact you by mail or phone to try and resolve the problem.
3. If no arrangements can be agreed upon and the homeowner continues to miss payments, then the lender will make a written demand for payment of the full amount owed on the property. This demand is based on the acceleration clause usually found in a mortgage agreement.
4. The lender then sends a notice of intent to foreclose.
5. After sending notice, the lender files a legal action with the court.
6. The legal notice is then published in the local newspaper.
7. Court issues order allowing lender to foreclose.
8. Legal notice of the sale is also published in the paper.
9. Finally, the property is sold at auction to the highest bidder.

Q: What is really my best available option?
A: There is no one answer to that question. It depends on many different variables and all of them must be carefully considered when formulating a plan of action.

Q: If I cannot stop the foreclosure sale process and my house does go to a foreclosure sale, what will happen at that sale?
A: The auction sale usually includes these events:>

• All the legal notices and the property description are read aloud by the Auctioneer.
• Bidders are then required to offer their deposits before bidding begins.
• The auction is then held until a final bid has been received.
• All non-winner's deposits are then returned.
• A deed of purchase and any other appropriate paperwork are then completed by the purchaser and the mortgage holder.
• The purchaser then is extended a short period of time (until 4pm the same day) to satisfy to purchase.
• At the closing arranged by the new owner formal title to the property then passes to the new owner.

Q: How are the proceeds from a foreclosure sale distributed?
A: Funds are usually distributed in this order:

1. Almost always, any outstanding real estate taxes are paid first.
2. Next, proceeds will be used to pay off mortgages in their order of precedence (first mortgage, second mortgage, etc.).
3. Then, any other lien holders and other secured creditors who have valid claims against the property are paid.
4. Last, if there's any money left from the above, it is paid to the former owner.

Q: What happens if there's not enough of a bid to pay off the mortgage?
A: If there's not enough proceeds from the sale to cover the debts owed on the property (mortgage(s), liens and others), the remaining debt is considered to be an unsecured debt. Therefore, you are still responsible for the debt.

Estate Planning

Q: Why do I need a will?
A: Remember, if you have no will, the State of Florida has one for you, and you may not be happy with what it says. Everyone should have a will.

Q: Can I do my own will?
A: That certainly is a possibility if you know what you are doing. Will it be valid or carry out your wishes as you intend? I do not know. Is it recommended? Absolutely not(not even with all of the computer software out there). The validity as well the effectiveness regarding your wishes are only very few of the unknowns regarding a self-made will. While commercially available drafting software exists, it is unlikely that a software program will interact with you regarding all the implications upon which a specific, informed and complete estate plan will be made.

Q: If I have a will, is my estate planning complete?
A: A will is only part of a complete estate plan. A will cannot give your family the power to make decisions with respect to your health and property while you cannot speak for yourself. These documents are called Durable Powers of Attorney and are a very important part of your overall estate plan. While wills are important, they do not control many types of assets. For example, a will has no legal affect regarding retirement accounts or other assets that have transfer clauses. In fact, a well drafted will should coordinate with all other transfer methods effective at death.

Q: What is a power of attorney?
A: A power of attorney is a document that authorizes another person, called your agent, to act on your behalf. A power of attorney allows the agent to act, even if you become incompetent. Your agent should be someone you trust completely to handle your finances honestly and according to your wishes.

Q: What can your agent do?
A: According to your provisions, your agent may be able to sign legal documents in your place, buy and sell real estate for you, pay your bills, and take other financial actions on your behalf.

Q: What about health care decisions?
A: A separate power of attorney for healthcare can be written giving your agent the authority to make health care decisions for you, if and when you are unable to make them.

Q: Is a power of attorney for health care different from a living will?
A: A living will tells physicians your wishes regarding life-sustaining procedures if you have a terminal illness, an end-stage disease or if you are in a persistent vegetative state. You may direct that life-sustaining procedures be withheld or withdrawn, or you may direct that they be used to sustain your life. A designated health care agent makes most decisions related to your health care. If you specifically grant the power, your agent can decide to withhold or withdraw life support, admit you to a nursing home and make other health care decisions.

Q: What if I become incapacitated and have not executed powers of attorney?
A: If you have not appointed an agent or signed a power of attorney and you are no longer able to manage your property or care for yourself, any family member, agency, health care provider or interested person may petition the court to appoint a guardian to act on your behalf. The guardian will be responsible for managing your financial assets and also may be responsible for decisions related to your care.

Q: What is probate?
A: Probate is a legal process that takes place after a person dies. An attorney or representative of the estate will document that the person's will is valid, help determine and value the person's property, pay debts and taxes and distribute the remaining property. This process can take a few months to more than a year depending on the complexity of the estate.

Q: Must all of a deceased person's property go through probate?
A: A certain amount of property can pass free of probate, or through a simplified probate procedure. Property in a trust or that passes outside of your will is not subject to probate.

Q: What is estate planning?
A: Estate planning helps ensure that your assets will pass to the beneficiaries you designate, limit estate taxes and, when possible, avoid probate.

Q: What is in an estate plan?
A: A proper estate plan may include a will or trust, a directive to your physician or a durable power of attorney, as well as any final instructions.

Loan Modification

Q: What is Making Home Affordable Modification Plan (commonly known as “HAMP” and “Obama’s Plan”?
A: The Obama Administration’s Making Home Affordable Program includes opportunities to modify or refinance your mortgage to make your monthly payments more affordable. It also includes the Home Affordable Foreclosure Alternatives Program for homeowners who are interested in a short sale or deed-in-lieu of foreclosure.

Many homeowners are struggling to make their monthly mortgage payments perhaps because their interest rate has increased or they have less income. A Home Affordable Modification will provide them with mortgage payments they can afford.
If you can no longer afford to make your monthly loan payments, you may qualify for a loan modification to make your monthly mortgage payment more affordable. Millions of borrowers who are current, but having difficulty making their payments and borrowers who have already missed one or more payments may be eligible.

Q: Can I get a mortgage modification through the Home Affordable Modification Program (HAMP) if my loan is not owned or guaranteed by Fannie Mae or Freddie Mac?
A: Yes. HAMP helps homeowners who are struggling to keep their loans current or who are already behind on their mortgage payments. By providing mortgage loan servicers with financial incentives to modify existing first lien mortgages, the Treasury hopes to help homeowners avoid foreclosure regardless of who owns or guarantees the mortgage.

Q: How do I know if I am eligible for a modification under the Home Affordable Modification Program (HAMP)?
A: To apply for a modification under HAMP, you must:

• Be the owner-occupant of a one- to four-unit home.
• Have an unpaid principal balance that is equal to or less than:
  • 1 Unit: $729,750
  • 2 Units: $934,200
  • 3 Units: $1,129,250
  • 4 Units: $1,403,400
• 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 answered YES to all of these questions, you may be eligible for a modification under HAMP. Only your servicer will be able to tell you if you qualify.

Click here to see if you're available: http://www.makinghomeaffordable.gov/modification_eligibility.html

Q: What if I am facing foreclosure?
A: Participating servicers may not refer a loan for foreclosure sale or proceed with a foreclosure sale on an eligible loan until the homeowner has been evaluated for HAMP and, if eligible, a trial modification offer has been made. Participating servicers must use reasonable efforts to contact homeowners facing foreclosure to determine their eligibility, including in-person contacts at the servicer’s discretion. Foreclosure sales may not be conducted while the loan is being considered for a modification or during the trial period. Additionally, once a homeowner has entered into a trial period plan by submitting the first trial period payment, the servicer may not take the first legal action to initiate a new foreclosure.

Q: I am unemployed. Can I still get a mortgage modification?
A: If you are unemployed, ask your servicer immediately for consideration through the Home Affordable Unemployment Program (UP) for eligibility criteria and for more information.

• If you are currently in a HAMP trial period and just lost your job, you may request to be considered for UP as long as you entered the trial period plan before missing three full consecutive mortgage payments.
• If you are unemployed and were previously determined ineligible for a HAMP modification, you may be eligible for UP.

If you are currently in a permanent HAMP modification and just lost your job, you will not be eligible for UP. You may still be eligible for other foreclosure alternatives, including the Home Affordable Foreclosure Alternatives (HAFA). While you are being evaluated for UP, servicers who have signed a HAMP Servicer Participation Agreement (SPA) are not permitted to refer you to foreclosure or conduct a foreclosure sale.

Q:  Do I need to be behind on my mortgage payments to be eligible for a modification under HAMP?
A: No. Responsible homeowners who are struggling to remain current on their mortgage payments are eligible if they reasonably believe they are very likely to default on their mortgage soon (often referred to by loan servicers as "imminent default"). This might be because a homeowner has had (or will have) a significant increase in the mortgage payment (due to a payment adjustment or rate adjustment upwards); unemployment or some other significant reduction in income; or some other financial hardship that will make the mortgage unaffordable. If you are facing a similar situation, contact your servicer. You will be required to document your income and expenses and provide evidence of the hardship or change in your circumstances

Q: I have a junior lien mortgage. Am I still eligible for HAMP?
A: Yes, the first lien mortgage is eligible for a modification under HAMP. (See below under “Second Lien Modification Program (2MP)” for help with your 2nd lien.)

Q: How do I know if my servicer is participating in HAMP? Are all servicers required to participate?
A: Participation in HAMP is mandatory for servicers of loans owned or guaranteed by Fannie Mae or Freddie Mac (Government Sponsored Enterprises or GSEs). Participation in HAMP is voluntary for servicers of non-GSE loans. However, substantial incentives are available to servicers and investors who complete modifications under HAMP, and most major servicers already have committed to the Program. A current list of participating servicers is available at www.MakingHomeAffordable.gov/contact_servicer.html.
Servicers of non-GSE loans sign a contract with Fannie Mae, as Treasury's financial agent, through which they agree to review every potentially eligible homeowner who asks to be considered for the Making Home Affordable Program. To ensure that a homeowner currently at risk of foreclosure has the opportunity to apply for a modification under HAMP, participating servicers may not proceed with a foreclosure sale until the homeowner has been evaluated for a HAMP modification and, if eligible, a trial modification offer has been made.

Q: Why does my loan servicer have to ask the lender or investor if they can do a loan modification through HAMP?
A: If the organization that services your loan does not own it, your servicer may need to get permission from the owner or investor before they can change any of the terms of your loan. Generally, there is a contract between the servicer and the investor that states what kind of actions the servicer is allowed to take. Most of these contracts, usually called servicing agreements or pooling and servicing agreements (PSAs), give the servicer flexibility to make modification decisions as long as the modification provides a better financial outcome for the lender or investor than not modifying the loan.

Q: Is the interest rate subject to change during the term of the HAMP modification?
A: If the modified rate is below the market rate as determined from the Freddie Mac Primary Mortgage Market Survey rate on the date the modification agreement is prepared, the modified rate will be fixed for a minimum of five years as specified in your modification agreement. Beginning in year six, the rate may increase no more than one percentage point per year until it reaches the market rate at the time the modification agreement is prepared. Your rate can never be higher than the market rate as indicated in your modification agreement. If the modified rate is at or above the market rate at the time the modification agreement is prepared, the modified rate is fixed for the life of the loan.

Q: Will a modification under HAMP include property taxes and homeowners insurance?
A: Yes. All loans modified under HAMP must include an escrow account for payment of future property taxes and hazard insurance, unless prohibited by state law. If your existing loan does not include an escrow account, one will be established. A new escrow account may require collection of a sufficient reserve to pay the taxes and insurance on or before they are next due. The reserve amount cannot be added to the modified loan amount. The servicer may give you the option of paying the reserve amount at the time the loan is modified or the option of spreading the amount over a period of 60 months and including it in the monthly escrow payment.

Q:  If I don’t currently have an escrow account on my mortgage, am I still eligible for a modification under HAMP?
A: Yes, you are still eligible to apply for a modification under HAMP. Should you qualify for a modification and make all trial payments on time, your modification agreement with your servicer will require the servicer to set aside a portion of your new monthly payment in an escrow account for payment of your property taxes and insurance premiums.

Q: If my mortgage qualifies for a modification under HAMP, will my escrow account payment change?
A: It might. Your escrow payment will adjust if your taxes and insurance premiums change, so the amount of your monthly payment that the servicer must place in escrow will also adjust as permitted by law.

Q:  What will the servicer do through HAMP to get my new modified payment down to 31% of my gross income?

• Lower the interest rate. Treasury is providing incentives to your servicer to write the interest down to as low as 2%, if necessary to get to a payment that you can afford. Each homeowner's interest rate will only be reduced to a point sufficient to get the modified payment to equal 31% of the homeowner's gross monthly income. Not all homeowners will need a rate reduction to 2% in order to achieve a monthly mortgage payment that is affordable.
• Extend the term. If a 2% interest rate does not result in a payment that is affordable (no more than 31% of your gross monthly income), your servicer will extend your payment term. At the servicer's option, the term of the loan could be extended up to 40 years.
• Forbear (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.

A portion of the principal could be also be forgiven. This is optional on the part of the servicer. There is no requirement for principal reduction or forgiveness, and there is no guarantee that your servicer will offer principal reduction or forgiveness.

Q: I owe more than my house is worth. Will a modification under HAMP reduce what I owe?
A: The primary objective of the HAMP is to help homeowners avoid foreclosure by modifying troubled loans to achieve a payment the homeowner can afford. Servicers may, but are not required to, offer principal reductions. It is more likely that your servicer will use interest rate reductions and term extensions in order to make your payment more affordable.

Q: What is a HAMP trial period?
A: The trial period is typically a three month period to see if the new payment plan will work for you, while providing you immediate relief and preventing any possible foreclosure sales from occurring. You should remember that during the trial, the terms and conditions of your original loan remain unchanged and only after you make all of your trial payments on time and send in all required documentation can your loan be officially modified.

Q: Could my payment change in or after the HAMP trial period?
A: Your payment will be based on 31% of your verified income. Your monthly payment could increase if property taxes, homeowner’s insurance, or homeowner’s association fees increase after the trial period.

Q: How will the HAMP modification affect my credit?
A: Accepting a loan modification can affect your credit score, but the actual effect will depend on a variety of factors. For more information about your credit score and how to improve it, visit www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm.
Each month, servicers must describe to the credit reporting agencies the exact status of each mortgage. If you are current with your mortgage payments prior to the trial period and you make each trial period payment on time, your servicer must report you as current and also identify the loan as “modified under federal government plan.”
If you are delinquent (at least 30 days past the due date) prior to the trial period and the reduced payments do not bring the account current, your servicer must report the level of delinquency and also identify the loan as “modified under federal government plan.”

Q: How will I know if my loan can be modified though HAMP?
A: Once your servicer confirms that you are eligible and you make all of your trial period payments on time, you will receive a modification agreement detailing the terms of the modified loan. Any difference between the amount of the trial period payments and your regular mortgage payment will be added to the balance of your loan along with any other past due amounts as permitted by your loan documents. While this will increase the total amount that you owe, it should not significantly change the amount of your modified mortgage payment as that is determined based on your total monthly gross income, not your loan balance.

Q: Could I end up with a balloon payment through HAMP?
A: Yes. If your servicer determines that a principal forbearance is required to get your monthly mortgage payment to an affordable level, the principal forbearance amount, say for example this was $20,000, would be subtracted from the amount used to calculate your monthly mortgage payment, but you would still owe the money. You would have a $20,000 balloon payment that accrues no interest and was not due until you pay off your loan, refinance or sell your house.

Q: What happens if I am unable to make payments during the HAMP trial period?
A: Homeowners who are unable to make the required payments by the end of the trial period are not eligible for a permanent modification under HAMP. However, you may be eligible for other foreclosure prevention options offered by your servicer.

Q: Is housing counseling required for a modification under HAMP?
A: Homeowners, especially delinquent homeowners, are strongly encouraged to contact a HUD-approved housing counselor to help them understand all of their options and to create a workable budget plan. These services are free. Housing counseling is required, however, for homeowners whose total monthly debts are equal to or greater than 55% of their gross monthly income.
When you apply for a modification under HAMP, your servicer will analyze all of your recurring monthly expenses, including car loans, credit cards, child support, and what you will pay toward your mortgage. If the sum of all of these recurring monthly expenses is equal to or more than 55% of your gross monthly income, you must agree to participate in housing counseling provided by a HUD-approved housing counselor as a condition of getting a modification under HAMP.

Q: I heard the government is providing a financial incentive to homeowners through HAMP. Is that true?
A: Yes. Homeowners who make timely payments on their modified loans will receive success incentives. For every month you make a payment on time, you will accrue an incentive that reduces the principal balance on your loan. If your loan ceases to be in good standing (three monthly payments are due and unpaid on the last day of the third month), no further success payments will be paid, including accrued but unpaid amounts. The incentive will be applied directly to your loan balance annually—$1,000 each year—and over five years the total principal reduction could add up to $5,000. This contribution by the Treasury is designed to help you build equity faster.

Q: I do not live in the house that secures the mortgage I'd like to modify. Is this mortgage eligible for a modification under HAMP?
A: No. If you own a house that you use as a vacation home or that you rent out to tenants, the mortgage on that house is not eligible to be modified under HAMP. If you used to live in the home but you moved out, the mortgage is not eligible. Only the first lien mortgage on your primary residence is eligible. The servicer will check to see if the dwelling is your primary residence. Misrepresenting your occupancy in order to qualify for this program is a violation of Federal law and may have serious legal consequences.

Q:  I have a mortgage on a duplex. I live in one unit and rent the other unit. Will I still be eligible for HAMP?
A: Yes. Mortgages on two, three and four-unit properties are eligible as long as you live in one unit as your primary residence.

Q: Can FHA or VA loans be modified under HAMP? Are all loans eligible?
A: Most conventional loans including prime, subprime and adjustable loans, loans owned by Fannie Mae, Freddie Mac and private investors, and most loans in mortgage backed securities are eligible for a modification under HAMP. In July 2009, FHA launched the FHA-Home Affordable Modification Program to provide assistance to borrowers to modify their mortgages to provide more affordable payments. FHA-insured first lien mortgage loans that are modified under FHA-HAMP are eligible for certain incentive payments under HAMP. The Administration is working with FHA and VA on a program that would provide for modifications consistent with the Making Home Affordable Program. Currently, loans insured or guaranteed by VA are being modified under other programs.

Q: What proof of income will I be required to provide with my HAMP application?
A: Be prepared to submit a copy of your two most recent pay stubs that show year-to-date earnings. If you are self-employed, you must provide your most recent quarterly or year-to-date profit/loss statement.

Q: I’m self-employed. How do I get a copy of my most recent quarterly or year-to-date Profit and Loss Statement?
A: Contact your CPA (Certified Public Accountant) or the licensed tax professional who assists you in completing your tax documentation.

Q: What types of documentation would be considered reliable enough to validate “Other Earned Income” for HAMP?
A: Other earned income (bonus, commission, fee, housing allowances, tips, overtime) must be documented by your employer in either your paystubs or other employment paperwork/contracts. Homeowners are encouraged to work with their employers to gather this information to describe the nature of the income and the continuity of the income.

Q: How do I get evidence of benefit income (e.g., social security, disability, death benefits, pension, public assistance, adoption assistance)?
A: You can provide a copy of benefit letters/statements, disability policy, or receipt of payments such as copies of two most recent bank statements showing electronic deposit of benefits. For additional information regarding social security, disability or death benefit income, contact Social Security directly toll-free at 1-800-772-1213 or visit their website at www.socialsecurity.gov. For all other benefits, you must contact the provider directly for additional information.

Q: How do I get evidence of unemployment benefits?
A: Evidence of unemployment income may currently be obtained through the Department of Labor UI benefit tool, which is available at www.ows.doleta.gov/unemploy/ben_entitle.asp.
After the Home Affordable Unemployment Program (UP) becomes effective on July 1, 2010, unemployment benefits and severance pay will no longer be acceptable sources of income for HAMP consideration.

Q: My rental income was not reported on last year’s tax returns because the property was vacant. What documentation do I need to validate rental income?
A: In such cases where a property has recently been rented, a signed Rental Agreement contract must be provided to show: the property address, date of contract, lessees name and address, rental amount and rental period. The contract must be signed by all parties (lessor, lessee, rental agents etc.)

Q: How do I get a copy of my Divorce Decree, Separation Agreement or other legal written agreements filed with a court (e.g., alimony or child support)?
A: Gather the information listed below and contact the Office of Vital Statistics in the state where your divorce occurred. The homepage of the state’s website will provide a link/information on how to contact the office of Vital Statistics. Generally, the documentation needed may include, but is not limited to, the following:

• Date of your divorce
• Full name of spouse
• Your driver’s license number
• Purpose for which record is needed
• Your name and address, together with a self-addressed, stamped envelope

Q: How long will modifications under HAMP be available?
A: HAMP expires on December 31, 2012. Your trial modification must be in place by that date.

Q: My loan is scheduled for foreclosure soon. What should I do?
A: Contact an attorney IMMEDIATELY.

Second Lien Modification Program (2MP)

Q: How do I get help with my second mortgage?
A: The Second Lien Modification Program (2MP) is designed to work in tandem with the Home Affordable Modification Program (HAMP). Together, HAMP and 2MP create a comprehensive solution to help homeowners achieve greater affordability by lowering payments on both the 1st and 2nd liens.

Q: What do I need to do to be considered for 2MP?
A: Under 2MP, when a homeowner’s 1st lien is modified under HAMP and the servicer of the 2nd lien is a 2MP participant, that servicer must offer to modify or provide some level of extinguishment on the borrower’s second lien. The 2MP offer will be made in reliance on the financial information provided by the homeowner in conjunction with the HAMP modification and without additional evaluation by the second lien servicer.

Home Affordable Foreclosure Alternatives Program (HAFA)

What other alternatives to foreclosure exist within the Making Home Affordable Program?
The Making Home Affordable Program will include additional foreclosure avoidance options through the Home Affordable Foreclosure Alternatives (HAFA) Program. The primary options available through HAFA include Short Sale and Deed-in-Lieu of Foreclosure.

Q: How does the HAFA Short Sale work?
In a Short Sale, the homeowner sells the property for less than the full amount due on the mortgage. When a homeowner qualifies for the HAFA Short Sale, the servicer approves the Short Sale terms prior to listing the home and then accepts the payoff in full satisfaction of the mortgage.

Q: How does the HAFA Deed-in-Lieu of Foreclosure work?
A: With the Deed-in-Lieu of Foreclosure, the homeowner voluntarily transfers ownership of the property to the servicer in full satisfaction of the total amount due. The servicer may require that the homeowner list and market the property before they agree to a deed-in-lieu arrangement. In order for the Deed-in-Lieu of Foreclosure to work, the homeowner must provide a marketable title, free and clear of other mortgages, liens, or other encumbrances.

Q: How can I be considered for HAFA?
A: Homeowners must be evaluated for HAFA within 30 calendar days of the following:

• The borrower does not qualify for HAMP.
• The borrower does not successfully complete a HAMP Trial Period.
• The borrower is delinquent on a HAMP modification.
• The borrower requests a short sale or Deed-in-Lieu of Foreclosure.

However, before evaluating a homeowner for HAFA, a participating servicer must first consider that homeowner for other loan modification or retention programs that they offer. In addition, pursuant to the servicer's policies, every eligible homeowner must be considered for HAFA by a participating servicer before the homeowner’s loan is referred to foreclosure and before the servicer may allow a pending foreclosure sale to continue.

Most of this information was taken directly from the Making Home Affordable website. 

Bankruptcy

Q: What is Chapter 7 Bankruptcy?
A: Chapter 7 bankruptcy, sometimes call a straight bankruptcy is a liquidation proceeding. The debtor turns over all non-exempt property to the bankruptcy trustee who then converts it to cash for distribution to the creditors. The debtor receives a discharge of all dischargeable debts usually within four months. In the vast majority of cases the debtor has no assets that he would lose so Chapter 7 will give that person a relatively quick "fresh start".
One of the main purposes of Bankruptcy Law is to give a person, who is hopelessly burdened with debt, a fresh start by wiping out his or her debts.

Q: What is Chapter 13 Bankruptcy?
A: Chapter 13 Bankruptcy is also known as a reorganization bankruptcy. Chapter13 bankruptcy is filed by individuals who want to pay off their debts over a period of three to five years. This type of bankruptcy appeals to individuals who have non-exempt property that they want to keep. It is also only an option for individuals who have predictable income and whose income is sufficient to pay their reasonable expenses with some amount left over to pay off their debts.

Q: Will my creditors stop harassing me?
A: Yes, they will! By law, all actions against a debtor must cease once the documents are filed. Creditors cannot initiate or continue any lawsuits, wage garnishees, or even telephone calls demanding payments. Secured creditors such as banks holding, for example, a lien on a car, will get the stay lifted if you cannot make payments.

Q: Will my spouse be affected?
A: Your wife or husband will not be affected by your bankruptcy if they are not responsible (did not sign an agreement or contract) for any of your debt. If they have a supplemental credit card they are probably responsible for that debt. However, in community property states, either spouse can contract for a debt without the other spouse's signature on anything, and still obligate the marital community. There are a few exceptions to that rule, such as the purchase or sale of real estate; those few exceptions do require both spouse's signatures on contracts. But the day to day debts, such as credit cards, do NOT require both spouses to have signed.
Community property states are: Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin.

Q: Who will know?
A: Bankruptcy filings are public records. However, under normal circumstances, no one will know you went bankrupt. The Credit Bureaus will record your bankruptcy and it will remain on your credit record for 10 years.

Q: What are the most common reasons for a Chapter 7 Bankruptcy?
A: The most common reasons for filing bankruptcy are:
1. Unemployment: Large medical expenses; Seriously overextended credit; Marital problems, and;
2. Other large unexpected expenses.
A Harvard Study reported that half of US bankruptcies were caused by medical Bills (MSNBC). The study was published online in February of 2005 by Health Affairs. The Harvard study concluded that illness and medical bills caused half (50.4 percent) of the 1,458,000 personal bankruptcies in 2001. The study estimates that medical bankruptcies affect about 2 million Americans annually — counting debtors and their dependents, including about 700,000 children.

Q: What don't I keep?
A: In a bankruptcy, assets in excess of your allowed personal exemption, or non exempt assets such as, real estate, automobiles and boats will be liquidated by the trustee.

I was bankrupt before. When can I file again?
A person can file Chapter 7 again if it has been more than 8 years since he or she filed the previous Chapter 7 bankruptcy. Also refer to: Chapter 13.

Q: Can I keep any credit cards?
A: Whether a debtor keeps credit cards after filing bankruptcy is up to the credit card company. If you are discharging a credit card they will cancel the card unless you reaffirm the debt. Even if you have a zero balance the credit card company might cancel the card.
When will I be discharged from Bankruptcy?
One of the major purposes of bankruptcy legislation is to afford the opportunity to a person hopelessly burdened with debt to erase his or her debt and thereby get a fresh financial start. A bankrupt's debt is erased when he or she is discharged.
The debtor is discharged 3 - 5 months after bankruptcy is filed. At that time all debts (with some exceptions) are written off.

Q: If I use a credit counselor won't I get a better credit rating than if I go bankrupt?
A: No, you will not. It will cost you less money and you will rebuild your credit rating faster if you file Chapter 7 or Chapter 13. Be cautious if you are considering using a credit counselor. Also read about the problems of unscrupulous companies in the credit counseling industry and the action the IRS has taken against "non-profit" credit counseling groups following widespread abuse.

Q: Will I ever get credit again?
A: Yes! A number of banks now offer "secured" credit cards where a debtor puts up a certain amount of money (as little as $200) in an account at the bank to guarantee payment. Usually the credit limit is equal to the security given and is increased as the debtor proves his or her ability to pay the debt. Two years after a bankruptcy discharge, debtors are eligible for mortgage loans on terms as good as those of others, with the same financial profile, who have not filed bankruptcy. The size of your down payment and the stability of your income will be much more important than the fact you filed bankruptcy in the past. The fact you filed bankruptcy stays on your credit report for 10 years. It becomes less significant the further in the past the bankruptcy is. The truth is, that you are probably a better credit risk after bankruptcy than before.

Q: Can my boss fire me for filing bankruptcy?
A: No. U.S.C. Sec. 525, prohibits any employer from discriminating against you because you filed bankruptcy.

What is Chapter 13 and when can it be used?
A: Individuals may file chapter 13 bankruptcy petitions if they:
1. Reside, have a domicile, a place of business, or property in the United States, or a municipality;
2. Have a source of regular income; and on the date the petition is filed owe less than $290,525 in unsecured debts and less than $871,550 in secured debts. Note: The amounts given here are 2001 amounts. They are regularly adjusted to keep up with the cost of living.
Corporations and partnerships may not file a chapter 13 bankruptcy petition. If you filed a prior bankruptcy petition and the prior proceeding was dismissed within the last 180 days, you may not be able to file a second petition and should check 11 U.S.C. sec. 109(g).

Q: What debts are erased by a Bankruptcy?
A: Most unsecured debts are erased in a bankruptcy
except for:

• Child support and alimony;
• Debts for personal injury or death caused by your drunk driving;
• Student Loans.
• Income tax debt.