My husband and I are co-signers on my daughter and her ex's house loan. Is there any kind of help for a?

Asked by Susan, Andover, MN Thu Feb 12, 2009

young divorced mother trying to sell her house. When purchased, it was 189,000 and I believe she still owes 179,000. She is up to date at present, and has been scraping to make the house payments, but can no longer make them in addition other bills like daycare, car payments, insurance and regular bills. The ex is paying no child support payments which has left her very strapped, and we have very little money to help. Could you give us any options that she could do? We've been told that because she is not behind on her payments that she might not qualify for any kind of help like refinancing (too little equity), short sale or whatever other possible alternatives there may be out there. Also, if she were to be able to do like a short sale or something like that...we are wondering how that would affect both her and our credit ratings. Andover Minnesota

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David Chambe…, , Saint Petersburg, FL
Thu Feb 12, 2009
Loan Modification can be an option, if she can't afford to pay someone to do it she may be able to do it herself.

Here is some info to get you started: http://www.hud.gov/offices/hsg/sfh/nsc/faqlm.cfm

Loan Modification
Frequently Asked Questions

A Loan Modification is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford.

Question 1: In utilizing the Loan Modification option to bring an asset current, can the mortgagee include all fees and corporate advances?


Answer: Mortgagee Letter 2008-21 states in part: Legal fees and related foreclosure costs for work actually completed and applicable to the current default episode may be capitalized into the modified principal balance.
Question 2: May a mortgagee perform an interior inspection of the property if they have concerns about property condition?


Answer: Yes, the mortgagee may conduct any review it deems necessary to verify that the property has no physical conditions which adversely impact the mortgagor's continued ability to support the modified mortgage payment.
Question 3: Can a mortgagee include late charges in the Loan Modification?


Answer: Mortgagee Letter 2008-21 states that accrued late charges should be waived by the mortgagee at the time of the Loan Modification.

Question 4: When utilizing a Loan Modification option, can a mortgagee capitalize an escrow advance for Homeowner's Association fees?


Answer: HUD Handbook 4330.1 REV-5, Paragraph 2-1, Section B, Escrow Obligations states: Mortgagees must also escrow funds for those items which, if not paid, would create liens on the property positioned ahead of the FHA-insured mortgage.
Question 5: Is there a new basis interest rate which mortgagees may assess when completing a Loan Modification?


Answer: Yes, Mortgagee Letter 2008-21 states that the new basis interest rate is 200 points above the monthly average yield on U.S. Treasury Securities, adjusted to a constant maturity of 10 years.
Question 6: Will HUD subordinate a Partial Claim, should a mortgagor subsequently default and qualify for a Loan Modification?


Answer: If a mortgagor subsequently defaults and qualifies for a Loan Modification, HUD will subordinate the Partial Claim.
Question 7: Are mortgagees required to perform an escrow analysis when completing a Loan Modification?


Answer: Yes, mortgagees are to perform a retroactive escrow analysis at the time the Loan Modification to ensure that the delinquent payments being capitalized reflect the actual escrow requirements required for those months capitalized.
Question 8: Is the mortgagor eligible for the upfront premium refund at payoff of a modified loan?


Answer: It depends upon when the closing date occurred. For assets closed:

After July 1, 1991 but before January 1, 2001, the 7-year unearned premium refund schedule shown in Mortgagee Letter 1994-1 remains in effect,

On or after January 1, 2001 that are subsequently refinanced, the 5-year refund schedule shown in the attachment of Mortgagee Letter 2000-46 applies, or

On or after December 8, 2004, refunds of upfront MIP are eliminated except, when the mortgagor refinances to another FHA insured mortgage. The refund schedule attached to Mortgagee Letter 2005-03 has been modified to a 3-year period.

Question 9: Can a mortgagee qualify an asset for the Loan Modification option when the mortgagor is unemployed, the spouse is employed, but the spouse name is not on the mortgage?


Answer: Based upon this scenario, the mortgagee should conduct a financial review of the household income and expenses to determine if surplus income is sufficient to meet the new modified mortgage payment, but insufficient to pay back the arrearage. Once this process has been completed the mortgagee should then consult with their legal counsel to determine if the asset is eligible for a Loan Modification since the spouse is not on the original mortgage.





Content current as of 29 August 2008

Source: HUD
1 vote
David Chambe…, , Saint Petersburg, FL
Thu Feb 12, 2009
Another Thing: Being upsidedown on the mortgage is not enough to qualify for a Modification.
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