HUD: Avoiding Foreclosure

What is the correct order of steps in the loss mitigation request process? A. Complete forms B. Respond to additional requests for information C. Determine client housing intentions D. Submit package E. Determine type of mortgage F. Consider servicer approval or denial G. Determine reason client is delinquent H. Gather documents

G, C, E, H, A, D, B, F

Which contributed to the increase in foreclosure rates? Mark all that apply. ___ 1. Subprime lending ___ 2. Risky loan products with features like negative amortization ___ 3. Homeowners paying off mortgages early ___ 4. Aggressive marketing of HELOCs ___ 5. Demand from the secondary market ___ 6. Using teaser rates to qualify more borrowers

1, 2, 4, 5, 6

Which of the attributes below are loan modification scams and which are not? Designate answers as "A" if they are aspects of a scam, or "B" if they are not aspects of a scam. ___ 1. Borrower receives a letter from his servicer discussing possible workout options ___ 2. Borrower receives a call from a lending company that says they will get her a modification for $1,000 ___ 3. Loan modification company guarantees they can get a borrower a modification ___ 4. Borrower receives letter from HARP program informing him he may qualify for refinancing ___ 5. Borrower receives a call from a company she's never heard of about a loan modification and is asked for her Social Security number over the phone

A) Aspects of scam: 2, 3, 5 B) Not aspects of scam: 1, 4

Which program adjusts interest rates for modified payments after five years? A. Home Affordable Modification Program (HAMP) B. Home Affordable Refinance Program (HARP) C. Freddie Mac Flex Modification D. Fannie Mae High LTV Streamlined Refinance

A) Home Affordable Modification Program (HAMP) Most HAMP modifications offered greatly reduced interest rates for five years, then increased the interest rate at one percent or less for three or four years, though rates were not to exceed the market rate.

What is the correct order of steps for clients that will transition out of the home? A. Client secures new housing prior to the sale date. B. Counselor and client formally apply for the desired option, as well as any financial transition assistance, and receive a response. C. Client packs the home to prepare for the move, especially in foreclosure cases, because the client may not have much time to vacate the property after the sale date. D. Counselor and client discuss the possibility of purchasing a new home if and when client is ready. E. Counselor and client reach out to servicer to discuss available options, and then determine which to pursue. F. Counselor and client work on improving credit to reduce the negative effects of foreclosure on the credit report. G. Counselor analyzes client's information, and together the counselor and client establish a budget to determine how much the client can afford for new housing. H. Client moves into new housing.

E, B, G, A, C, H, F, D

Which action should a client avoid to secure rental housing after a foreclosure, short sale, or deed-in-lieu? A. Wait until the sale is finalized. B. Prepare to have a co-signer. C. Secure housing before the sale is finalized. D. Save for a security deposit.

(A) Wait until the sale is finalized Because the client's credit score will be negatively impacted, s/he should try to secure housing prior to the finalization of the sale.

Generally, modification options offer relief to homeowners _______, while refinance options target borrowers _______. A. in default; in good standing B. in good standing; in default C. with GSE loans; with non-GSE loans D. with non-GSE loans; with GSE loans

(A) in default / in good standing

Lenders often offer short sale or deed-in-lieu options for homeowners trying to sell the home quickly before attempting a regular home sale. A. True B. False

(B) False The term "short sale" refers to a shortage in the amount repaid, not the length of the sale period. A regular home sale is often the best option for both homeowner and lender, though underwater mortgages and other circumstances may require the evaluation of alternative options, such as a short sale or deed-in-lieu.

Below are the different options for a client considering a transition out of the home. Match each option with its definition. A. Deed-in-Lieu B. Foreclosure C. Short Sale ___ 1. A legal process in which mortgaged property is sold to pay the loan of the defaulting borrower. Laws are based on the statutes of each state. ___ 2. A procedure in which the borrower is allowed to sell a property for an amount less than the outstanding mortgage balance owed to avoid a foreclosure. Also called a preforeclosure sale. ___ 3. A process that allows a homeowner to avoid foreclosure, providing a deed to the lender instead. Though it helps avoid foreclosure, the process does not allow the homeowner to stay in the home.

(B) Foreclosure: 1 (C) Short Sale: 2. (A) Deed-in-Lieu: 3

Jessica, a Florida resident, was in a car accident and subsequently had to pay medical bills and purchase a new car. Although she is still able to work, Jessica is unable to cover her mortgage payment because of the unexpected expenses. She is now seven months past due on her mortgage and has received a Notice of Default. Her requests to her servicer for a retention option have been denied. To help her catch up on her other bills so she can start making her mortgage payments again, for which payment assistance program should she apply? A. Florida Hardest-Hit Program—Mortgage Loan Reinstatement Payment B. Leon County Foreclosure Prevention Assistance Program C. Florida Hardest-Hit Program—Unemployment Mortgage Assistance Program

(B) Leon County Foreclosure Prevention Assistance Program Jessica has exhausted all other options and will not qualify for the other programs since she was never unemployed.

All of these are options when creating an emergency budget for a client who wants to remain in his/her home, except: A. Asking older children who live with them to help pay some bills B. Missing mortgage payments C. Cooking dinner at home every night D. Earning extra income from a side business

(B) Missing mortgage payments Homeowners need to show their servicer they are making a good faith effort to meet their financial obligations.

Since receiving a loan modification several years ago, a borrower had been current on his mortgage until he recently suffered a severe reduction in income. A housing counselor advised the client to seek assistance from the servicer to prevent foreclosure. The servicer claimed it could not evaluate the borrower for further relief due to the prior modification. Is the servicer in compliance? A. Yes B. No

(B) No Servicers are required to provide certain borrowers with foreclosure protections more than once over the life of the loan, provided that borrowers become current on payments at any time between completed prior and subsequent loss mitigation applications.

When a borrower is trying to avoid foreclosure, a mortgage company will usually consider a _____ before a _____. A. deed-in-lieu, short sale B. short sale, deed-in-lieu

(B) short sale, deed-in-lieu Most servicers will look for ways to sell the property instead of accepting responsibility for it through a deed-in-lieu.

What does it mean for a mortgage to be underwater? A. A mortgage required for any structure built at or below sea level B. A home suffered flooding and resulting damages caused mortgage delinquency C. A mortgaged property is worth less than the balance owed to the lender D. A borrower is drowning in late payments and trying to become current

(C) A mortgaged property is worth less than the balance owed to the lender

All of the following are eligibility requirements of the FHA-HAMP Loan Modification, except: A. Mortgage is in default or imminent default but not in foreclosure. B. At least one borrower has continuous income. C. Borrower must demonstrate minimum surplus income amount. D. Property must be and must remain the borrower's primary residence.

(C) Borrower must demonstrate minimum surplus income amount. Borrower must demonstrate that income is insufficient to cure arrears within six months.

The following Florida clients are facing foreclosure but qualify for financial assistance through one of the programs below. All of the clients are low- to moderate-income homeowners and are both behind on their mortgage and live in their primary residence. Match each client on the right to the most appropriate financial assistance program on the left. A program may be used more than once. A. Leon County Foreclosure Prevention Assistance Program B. Florida Hardest-Hit Program— Mortgage Loan Reinstatement Payment C. Florida Hardest-Hit Program— Unemployment Mortgage Assistance Program ___ 1. Homeowner 1 has been unemployed for 14 months. ___ 2. Homeowner 2 is five months behind on her mortgage and has received an NOD. She had a temporary financial hardship that is now cleared. She can make up the past due amount over time. She has requested assistance from her servicer but has been declined. ___ 3. Homeowner 3 is three months behind on her mortgage because she was laid off and has received an NOD. She is working full-time again and can afford her original payments once she is caught up. ___ 4. Homeowner 4 had his hours cut in half and is struggling to pay his mortgage. He has made partial payments for six months, but the servicer has sent him an NOD.

(C) Florida Hardest-Hit Program—Unemployment Mortgage Assistance Program: 1. (A) Leon County Foreclosure Prevention Assistance Program: 2 (B) Florida Hardest-Hit Program—Mortgage Loan Reinstatement Payment: 3. (C) Florida Hardest-Hit Program—Unemployment Mortgage Assistance Program: 4.

After the sale date of a home, which scenario could result in an eviction, typically with little notice to the client and under the enforcement of a law officer? A. Short sale B. Deed-in-lieu C. Foreclosure

(C) Foreclosure After a foreclosure sale, homeowners are typically given a certain number of days to vacate the property, but they should be prepared to leave with only a few days' notice.

Anthony received a letter regarding modifying his mortgage in the mail, and he knew it was from a scammer. To which of the following entities should he report this activity? A. Federal Trade Commission B. Homeowners Hope Hotline C. Prevent Loan Scams Campaign D. All of the above

(D) All of the above Scams should be reported to each of these entities to ensure documentation is thorough.

A client needs to gather all of the financial documentation below to submit a loan modification request, except: A. Two most recent bank statements B. Utility bill showing homeowner name and property address C. Last two years of tax returns D. Information on amounts paid for child care

(D) Information on amounts paid for child care This is not a required piece of financial information.

Match the recent regulatory change or nationwide settlement on the left with the reason it was created on the right. A. Making Home Affordable B. Consumer Finance Protection Bureau C. National Mortgage Settlement D. Issuance of New Mortgage Rules E. Hardest-Hit Fund ___ 1. To make it easier for borrowers to understand loan terms, to require homeownership counseling for some mortgages, and to expand protections ___ 2. To enable 18 states and the District of Columbia to develop locally tailored programs to assist struggling homeowners in their communities ___ 3. To create a federal agency charged with addressing failures of consumer protections ___ 4. To help homeowners avoid foreclosure, stabilize the housing market, and improve the economy ___ 5. To penalize five financial institutions for deceptive lending and foreclosure practices

(D) Issuance of New Mortgage Rules: 1. (E) Hardest-Hit Fund: 2 (B) Consumer Finance Protection Bureau: 3 (A) Making Home Affordable: 4 (C) National Mortgage Settlement: 5

All are consequences of a homeowner going through foreclosure, short sale, or deed-in-lieu, except: A. Negative impact on credit for several years B. Short-term inability to secure a new prime mortgage C. Potential loss of equity built up in home D. Lack of financial assistance for relocation

(D) Lack of financial assistance for relocation Relocation assistance can be offered for homeowners considering all three options.

What are the most common reasons why individuals face foreclosure? Select one of the following options. A. Increase in expenses and reduction in income B. Medical bills and poor budget management skills C. Poor investment and/or not being able to flip an investment property D. Reduced and/or lost income

(D) Reduced and/or lost income Often, clients seeking counseling say that they are facing foreclosure due to reduced or lost income.

All of the following are true about HLP's Case Status system, except: A. The Status tab is only visible when a case is open. B. It shows the last case update and amount of time the case remained in the previous status. C. It shows who is in control of the process—the servicer or the counselor. D. Servicers must update the case status every 20 days when they are in control of the process.

(D) Servicers must update the case status every 20 days when they are in control of the process. Servicers must update the case status every 10 days.

Which best describes access to the HLP main platform where loss mitigation/retention option applications are submitted? A. Counselors can sign up for an account directly on the site. B. Homeowners can sign up for an account directly on the site. C. Only counselors with certain certifications can have an account on the site. D. The counseling agency's HLP account administrator must provide access for each counselor at the agency.

(D) The counseling agency's HLP account administrator must provide access for each counselor at the agency. One person from each agency serves as its administrator and creates accounts for each counselor that should access the site.

The following are benefits of different FHA loss mitigation programs. Match the program benefit with the corresponding program. A. Assists borrowers who do not have a verifiable loss of income or increase in living expenses. B. Suspends mortgage payments or allows for partial payments while borrower is unemployed. C. Can combine a loan modification and partial claim to bring the mortgage current. ___ 1. Special Forbearance - Unemployment Agreement ___ 2. Informal/Formal Forbearance ___ 3. FHA-HAMP Loan Modification

. Correct matched items: (B) Suspends mortgage payments or allows for partial payments while borrower is unemployed: 1. Special Forbearance - Unemployment Agreement (A) Assists borrowers who do not have a verifiable loss of income or increase in living expenses: 2. Informal/Formal Forbearance (C) Can combine a loan modification and partial claim to bring the mortgage current: 3. FHA-HAMP Loan Modification

Which is a reasonable option for a homeowner facing foreclosure? Mark all that apply. ___ 1. Talk to servicer about modification or repayment plan ___ 2. Remain in the home without paying mortgage ___ 3. Establish an emergency budget to catch up on payments ___ 4. Send partial mortgage payments when possible

1, 3

Which items does a counselor need to know to evaluate a client's budget? Mark all that apply. ___ 1. Credit score reflecting recent negative impact ___ 2. Monthly income from a part-time job ___ 3. Credit report information including delinquencies ___ 4. Mortgage information including past due amount

2, 3, 4

Which actions below typically occur during a judicial foreclosure process and which actions typically occur during a non-judicial process? Mark the actions that are judicial with an A and the ones that are non-judicial with a B. ___ 1. The client receives a Notice of Default in the mail. ___ 2. The client's opportunity to fight a foreclosure takes place in court. ___ 3. The servicer can't take any foreclosure action against a client until a judge grants them permission. _ __ 4. Communication occurs between the servicer and the homeowner. ___ 5. The client has until five days before a foreclosure sale to cure a delinquency and stop the sale.

A) Judicial: 2, 3 B) Non-judicial: 1, 4, 5

A counselor must know the foreclosure processes. Which of the following state agencies are typically where counselors can look for information on their states' processes? Mark all that apply. ___ 1. Housing Department ___ 2. Attorney General's Office ___ 3. State Housing Finance Agency ___ 4. Department of Community Affairs

All, Depending on the state, any one of these offices could have information on your state's foreclosure process.

Match the borrower description with the corresponding program. A. Home Affordable Modification Program (HAMP) B. Freddie Mac Flex Modification C. Fannie Mae High LTV Streamlined Refinance ___ 1. Borrower has a good payment history, but home has declined in value ___ 2. Borrower faces mortgage payment increase after five years ___ 3. Borrower completes a Uniform Borrower Assistance Form

Correct matched items: (A) Home Affordable Modification Program (HAMP)—Borrower faces mortgage payment increase after five years (B) Freddie Mac Flex Modification—Borrower completes a Uniform Borrower Assistance Form (C) Fannie Mae High LTV Streamlined Refinance—Borrower has a good payment history, but home has declined in value

What is the correct order of the general steps to submit a foreclosure alternative application in HLP? Place the statements in correct sequence. A. Complete entry of basic homeowner data on the Financial, Q&A and Documents navigation tabs. B. Create the case on the New Case tab. C. Use the Review & Submit tab to identify if all required elements have been completed and submit the application.

Correct order: (B) Create the case on the New Case tab. (A) Complete entry of basic homeowner data on the Financial, Q&A and Documents navigation tabs. (C) Use the Review & Submit tab to identify if all required elements have been completed and submit the application.