The FHA and HUD have issued a new mortgagee letter explaining the replacement of a “saving your home” brochure issued in 2002. According to FHA Mortgagee Letter 14-01, the “How to Avoid Foreclosure” brochure, HUD-PA-426, has been replaced. “The new brochure is the “Save Your Home: Tips to Avoid Foreclosure” brochure, HUD-2008-5-FHA, which is to be sent with a cover letter to delinquent mortgagors pursuant to 24 CFR 203.602.”
The FHA and HUD have replaced the old document and have included the following instructions to lenders when sending the new brochure, which is designed to help inform borrowers in trouble on their FHA mortgages about the options available to them. When sending the new brochure, lenders are required to send a cover letter which includes the following “informed borrower” information:
- highly visible information about the availability of language access services offered by the servicer for mortgagors with limited English proficiency (this information must be provided, at a minimum, in Spanish and must include an advisement to seek translation or other language assistance);
- the following information related to the mortgage loan: (a) number of late payments; (b) total amount of any late charges incurred; (c) the month of each late payment (e.g., June, July); and (d) the original due date of each late payment…
The FHA is keen on avoiding situations where borrowers go into default and/or foreclosure without knowing the options available to them that could help save the home. The new FHA/HUD brochure includes a variety of helpful information in this area including a warning about foreclosure avoidance scams:
“Beware of foreclosure prevention scams! You may be approached by organizations with official sounding names offering a quick fix to your mortgage problems. They often charge hefty fees or require that you “temporarily” sign over your deed to them. Remember — solutions that sound too good to be true usually are. These precautions will help you avoid being taken by a scam artist:
- Never sign any papers you don’t fully understand.
- Check with a lawyer, your lender or trusted advisor, or a HUD-approved housing counselor before entering into any deal involving a loan assumption, contract of sale or a transfer of the deed to your home.
- If you can’t afford your current mortgage, don’t be talked into refinancing into a new loan with a higher payment.To find a HUD counselor in your area call 1-800-569-4287 or TDD 1-800-877-8339.”
Borrowers who get into trouble on an FHA mortgage should get in touch with the lender as soon as possible to make arrangements and initiate foreclosure avoidance measures.