Need to get out of a hole? This can do it for you, and it makes sense, both for you and for your mortgage servicer. Fannie Mae will lend you up to $15,000 of its own money to bring you current and stave off the specter of foreclosure. Unsecured. At an interest rate of 5%. With mortgage lates on your credit! This is a personal loan from FNMA to help you keep your home.
Why does it make sense? Won't FNMA lose some money doing this? The answer lies in the real cost of foreclosure to Fannie Mae and your lender. Compared to the average loss of $40,000 on a typical foreclosure, loaning you money at a low interest rate is a no-brainer. The purpose of the personal, unsecured loan is to bring you current on your mortgage and let you keep your home.
You don't get the money. It will go directly to your mortgage servicer. Here's how FNMA describes the purpose of the loan:
"HomeSaver Advance is designed for qualified borrowers who have fallen behind on their mortgage, but are able to resume timely payments once their loan is brought current by the advance. It helps [to] streamline the workout process for applicable loans, as it provides an option for earlier resolution of delinquent loans."
Here are the highlights of the program, which will begin next week (April)
- Loan amount up to the lesser of $15,000 or 15% of the original unpaid principle balance for delinquent PITI, escrow advances (money to pay your taxes and insurance), up to 6 months of unpaid HOA fees, and advances for attorney's fees and costs.
- Late charges and other ancillary fees and costs may NOT be paid by the loan. (Want to bet that your mortgage servicer will waive those fees in order to bring you current? Bet your bippie!)
- Money goes to arrearages. You never get cash in hand.
- The note will be at a fixed rate of 5%. The first six months are a no interest/no payment period!
- Amortization period is 14.5 years after the initial six months.
If you have kept in touch with the person who originated your mortgage, ask him or her to help you. He or she will not be paid to do this, so it will separate the sheep from the goats, so to speak. If you don't get help, it tells you something about your loan officer. Find one who will help!
EDIT: For your specific mortgage situation, you must call your mortgage servicer, not Fannie Mae. I'll dig deeper and write another post in the next few days on the subject.
I'm Mike in Tucson, your preferred Tucson, Arizona mortgage lender.
Think of me as your Local Expert.
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Very useful post Mike! Thanks for sharing this here on AR! People need to be aware of the things that are available to help them out.