I know a lot of you are worried and having trouble - maybe this is a better answer than a short sale.
They say the way to stay young is to continually learn something. Based on that, I think I am about 20, instead of 61 and I learned something new today.
There is a program outlined in FHA Mortgagee Letter 2003-19 called a "partial claim" and it is available to people with FHA loans that are more than 4 months and less than 12 months delinquent on their mortgage.
There are specific criteria, actually, it would be pretty dumb if there weren't. One of them is that you are now able to make the payments and another is that you don't have the money to cure the delinquency. Considering we are talking about the government, this is pretty reasonable. The full qualification are:
- Have overcome the cause of the default;
- Have sufficient income to resume monthly mortgage payments;
- Do not have sufficient surplus income to repay the arrearage through a repayment plan;
- A mortgage modification is not appropriate;
- The mortgagor is an owner-occupant(s) committed to continuing occupancy of the property as a primary residence. A partial claim may not be used to reinstate a loan prior to a sale or assumption
The request for partial claim is originated by the servicing lender and I honestly don't know how many of them are aware of the program. So, if you, or someone you know, has an FHA loan and are delinquent due to a condition that is now cured, maybe you should ask your lender to look into this program.
There is a FAQ about the partial claim option here. It isn't free money. The homeowner will sign a note for the amount of the claim but it is interest free and doesn't require payments, so it is close to free.