Delinquent FHA Loan - There is a way to bring it current - Partial Claim

Real Estate Agent with Fred Real Estate Group

I know a lot of you are worried and having trouble - maybe this is a better answer than a short sale. 

Original content by Fred Chamberlin

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.

Comments (6)

Sandra Cummings
William Raveis Real Estate - Guilford, CT
Real Estate Agent, Guilford Connecticut

Thesa - This is wonderful news for anyone having a FHA loan. I have a client who fits all the criteria, but alas she does not have an FHA loan.

Oct 17, 2008 11:20 AM
Marchel Peterson
Results Realty - Spring, TX
Spring TX Real Estate E-Pro

Thesa, I did not know about this.  Thanks for sharing!  Should I get one of those calls I will no where to send them. 

Oct 17, 2008 12:46 PM
Elizabeth Nieves
The Elizabeth Nieves Realty Group - Durham, NC
Bilingual Raleigh - Durham North Carolina Real Estate Team

VERY INTERESTING! I was not aware of the specifics of this. I'm so glad you reblogged it, because I did not see it. I'm going to bookmark for reference. Thanks and GBU!

Oct 18, 2008 10:33 AM
Fred Chamberlin
Guild Mortgage Co - Oak Harbor WA - Oak Harbor, WA
Oak Harbor/Whidbeynulls, #1 Experienced FHA Mortgage Consultant

Thanks for the re-blog Thesa. I am wondering if maybe someone with regular mortgage insurance might also use it???? Worth looking into.

Oct 21, 2008 05:54 AM
Jeff Belonger
Social Media - Infinity Home Mortgage Company, Inc - Cherry Hill, NJ
The FHA Expert - FHA Loans - FHA mortgages - USDA loans - VA Loans

Thesa... I'll go to Fred's post... but this all goes back to the lien holder... they have to agree to this. Just as they would with not letting homes go into foreclosure... or those that need to modify. The investor holds all of the cards. These programs, just like the HOPE program, are all the same. thanks for the info though...

jeff belonger

Oct 23, 2008 03:43 PM
Mike Jones
SUNSTREET MORTGAGE, LLC (BK-0907366, NMLS 145171) - Tucson, AZ
Mike Jones NMLS 223495


Between us, we have nearly half a million points, and this is the first time I've commented on your blog.  (Okay.  Your Re-Blog.)  How did that happen?  I'll be back!

Mike in Tucson

Oct 26, 2008 05:21 PM