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Foreclosure Prevention Programs
and Tenant Rights After Foreclosure
- AN OVERVIEW -
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President Obama's Making Home Affordable Program offers help to struggling homeowners. The program includes:
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Home Affordable Refinance: a program that allows homeowners with little or no equity in their homes to refinance to lower rate mortgages
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Home Affordable Modification: a program that provides loan modifications with lower monthly payments to homeowners who pay more than 31% of their monthly income for their mortgage
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Foreclosure is a legal process by which a lender can take back your house and sell it if you don't make your mortgage loan payments on time. If your lender forecloses, you will lose your house, lose the money you have invested in your house, and lose your good credit rating. Foreclosure prevention programs can help you avoid foreclosure if you are in trouble with your home loan.
Foreclosure prevention counseling is a free service to help Massachusetts homeowners avoid foreclosure. Counselors review your mortgage and finances with you, discuss your options, and help you find a solution. Services include negotiating with current lenders, refinancing assistance, financial counseling, legal assistance, outreach, and consumer education.
Mortgage lenders often agree to modify a loan when they will lose less money modifying the loan than by foreclosing on the house. Loan modifications usually result in lower monthly mortgage payments. You should contact your lender directly to discuss changing your mortgage loan. Each bank or mortgage lender decides on eligibility rules and benefits for their loan modification programs.
Mortgage refinancing programs help homeowners at risk of foreclosure by replacing high-cost mortgage loans with new affordable loans. Each mortgage refinancing program has its own eligibility requirements and application procedure. HOPE for Homeowners is the major federal mortgage refinancing program to help prevent foreclosures.
Homeowners who are not able to modify or refinance their loans may want to consider selling their house themselves (preforeclosure sale), voluntarily handing over the deed to their house (deed in lieu of foreclosure), or declaring bankruptcy (Chapter 13 or Chapter 7). Each of these options has disadvantages, but may be better than foreclosure. You should discuss your situation with a foreclosure counselor and lawyer before deciding what to do.
If you are a tenant and the building in which you are living is sold at foreclosure, you have certain rights under Massachusetts law. According to the law, you do not have to move out of the building right away, even if the owner tells you to leave. The new owner must maintain the building and provide the same utilities that your previous landlord was required to provide. Regardless of the new owner's plans for the building, the owner cannot violate your rights as a tenant.
Links to other web sites with information about foreclosure prevention.
Foreclosure Prevention Programs section last updated on 8/21/09
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