Harm Reduction Initiative

The Pennsylvania Sheriffs' Association

This information was provided by Retired Sheriff Joseph F McGinn and the Delaware County Sheriffs Office and is probably the most concise and complete explanation of the process, the options, and the contacts for anyone who may find themselves having a problem with affording their home payments that I have seen. We would like to thank the Joseph McGinn for permission to reprint the information here.

How To Save Your Home From Foreclosure

Joseph F. Mcginn
Retired Sheriff of Delaware County

Foreclosure is a process that transfers the right of homeownership from the homeowner to the bank or lender. A home goes into foreclosure when the owner stops paying his mortgage loan payments. Properties that have been foreclosed by lenders often are then sold at sales presided over by local sheriffs.

How Does A Home Get To A Sheriff's Sale?

The steps are as follows:
Number of DaysExplanation
30 Days BehindLetter of Intention to Foreclose
30 Days to Bring CurrentGrace Period
30 Days to ServeComplaint in Mortgage Foreclosure
30 Days to AnswerAnswer to Complaint Judgment Answered
90 Days to SaleWrit of Execution Issued

What Can Be Done To Prevent A Sheriff’s Sale Of A Home?

Do not ignore the letters from your lender’s loss mitigation department. Explain your situation. Be prepared to provide financial information

Loss Mitigation is a program where homeowners and lenders work together to resolve a delinquent loan. Loss Mitigation can involve a short-term or long-term plan for bringing the loan current.It can also provide a way for the homeowner to make a graceful exit from an unaffordable mortgage.

The Question That Must Be Answered Is:

Do You Want To Stay In The Home Or Leave The Home

If the option is to leave the home, the homeowner could:

Short Sale

When the home is sold at current fair market value and results in proceeds of less than total debt. (Viewed as a last resort)

Sell and Payoff

Deed-in-Lieu of Foreclosure – Homeowner voluntarily deeds property to lender.

If the option is to stay in the home, another question must be addressed.

Is It A Short-Term Financial Hardship Or A Long-Term Financial Hardship?

If it is a short-term financial hardship, the homeowner could:

Do a Repayment Plan

This is a formal, written agreement that temporarily increases the monthly payment until the loan is brought current. This usually requires cash down payment.

The benefits of this are:

  • The homeowner is able to remain in the home
  • The homeowner can “makeup” missed payments over time.
Mortgage Forebearance

This is a formal, written agreement often in the form of a consent agreement where the monthly payments are reduced or suspended for a specific period of time. At the end of the agreed period, the homeowner resumes making regular monthly payments and tenders additional funds to make up for the past due amount.

Home-Saver Advance

For Fannie Mae insured loans only – this program allows the homeowner to reinstate the mortgage. The homeowner signs a note at 5% interest payable over 15 years with no payment for the first 6 months.

HEMAP - Homeowners Emergency Mortgage Assistance Program

In this program, which is offered by the Pennsylvania Housing Finance Agency (PHFA), the Homeowner must prove prove that a hardship existed which caused the default in the mortgage and the Homeowner must have a reasonable prospect of curing the default within 2 years. (HEMAP – 800-342-2397)

If the homeowner has a long-term financial hardship, the homeowner could:

HERO - Homeowner's Equity Recovery Opportunity Program

Do a Loan Mediation – With this program, which is a PHFA Program, PHFA purchases the mortgage from the lender and then sets the homeowner up on an affordable repayment agreement. This provides for up to 100% financing.

Reverse Mortgage

This is only available to Homeowners who are 62 years of age or older. It provides the homeowner with up to 60% of the value of the house.

Mortgage Modification

One or more of the terms of the mortgage may be changed to bring the loan current. Modification might involve extending the term or temporarily reducing the interest rate. Fees and other costs may be added to the principal balance that is owed.