Mortgage Payment Challenges FAQs

How do I know if I am eligible for a modification under the Home Affordable Modification Program (HAMP)? 

To apply for a modification under HAMP you must:

  • Be the owner-occupant of your home
  • Have a first lien mortgage originated on or before January 1, 2009
  • Have a monthly mortgage payment (including taxes, insurance and HOA dues) greater than 31% of your gross monthly income
  • Have a mortgage payment you can not afford due to a documented financial hardship

If I do not meet the criteria for HAMP, can Desert Schools still help me? 

HAMP is the best option for most members. However, if you don’t qualify under HAMP, but are experiencing a documented financial hardship Desert Schools will look at other options and try to prevent foreclosure. The solutions we may be able to offer will vary depending on the hardship, loan type and our member’s specific financial situation.

If I qualify for a modification under HAMP, will my escrow account payment change? 

Your escrow payment will adjust if your taxes and insurance premiums change, so the amount of your monthly payment will change to ensure Desert Schools is collecting the correct amount to pay your property tax and insurance bills.

I owe more than my house is worth. Will a modification under HAMP reduce what I owe? 

No. The primary objective of the HAMP is to help homeowners avoid foreclosure by modifying troubled loans to achieve a payment the homeowner can afford. If you qualify, Desert Schools will accomplish this by making changes to the term and or rate, but will not reduce the principal balance.

What is a trial period? 

The trial period is typically a three month period to see if the new payment plan will work for you, while providing you immediate relief and preventing any possible foreclosure sales from occurring. You should remember during the trial, the terms and conditions of your original loan remain unchanged and only after you make all of your trial payments on time and provide all of the required documentation can your loan be officially modified.

Could my payment change after the trial period? 

Your payment will be based on your verified income. If your income changes during the trial period, the payment may change too. Your payment could also change if property taxes or homeowners insurance premiums increase during the trial period.

How will a modification affect my credit? 

Accepting a loan modification can affect your credit score, but the actual effect will depend on a variety of factors. For more information about your credit score visit www.ftc.gov/bcp/edu/pubs/consumer/credit/cre24.shtm

Each month we report the status of each mortgage. If you are current with your mortgage payments prior to the trial period and you make each trial period payment on time, we will report you as current and also identify the loan as “modified under federal government plan”.

If you are delinquent (at least 30 days past the due date) prior to the trial period and the reduced payments do not bring the account current, we must report the level of delinquency and also identify the loan as “modified under federal government plan”.

What happens if I am unable to make payments during the trial period? 

Homeowners who are unable to make the required payments by the end of the trial period are not eligible for a permanent modification under HAMP. If this happens, speak with one of our specialists about other possible foreclosure prevention options.

My home is scheduled for foreclosure soon. What should I do? 

Contact your mortgage servicer (Desert Schools and any other lender with a loan secured by the property) and ask to be considered for HAMP. If you are eligible, you will be offered a trial modification. You may also contact a HUD-approved housing counselor for help by calling the Homeowner’s HOPE Hotline at (888)-995-HOPE (4673).

What will happen if my home goes to foreclosure? 

Foreclosure is the worst case scenario for homeowners and lenders. A foreclosure will have a drastic negative impact on your credit score and will prevent you from qualifying for another mortgage loan for many years. If you still occupy the home when it is sold, you will be evicted. Foreclosures should be prevented whenever possible.

What is a short sale? 

In a short sale, the homeowner sells the property for less than the full amount due on the mortgage. Short sales require approval by your lender(s). Short sales are sometimes used as a last resort to prevent foreclosure.

Will a short sale affect my credit? 

Yes. We will report short sales to the credit reporting agencies as, “Legally settled for less than balance owed.”  If payments were late prior to the sale, the late payments will also be reflected on your credit report.

If I am approved for a short sale, will I be responsible to sign a Promissory Note to re-pay the loss? 

Yes, in many cases. The amount and terms of the Promissory Notes, if applicable, vary based on the original terms of your mortgage, your individual financial situation and the amount of the loss. Terms of Promissory Notes will be reviewed and also listed on the short sale approval letter.

How do I know if Desert Schools will approve a short sale? 

The first step is to list you home for sale using a licensed real estate agent. Your agent will set the appropriate sales price based on current market data. When you receive an offer, the signed contract will be reviewed by Desert Schools (and any other lenders on the property). You will be notified of our decision in writing.

What is forbearance? 

A forbearance agreement is a temporary arrangement where a lender agrees to accept a smaller payment for a specific period of time (typically three months) due to a documented hardship.

I applied for a modification but was offered forbearance. Why? 

If you were offered forbearance, it is likely you did not qualify for a modification at this time. The most common reason for this is unemployment. When a member has a temporary hardship and does not qualify for a modification, in some cases three month forbearance is offered as a way to offer some mortgage payment relief.

What will happen at the end of the forbearance period? 

At the end of the forbearance period your case will be re-evaluated based on updated financial information that you will be asked to provide. Hopefully, at the end of the forbearance period you are no longer experiencing hardship. If you are, we will determine eligibility for a loan modification.

What will be reported to the credit bureaus if I am on a forbearance plan? 

If your loan was current at the time that the forbearance began your loan will be reported to the credit reporting agencies as “current – paying under a partial payment agreement”. If your loan was delinquent at the time your forbearance was granted we will continue to report your loan as past due.

What if I've submitted a request for a foreclosure prevention alternative and I'm not satisfied with the outcome? 

If you have already submitted your request for a foreclosure prevention alterative and are not satisfied with the outcome, your case can be re-evaluated by our escalations team.  Contact us via email at escalations@desertschools.org or by phone at 602-335-5676 or 1-800-456-9171 (x35676).  Please provide your name and account number, as well as any new information to be considered.  A member of our team will contact you within 3 business days to confirm receipt of your inquiry and obtain additional information, if needed. Your case will be re-evaluated and resolved within 15 business days.

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