Introduction
A partial claims mortgage is a financial tool that can help homeowners who are struggling to make their mortgage payments. It is a program offered by the Federal Housing Administration (FHA) to provide assistance to borrowers who are facing financial hardship. In this article, we will delve deeper into the concept of a partial claims mortgage, how it works, and who is eligible for this type of assistance.
Understanding Partial Claims Mortgages
A partial claims mortgage is a loan modification option available to borrowers with FHA-insured mortgages. It allows borrowers who are behind on their mortgage payments to receive a one-time payment from the FHA to bring their loan current. This payment is considered a “partial claim” because it is made on behalf of the borrower to the lender to cover the delinquent amount.
How does it work? When a borrower falls behind on their mortgage payments, they can apply for a partial claims mortgage through their lender. The lender will then work with the FHA to determine if the borrower is eligible for this type of assistance. If approved, the FHA will provide a one-time payment to the lender to bring the loan current. This payment is interest-free and does not require repayment until the borrower either sells the property or refinances the mortgage.
Who is eligible? To be eligible for a partial claims mortgage, borrowers must meet certain criteria. They must have an FHA-insured mortgage, be at least four months behind on their payments but no more than 12 months behind, and have the ability to resume making their regular mortgage payments. Additionally, borrowers must have experienced a financial hardship that caused them to fall behind on their payments, such as a job loss, medical expenses, or a divorce.
Benefits of Partial Claims Mortgages
Partial claims mortgages offer several benefits to borrowers who are struggling to make their mortgage payments:
1. Avoid foreclosure: One of the main benefits of a partial claims mortgage is that it can help borrowers avoid foreclosure. By bringing the loan current, borrowers can regain control of their mortgage and prevent the lender from initiating foreclosure proceedings.
2. Interest-free assistance: The one-time payment provided by the FHA is interest-free, which means borrowers do not have to worry about accruing additional interest on the delinquent amount.
3. No immediate repayment: Borrowers do not have to repay the partial claim amount until they sell the property or refinance the mortgage. This provides temporary relief and allows borrowers to focus on stabilizing their financial situation.
Conclusion
A partial claims mortgage is a valuable tool for homeowners facing financial hardship and struggling to make their mortgage payments. It provides a lifeline to borrowers by offering a one-time payment to bring the loan current and avoid foreclosure. By understanding the eligibility criteria and benefits of a partial claims mortgage, homeowners can explore this option to regain control of their mortgage and stabilize their financial situation.
References
– hud.gov
– fha.com
– investopedia.com
