FHA Pre-foreclosure Options

I recently attended a breakfast meeting that brought in a Housing and Urban Development (HUD) counselor to discuss pre-foreclosure options for homeowners that are struggling to make their payments or have already missed a payment with an FHA loan.  I was aware of a few of their options but was surprised at how much HUD wants to keep homeowners in their homes with the other options available. 
The Federal Housing Administration (FHA) insured loans offers homeowners four options if you want to keep your home and two options if can't keep your home.  Both FHA and your lender will want to know the reason(s) you have or will be unable to make your mortgage payment and whether or not the situation is temporary.  Once you've had the discussion with your lender or HUD-approved housing counseling agency, you'll need to submit your financial information to the lender along with supplemental paperwork, depending on the type of request, to your lender for review. 

The options to stay in your home include a special forbearance, a mortgage modification, a partial claim or even a FHA-Home Affordable Modification Program option.  The partial claim option of FHA insured mortgages is what struck me as the most important and beneficial option for the financially distressed homeowners.  This partial claim is a 'one-time' loan from the insurance fund to bring your account current.  The loan is interest free and does not need to be repaid until you either pay off the first mortgage or sell your home.  The other three options are somewhat common of those offered by conventional lenders.

If your situation is permanent and you're unable to make any payments anymore, you can sell your home as a short sale or sign over the Deed in Lieu of foreclosure to your lender.   It's important to remember that any of the options mentioned above could have tax consequences involved once all is settled on your loan.  Your own situation of payment or not being able to repay will truly dictate which of the options are available to those that have an FHA insured mortgage.

As with any of the information I share, you are welcome to call or email additional questions as I'd be glad to share the knowledge so that you can choose the best path for your situation.