|By Laura Gutmann on May 17, 2010
The U.S. Department of Housing and Urban Development (HUD) provides those who have experienced recent financial hardship with an option called making a “partial claim” to help them get back on track. This means that qualified individuals can get help reinstating mortgage loan arrangements and catching up on their debt if they have temporarily fallen behind, but can demonstrate that they will be able to handle these costs down the road. This might be particularly helpful for those who became delinquent with their monthly mortgage payments when they were unemployed, but now have an income and hope of recovery. This special arrangement can also help you avoid having to go through foreclosure, declaring bankruptcy, or losing your home.
If you find yourself in a similarly difficult position, you will have to investigate whether this option is right for you – it may be that declaring bankruptcy, making a forbearance arrangement, or creating a different plan is more appropriate for your situation. For example, you can only qualify for a partial claim if you are between 4-12 months behind on your mortgage. However, “with this option, homeowners are given an interest free loan, guaranteed by HUD, to pay off the arrears and reinstate a delinquent loan. This loan is must be repaid when the first mortgage is paid off, or when the property is sold.” This option is best for those who have experienced financial hardship for only a short period of time, rather than those who have more deeply rooted and ongoing problems.
In order to get partial claim status, you must show that you not only have the ability to return to making payments as normal, but that you intend to stay in your home and continue to live there, keeping it in good condition. You will also need to write a statement explaining your circumstances, show proof of current income, and submit copies your recent tax returns and financial records. The loan you receive from HUD will simply allow you to repay the balance owed that is already past due and assists you in recovering your initial mortgage agreement, which you may have lost over the couple of months where you were unable to meet your obligations.