What is an FHA Modification with a Partial Claim?
The Department of Housing and Urban Development (HUD) supports home ownership for many low or moderate income borrowers. It does this through the Federal Housing Administration (FHA), which offers insured mortgages for families with poor credit or financial struggles. There are several options for homeowners having trouble paying their FHA loans. One such option is a modification with a “Partial Payment of Claim.”
A modification with a partial Claim is one where the lender breaks the loan into 2 loans. The Borrower makes monthly payments of principal and interest on the first loan, and the second loan or “Partial Claim” is a separate mortgage which does require monthly payments, and does not carry interest. The Borrower only pays the Partial Claim if the home is sold or refinanced. The Partial can be up to 30% of the amount owed.
In other words, your FHA Partial Claim must be paid in full before you can sell your house. If you have had an FHA Mortgage and are seeking to sell your home, you must confirm that there is a not a “Partial Claim” that will be added to the amount due at the closing.
Paying an FHA Partial Claim
The HUD puts a lien against the borrower’s property for the amount of the claim. The borrower must pay off the partial claim if they either sell the home or refinance it. This is important to remember.
If you have questions about whether an FHA Partial Claim is an option for you, our office has the resources available to conduct an analysis of your situation and the FHA modification programs to determine whether you would qualify. We can also provide you with an estimate of the payment terms if you qualify for a modification, contact Ira J. Metrick today.