A partial claim is an option available to homeowners with FHA loans who meet the HUD guidelines for a partial claim (see below). 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. After a partial claim is completed, the homeowner does not need to worry about foreclosure or losing their home.
Homeowner must have the following partial claim qualifications:
Long term ability to repay the loan and make normal payments
Inability to qualify for a forbearance agreement or workout plan
Ability to prove that the financial hardship is over
Homeowner must continue to live in the property and keep it in good livable condition
Existing loan must be at least 4 months, but not more than 12 month delinquent
Many people think a partial claim can not be combined with other options to stop foreclosure, such as a forbearance agreement, or a chapter 13 bankruptcy; however, if done correctly, these options can be combined to allow an even more affordable payment. In general, a partial claim is a one time occurrence, but in rare cases, when a second, unrelated hardship has taken place, a second partial claim could be approved.
If you have fallen behind and you think you may qualify for a partial claim, you should contact your lender immediately and discuss this option. If you lender is not cooperative, or if they say you are not qualified, then you may want to seek the help of a professional to help you secure your right to a partial claim. In many cases, your lender may automatically turn you down, because they are not familiar with this process, or they are simply too lazy to begin this process. Either way, don’t give up, just find a professional who can help see you through this process until it’s complete.