What Happens After Obtaining a Partial Loan Claim?
What is a Partial Loan Claim?
A partial claim is a type of loan provided by the U.S. Department of Housing and Urban Development (HUD) to help homeowners catch up on overdue mortgage payments. This option is available for those with FHA-insured mortgages who are struggling to make their payments due to financial hardships.
If you qualify, the partial claim loan will cover the overdue amount and place it in a zero-interest subordinate lien against your property. You won't need to repay this amount until the last mortgage payment is made, the loan is refinanced, or the property is sold.
For more detailed information, you can check out the HUD website here.
What Happens After Obtaining a Partial Loan Claim?
After obtaining a partial loan claim, here's what you can expect:
1. **Resume Regular Payments**: You will need to resume making your regular mortgage payments as scheduled. The partial claim helps bring your mortgage current, so it's crucial to keep up with future payments.
2. **Subordinate Lien**: The amount covered by the partial claim will be placed as a zero-interest subordinate lien on your property. This means it becomes a secondary loan against your home.
3. **Repayment of Partial Claim**: You won't need to repay the partial claim immediately. The repayment is typically required when one of the following events occurs:
- You pay off your primary mortgage.
- You refinance your mortgage.
- You sell the property.
4. **Ongoing Communication**: Stay in touch with your mortgage servicer. They may provide additional guidance or support to ensure you remain on track with your mortgage payments.
5. **No Interest or Monthly Payments**: The partial claim amount does not accrue interest, and there are no monthly payments required for it until one of the triggering events mentioned above.
By obtaining a partial loan claim, you'll have the opportunity to catch up on missed payments and stabilize your financial situation. It's a great way to avoid foreclosure and keep your home.
If you have more questions or need further assistance, feel free to visit Hud.gov
How does this impact my overall credit score?
Obtaining a partial loan claim can have both positive and negative impacts on your credit score:
1. **Positive Impact**: By catching up on missed mortgage payments and avoiding foreclosure, you can prevent further damage to your credit score. Making regular payments after the partial claim can help improve your credit over time.
2. **Negative Impact**: The missed payments leading up to the partial claim may have already affected your credit score. Additionally, the partial claim itself may be reported to credit bureaus, which could have a temporary negative impact.
It's important to communicate with your mortgage servicer and understand how they report partial claims to credit bureaus. Over time, as you continue to make on-time payments, your credit score can recover and improve.
I hope this helps.
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