The following four options are available to VIHFA borrowers to avoid foreclosure:
1. Repayment Agreements
A repayment plan is an agreement that gives a borrower a specified amount of time to bring a delinquent mortgage account current by paying the normal monthly payments plus an additional amount monthly to cure the delinquency. A repayment plan is considered when the delinquency is a result of a temporary hardship that can be resolved.
- The plan must lead to the full reinstatement or to the payoff of the mortgage
- The repayment agreement must be in writing with a stipulation agreement if the loan has already been referred for legal action
- The delinquency must be greater than three (3) months and less than twelve (12) months
- Borrower will be required to seek counseling with one of VIHFA’s certified counselors for budget and credit counseling
- Payments are to be made by payroll deduction, direct debit of bank or credit account
A repayment agreement will be granted for a period of twelve (12 ) months. If it is determined that the financial condition of the borrower has not changed or improved since the 1st repayment agreement, then the Authority has the option to extend the agreement after reviewing the loss mitigation package and payment history.
Refinancing involves paying off an existing VIHFA loan with the proceeds from a new loan by using the same property as collateral. VIHFA does not refinance loans for existing clients in their portfolio who are in foreclosure except for Veterans. This Loss Mitigation option allows a borrower to refinance a current or delinquent mortgage with another lender thus removing the current delinquency or foreclosure potential from the Authority’s portfolio. With this option, the borrower will receive a completely new mortgage with new terms, interest rate and monthly payments. The new loan will replace the current mortgage and may even lower the monthly payment, which may improve the borrower’s financial situation.
3. Loan Modification
A Loan Modification is a written agreement between the Virgin Islands Housing FinanceAuthority and a borrower that permanently changes one or more of the original terms of the Note to bring a defaulted loan current and/or make the payment terms more affordable to the borrower. The appropriate loan modification for the borrower will be determined by the Counselor in the Homeownership Division.
4. Deed in Lieu of Foreclosure
In addition to the restrictions set forth in the deed, VIHFA has the first option to purchase and to sell the property to a qualified applicant on its applicant list. VIHFA may exercise receiving a Deed-In-Lieu of Foreclosure in order to satisfy the debt owed by borrower. When a mortgage is in default and it is has been determined that there are no other alternatives for resolving the delinquency, even through a sale of the property, the Virgin Islands Housing Finance Authority may agree to a voluntary conveyance of the property from the borrower in exchange for the satisfaction of the debt. This option is only available when the Virgin Islands Housing Finance Authority is the first lien holder on the mortgage. In order to utilize this option, the following circumstances must be present:
- No other option for loss mitigation is appropriate in assisting the borrower to maintain the mortgage with the Authority
- A determination has been made that the borrower’s current hardship will be long term or permanent
- Borrower is willing to convey the property to the Virgin Islands Housing Finance Authority
Loss Mitigation Process
For Borrowers, the Loss Mitigation Policy & Procedures are as follows:
- Once a delinquent Borrower contacts the Collections and Servicing Division (C&S) and inquires about assistance in fulfilling mortgage requirements, C&S will prepare a Loss Mitigation package.
- The Loss Mitigation Package will be sent to the Borrower within five (5) days of notification and contain a list of documents to be completed by the borrower. These documents will be used to evaluate the Borrowers’ financial situation.
- The Loss Mitigation package is returned to the Homeownership Division where a review of the information will be conducted with the Borrower and a determination made as to which VIIHFA foreclosure prevention option is best suited for the borrower.
- Once an assessment is completed, the loss mitigation package will provide the Borrower with options available to avoid foreclosure by offering them alternatives to pay down their mortgage.
The Loss Mitigation Package includes:
- Hardship letter/personal statement about financial situation that caused delinquency
- Copies of personal Tax Returns for the past 2 years with W-2’s
- Copies of business tax returns for past 2 years for self-employed individuals
- For self-employed individuals, a year to date balance sheet and income statement (P&L)
- 2 months of the most recent bank statements
- Proof of Income
- Paycheck stubs for the past 60 days
- Child Support Income
- Unemployment Income
- Disability Income
- Name and contact details of borrower's current employer
- Recent utility bills – electrical, cable, water and telephone
- Financial Status Form
- Credit Authorization form/$30.00 fee for credit report
- Debts not included on credit report with substantiating evidence
- Power of attorney if applicable
- Copy of complete divorce decree or legal separation agreement if applicable.
- Social Security and valid picture identification for each borrower.