Brendan Borrows $150,000 from Countywide Credit Union to Buy a Home.The

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The Answer is Countrywide's options include forbearance,a workout agreement,a U.S.Department of Housing and Urban Development (HUD)loan,a short sale,a sale and leaseback arrangement,the U.S.Treasury Department's Home Affordable Modification Program (HAMP),a deed in lieu of foreclosure,and a prepackaged bankruptcy.Foreclosure is also an option. Forbearance is the postponement of part or all of the payments of a loan in danger of foreclosure.This may be based on a borrower's securing a new job,selling the property,or some other factor.A workout is a voluntary attempt to cure a default under which,for example,a lender may agree to delay foreclosure in exchange for a borrower's financial information.An interest-free loan may be obtained from the U.S.Department of Housing and Urban Development (HUD)to bring a mortgage current under certain requirements,including the borrower's ability to make full payments.A short sale is a sale of property for less than the balance due on a mortgage.A borrower-who typically must show some hardship-sells the property with the lender's consent,and the lender gets the proceeds.In a sale and leaseback deal,an investor buys the property and leases it back to its former owner for less than the mortgage payments.The seller-owner pays off the mortgage with the sale proceeds.HAMP encourages private lenders to modify mortgages to lower the monthly payments of borrowers in default (to 31 percent of the debtor's gross monthly income).A deed in lieu of foreclosure conveys property to a lender in satisfaction of a mortgage.This option works best when the property's value is close to the outstanding loan principal.A prepackaged bankruptcy allows a borrower to negotiate the terms with his or her creditors in advance. In this problem,because the market value of the home has declined,it would be unlikely to bring enough on a short sale or a foreclosure sale to recover the unpaid amount of the loan,plus the lender's fees and costs,so a deficiency judgment would be needed.The best option among this list would most likely be forbearance or a workout agreement.The lender could ask for proof of the borrower's pending employment and agree to postpone efforts to collect the unpaid amounts of the mortgage,as well as the next six payments.This action would save both parties expense and the negative effects,particularly to the borrower's credit rating,of some of the other options.

Brendan Borrows $150,000 from Countywide Credit Union to Buy a Home.The

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