1. WHAT FACTORS DETERMINE IF I QUALIFY?
HEEP was designed to bring relief for those struggling with debt associated with mortgages on their Primary Residence. To qualify, one must be able to successfully document the following factors: 1) Title, 2) Equity and 3) Capacity.
Title – An applicant must be able to demonstrate equitable title in the subject property.
Equity – An applicant must be able to document a net positive equity. Equity is defined as the difference between what you OWN and what you OWE.
Capacity – An applicant must be able to pay a reasonable application fee AND be able to honorably pledge a commitment to protect their equity from further encumbrance during the term of their participation in HEEP.
To document your title in a property you must be able to provide suitable documentation in the form of mortgage statements and/or documents recorded in public record (ie – Deed of Trust, Warranty Deed) attesting to your rightful title. When title is being held in a Trust you would need to be able to document your relationship to the Trust.
Each HEEP participant is asked to pay a reasonable application fee associated with the equity being registered and to commit to protecting that equity from being altered either by being allowed to be encumbered further with any additional loans, levies, tax liens or loss due to foreclosure for the term of the HEEP tranche, which should be limited to between 90 and 120 days (from the time of their application to the conclusion of that tranche). Thus, if the applicant is fully aware that they will not be able to be making payments on their loan(s) during the time that their equity will be committed to HEEP, they should not apply.
HEEP allows a fairly liberal calculation of equity by permitting the use of a value determination within the past five (5) years. This determination of value can be in the form of either a formal appraisal, a Tax Assessor’s Value assessment or a Zillow Estimate of Value*. (* A Zillow Estimate of Value, however, will not be permissible for properties purchased within the past 12 months) The use of this broad time period will provide most home owners with the opportunity to use equity that was present when they purchased their property several years ago prior to the real estate market failure. One would simply use this maximum value and subtract all existing debt on the property, whether public or private, providing appropriate documentation for all such debt.
HEEP is intended to be a benefit to homeowners struggling with debt associated with their primary residences, who have become challenged both by the huge swing in property value and a significant decrease in personal income. Thus, HEEP is targeted at the primary residence – small or large. Though it can be applied to a rental property it was never intended for the benefit of the “real estate investor”, but instead for the common man or woman on “main street”. Properties other than primary residences are considered on a case-by-case basis.
Properties with no encumbrance(s) or otherwise “free and clear” do not qualify for HEEP.
HEEP is not intended to be a tool to stop foreclosure. It is possible, however, to use HEEP in conjunction with other proven procedures dedicated to stopping banks efforts to foreclose on a homeowner. Native American Law and Justice Center (NALJC) does have a team dedicated to helping individuals confronted with foreclosure and is offering a program based on the Home Ownership and Equity Protection Act (HOEPA). Information about this program can be found on the NALJC website under HOEPA.