Housing Counselor Certification (HUD) Practice Exam

What retention option is best for a family with a negative cash flow that is seven months behind on their mortgage?

1. Temporary Forbearance

2. Special Forbearance

3. Loan Modification

4. FHA-HAMP Loan Modification

The correct answer is: Special Forbearance

A family facing negative cash flow and being seven months behind on their mortgage situation requires a solution that directly addresses their current financial difficulties while helping them to stay in their home. Special Forbearance is designed specifically for homeowners who are experiencing temporary financial hardships that impact their ability to make their mortgage payments. This option allows for a short-term suspension or reduction of mortgage payments, providing the family with the necessary time to recover financially without losing their home. The terms are often tailored to the family's specific circumstances, which is particularly beneficial in situations of negative cash flow. In contrast, while other options like Temporary Forbearance might offer similar relief, they are often more short-term and not as adaptable to the needs of families facing persistent financial challenges. A Loan Modification involves changing the original terms of the loan, which can be beneficial but may not be the quickest or most appropriate response to immediate cash flow issues. FHA-HAMP Loan Modification focuses on long-term solutions but may also require more time to process and implement, which may not meet the urgent needs of a family currently in distress. Overall, Special Forbearance aligns best with the immediate need to manage the financial difficulty and avoid further delinquency while offering a path for recovery.