A HUD (Housing and Urban Development) Partial Claim Loan is another possibility. Under this option, a mortgagee will advance funds on behalf of a mortgagor in an amount necessary to reinstate a delinquent loan (not to exceed the equivalent of 12 months). The mortgagor will execute a promissory note and subordinate mortgage payable to HUD. Currently, these promissory or "Partial Claim" notes assess no interest and are not due and payable until the mortgagor either pays off the first mortgage or no longer owns the property.
To qualify for a Partial Claim Loan:
John and Mary’s monthly mortgage payment is $1,000. Since John’s unemployment, they’ve missed six payments and owe the mortgage company $6,000, plus another $1,000 in attorney fees. They need $7,000 to get out of foreclosure. John has just started a new job. A Partial Claim Loan will give John and Mary an interest free loan of $7,000, which will be added to the end of their mortgage. Their mortgage payments will remain the same.