Work Out Options

Webster works with customers experiencing hardships to find alternative solutions for loan repayment.

 

Informal Repayment Plan

 

Informal Repayment Plan is a verbal repayment agreement with a duration of 6 months or less that should result in a completed reinstatement of the loan. An informal repayment plan is the first and best means to ensure that a one or two month delinquency does not escalate beyond the borrower’s ability to cure. The informal repayment plan is developed after a review of the borrower’s financial situation and arranges payment terms consistent with the borrower’s ability to pay. An informal repayment may be appropriate for borrowers who have recently experienced a temporary inability to pay; impacted by natural disaster, or increase in living expenses, but who will have sufficient monthly income to correct the delinquency and reinstate the loan within the duration of the plan either through gradual repayment of the arrearage, or through a combination of repayment and loan modification.

 
 
 
 
 
 

Formal Repayment Plan

 

Formal Repayment Plans are written repayment agreements with a duration of more than 6 months. A formal repayment plan is the next best means to ensure that a three or more month delinquency does not escalate beyond the borrower’s ability to cure. The formal repayment plan is developed after a review of the borrower’s financial situation and arranges payment terms consistent with the borrower’s ability to pay.

An formal repayment may be appropriate for borrowers who have recently experienced a temporary inability to pay; impacted by natural disaster, or increase in living expenses, but who will have sufficient monthly income to correct the delinquency and reinstate the loan within the duration of the plan either through gradual repayment of the arrearage, or through a combination of repayment and loan modification.

 
 
 
 
 
 

Special Repayment Plan

 

Special Repayment Plans are written repayment agreements containing a plan to reinstate a loan that has been delinquent for at least 90 days. A special repayment plan provides relief that is not typically afforded under an informal or formal repayment plan, including one or more of the following: (a) suspension or reduction of payments for a period sufficient to allow the borrower to recover from the cause of default; (b) a period during which the borrower is only required to make his/her regular monthly mortgage payment before beginning to repay the arrearage; (c) a repayment period of at least six months.

A borrower is ineligible for a special repayment plan for failure to perform under the terms of informal or formal repayment plans.

Special repayment plans may be offered to borrowers who have recently experienced a verifiable loss of income or increase in living expenses, but who will have sufficient monthly income to correct the delinquency and reinstate the loan within the duration of the plan either through gradual repayment of the arrearage, or through a combination of repayment and modification. A temporarily unemployed borrower will be considered for a special repayment plan with a demonstrated strong history of employment, likelihood of future employment, and be able to afford partial payments until employed for a period not to exceed four months.

 
 
 
 
 
 

Loan Modification

 

Loan Modifications both Classic and Streamlined Loan Modifications can be a temporary or permanent change in one or more of the terms of a borrower’s loan allowing the loan to be reinstated and results in an affordable payment for the borrower. Loan Modifications may include a change in the interest rate; capitalization of delinquent interest or escrow items; extension of the time available to repay the loan; and/or re-amortization of the balance due. For loan modifications, legal fees and related foreclosure costs may be capitalized into the modified principal balance. No other increase to the principal balance is permitted.

Loan Modifications may be appropriate for borrowers who have experienced a permanent or long term reduction in income or increase in expenses, or have recovered from the cause of the default but do have sufficient surplus income to repay the arrearage through a loan modification. To qualify, borrowers must be able to support the monthly mortgage debt after the terms of the loan are modified.

Loan Modifications is most often used to reduce a borrower’s payment when the cause of the default is permanent or long term.

 
 
 
 
 
 

Deferment

 

Deferment options involve deferring the amount necessary to reinstate a delinquent loan, not to exceed the total amount of the past due payments. This is accomplished by deferring the delinquent payments to the end of the loan term and bringing the account current.

A deferment is appropriate if the borrower has the long term financial stability to support the mortgage debt and the borrower does not have the ability to repay the arrearage.

 
 
 
 
 
 

Deed-in-lieu of Foreclosure

 

Deed-in-lieu of foreclosure (“DIL”) is a disposition option in which a borrower conveys the property to the bank in exchange for a release of the mortgage/deed of trust from the land records. Borrower and lender may enter into an agreement regarding any deficiency amount. Though this option results in the borrower losing the property, it is usually preferable to a recorded foreclosure.

 
 
 
 
 
 

Pre-Foreclosure/Short Sale

 

Short sale option allows a borrower in default to sell the property and obtain a release of the mortgage lien from the land records without paying the mortgage debt in full at the time of closing. A short sale would be considered when the resulting proceeds from the sale of a property securing a loan fall short of the balance owed to the Bank. This will enable the transaction to close and borrower and lender may enter an agreement regarding the payment of the deficiency amount.

 
 
 
 
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Loan Customer Service
General information about the Homeowner Assistance Program 1-800-270-5400



Loan Counselor
Help for customers who are behind on a mortgage payment
Phone: 1-800-270-5300
Fax: 1-203-294-8369
Mon-Thurs: 8:30a.m. - 9:00p.m.
Fri: 8:30a.m. - 5:00p.m.
Sat: 9:00a.m. - 1:00p.m.

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