What does "Partial claim" mean?

Definition

A partial claim is a loss mitigation option for FHA loan borrowers in which a lender pays off your past-due amount and adds it as a non-interest-bearing lien on your home. This is paid off when you sell or refinance.

Understanding Partial Claims

A partial claim may be available when a homeowner struggles to make mortgage payments. It allows borrowers to catch up on missed payments by creating a subordinate loan for the overdue amount. In simple terms, it's like pausing your current payments and tacking them onto a smaller loan you'll pay back later. Example: If you owe $5,000 in missed payments, a partial claim might allow you to move that amount into a separate loan. It's not a way to reduce the total amount owed on your mortgage. Instead, it helps manage payments without losing your home. Partial claims don't erase the debt or lower your principal balance.

People Want To Know

What is a partial mortgage claim?

A partial mortgage claim is a loss mitigation option for FHA loan borrowers where the lender pays off your past-due amount and adds it as a non-interest-bearing lien on your home. This lien is paid off when you sell or refinance the property.

Is a partial claim a good idea?

A partial claim can be a viable option for FHA loan borrowers facing temporary financial hardship. It allows you to defer past-due payments without accruing interest on that amount, which is added as a lien on your home. However, this amount must be repaid when you sell or refinance your home, potentially impacting your financial situation at that time.

Does a partial claim hurt credit?

A partial claim can negatively impact your credit score. When a borrower utilizes a partial claim, the missed payments leading to the claim are reported to credit bureaus, which can lower your score. While the partial claim itself does not directly affect credit, the late payments preceding it do.

Can you sell a house with a partial claim?

Yes, you can sell a house with a partial claim. However, the partial claim amount becomes a non-interest-bearing lien on your home, which must be paid off when you sell or refinance the property.

Flip the Script - Master mortgage objections

More From The Mortgage Glossary

Payoff amount

The payoff amount is the total sum of money required to completely pay off a mortgage. It includes the remaining principal, any accrued interest, and other fees.

Permanent Change of Station (PCS) orders

Permanent Change of Station, or PCS, orders are official directives for military personnel to relocate to a new duty station. These orders often come with specific guidelines and can impact a home loan.

Preapproval

Mortgage preapproval is a conditional commitment from a lender to give you a loan up to a specific amount. It involves a detailed review of your finances and gives you a clear idea of what you can afford when shopping for a home.