A newly released study by Freddie Mac, the mortgage giant and the Roper Organization; professional pollsters, showed that 61% of delinquent homeowners did not know about workout options offered by lenders designed to help them save their home.
This is a shame as Freddie Mac’s records show that up to 80% of delinquent borrowers can be helped by one form of workout program or another offered by lenders.
Although the study’s authors attribute the blame to lack of follow up on the borrower’s part, as well as the lender’s, we have seen a lot of frustration from many of our clients who were delinquent.
What programs there are, how to find them, who to talk to, and what were the qualifications for the different programs, were among their questions.
Others were frustrated because they did not qualify for the programs offered.
Once the banks stop accepting mortgage payments from a delinquent borrower, usually after the third missed payment, they generally cease to look to the banks for any more assistance.
In reality, banks lose money when they are forced to take back homes. They also receive demerits from state banking regulators for having non-performing assets (delinquent loans) on their books.
The problems arise in large part due to the fractured nature of the mortgage business these days. Gone are the days when your local bank loaned you the money, collected your payments for 30 years and handed you back the satisfied mortgage when it was paid off.
Today, your mortgage is sold by the bank that made the loan, usually within 24 hours. The original bank therefore gets its money back to make more mortgage loans. They may or may not continue to collect your payments.
Later, your mortgage could be traded, sold, securitized, collateralized and homogenized in the vast, international secondary mortgage market.
Is it any wonder that it is almost impossible for the layman to figure out who to contact when problems arise? Always pay attention to notices you may receive about your mortgage being transferred or sold to another bank. Make sure payments are sent to the correct bank. The responsibility is yours.
If, against the odds, the right person at the right bank is presented with a sufficiently documented case, they can frequently work something out. Something like a forbearance, under which a lender would temporarily reduce or even eliminate mortgage payments to allow the person to catch up.
Other possibilities would include loan modifications, where a major parameter of the loan, such as the payment size, interest rate or even term of the mortgage would be modified or changed to result in a lower payment.
There are even situations where the entire loan can be refinanced and the arrears paid off, like a credit card debt consolidation loan, even though the borrower is in foreclosure.
If you fall behind in your mortgage payments, act fast. Start by contacting the bank you are sending your mortgage payments to. If you do not get their help and cooperation, you should look for help from a knowledgeable professional, your home is on the line!
Copyright 2005 Bill Young. Bill is a former bank mortgage officer and is now a personal financial consultant and real estate investor. If you are facing foreclosure, and want to stay in your home, he can help you negotiate a deal with your bank that can save your home. http://SaveYourHomeLLC.Com If you cannot or do not want to keep your house: http://WeTakeOverYourPayments.Com If you want to learn more about real estate investing: http://MotivatedSellersOnline.Com
