If you
either want to sell your house and have debt relief or keep you home. Please
consider the following…
Step-by-step plan for seeking help:
-
Respond to the mortgage company's phone calls
and letters.
- Seek advice and negotiating help from a third
party.
-
Figure out if your problem is short-term or
long-term.
-
Decide what you want and ask for it.
-
Document income and expenses; keep all
correspondence with the servicer.
- Be persistent in your quest to talk to the right
people at the mortgage company.
Respond to the mortgage company's phone calls and letters
The mortgage servicer is the company that collects monthly
payments, passes along the payments to the homeowner's insurance company and
tax collector, and makes phone calls and sends letters when the borrower falls
behind.
Academic researchers
have found that, in about half of foreclosures, the delinquent borrower never
talked to the servicer.
"One of the challenges we have
is in actually establishing effective communication with some of our borrowers
in distress," says Paul Koches, senior vice president and chief counsel
for Ocwen Financial Corp., a large servicer of subprime mortgages based in West
Palm Beach, Fla. Fear, embarrassment and shame keep delinquent borrowers from
talking to servicers.
"There's a great deal of
psychology that swirls around delinquencies," Koches says. "But we
have no chance of helping someone if they're not willing to talk to us."
Tip:
- Answer the phone and open your mail, but don't agree to any terms until you read the
next tip.
Seek advice and negotiating help from a third party.
Respond to the mortgage servicer, but don't be rushed into
making a promise that you can't keep. Before making a deal with the servicer,
describe your situation to an attorney, accountant or a knowledgeable mortgage
person, Abrams Garfinkel Margolis Bergson law firm.
One place to go is a housing counseling agency or a consumer
credit counseling service. Call to (888) 995-HOPE, the hotline established by
the nonprofit Homeownership Preservation Foundation. It offers 24/7 access to
foreclosure counselors, nationwide. You can also visit my website for more
information: http://housesbymaria.com/foreclosure.php
Tip:
- Choices for guidance include consulting an
attorney, a credit counselor or a housing counseling agency. You can find a
counselor through the http://www.cdpe.com/home
. Find help at which maintains an updated database of approved housing
counselors. http://www.cdpe.com/profile/view
Is your problem short-term or long-term?
Mortgage servicers
offer two broad types of workouts, depending upon whether the borrower's
troubles are short-term or long-term. Before negotiating with a mortgage
servicer, you should know which category your problem belongs to.
Sometimes it's easy to know the difference. Koches, of Ocwen, cites the
hypothetical example of someone who has to pay an emergency medical bill.
"Maybe for a relatively short period -- a month or three months -- they're
under tremendous pressure," says Koches. "We full well understand
that if a homeowner needs to address a serious medical problem, they're going
to deploy their available cash to getting themselves back on their feet ...
clearly, there are short-term disruptions that call out for forbearance."
In other cases, the
borrower might become permanently disabled, get divorced or become widowed.
Those usually are long-term problems. Throw in a sharply higher rate on an
adjustable-rate mortgage, and it can turn into a crisis.
Sometimes it's hard
to know how long a problem will last. A layoff might result in a one-week job
search, or a yearlong hunt. An injury or illness could linger longer than
expected. In such cases, it's still a good idea to get in touch with the
servicer.
Tip:
- Each situation is unique. Understand your
situation before agreeing to a plan.
Decide what you want and ask for it
For short-term problems, the mortgage company is likely to offer
a forbearance. Most commonly, this entails adding a set amount to each month's
payment.
Bank representative’s opinions:
Any forbearance agreement should be
"forward-moving" -- it should be the full mortgage payment, plus a
portion that pays off the arrearage over time. "You don't ever want to go
onto a payment plan, particularly if you can afford it, that involves less than
a full monthly payment," because you don't want to keep adding to the
amount owed.
Longer-term problems that reduce income, such as disability,
are sometimes solved by loan modifications. Theoretically, any term of a
mortgage may be modified: the rate, the final payoff date, even the amount
owed.
"Modification is designed for a homeowner who doesn't
have future prospects of being able to maintain the current mortgage payment or
the projected one, if they're anticipating a rate jump, over the long term; it
is designed for long-term relief, so we know that their income isn't going to
change much over the next 20 years."
Modifications were once viewed by the industry as an extreme
measure. Now, with foreclosure having affected roughly one out of every 54
homes last year, modifications are more appealing.
The government's new Making Home Affordable plan will
probably make modifications even more attractive. The plan creates uniform
standards for modification. In the past, the lending industry has cited a lack
of such standards as a roadblock to successful modifications.
The plan promises servicers $1,000 for each loan a servicer
successfully modifies. The servicer also receives an additional $1,000 per year
for every year the homeowner stays current on the modified loan.
"The primary focus, particularly now with the
president's new loan modification plan, is on (staying current) and I think
you're going to see, hopefully, a groundswell of support," says Koches.
"A lot of the players in the industry had resisted undertaking an
aggressive modification program, citing legal reasons or lack of standards. But
I do think now that we have a really well thought out, well-balanced
plan."
Tip:
Document income and expenses. Keep all correspondence (even the envelopes)
Before negotiating a deal, gather all the information you
need, starting with any correspondence from the servicer. "That includes
anything unopened, as well. Bank representatives have said “Don’t throw away envelopes from the servicer --
postmarks sometimes can
make the difference between being eligible or ineligible for relief”
Collect everything that relates to income and expenses.
Find your last 3 pay stubs. Banks want to see at least one month of income “If
(income) is very sporadic, give details on how you're getting paid so we can
calculate an average over time." Gather at least three years' worth of W2s
and tax returns, plus three months of bank statements. Find all the mortgage
paperwork and add that to the file.
Pull together all bills, paid or not, from the times you
were falling behind on the house payments until now. Include utilities,
auto payments, credit cards, student loans, child support, and medical bills.
Find the winter and summer heating and cooling bills.
You also need to include everything that documents why they
fell behind an employer's notification of reduced hours or a layoff, an invoice
for an auto repair or a furnace replacement, or a shutoff notice from a
utility.
Behind every mortgage delinquency, there's a story. Learn
to tell it succinctly. "They should sit down and write out the
circumstances that led to the default," Bank representative says "They need to determine what was the
reason they fell behind."
Tip:
- Be prepared for tough questions.
Some questions at Ocwen : loss
mitigation specialists are taught to ask tactfully, Example: "Is there a
way you can reduce some of those auto expenses?"
A counselor at a housing counseling agency might be more
direct: "Do you want the Escalade or the house?" Know the answers
before the pointed questions are asked.
You want to have some a third party that can advise you in
these circumstances.
Be
persistent in your quest to talk to the right people at the mortgage company
This last point could just as easily be the first: Make sure
you talk to the people at the mortgage servicing company who can help you.
A
mortgage servicer has two platoons of employees who talk with delinquent
borrowers. The first is the collections department, which consists of people
who try to pry money out of you and get you current on the payments.
The second group consists of the loss mitigation
specialists. These departments go by different names, depending on the
servicer, including foreclosure prevention, loan resolution and delinquency
customer service. We'll use the most common name for the department: loss
mitigation, or loss mit.
It can be difficult to get through to the loss mitigation
department if collection agents are discouraged from transferring calls. This
is one of the benefits of having a helper, such as an attorney or a housing
counselor. The first will intimidate bill collectors and the second might have
contacts within the loss mit department.
Tip:
- You'll want to talk to someone in the loss
mitigation department. Request their
number as soon as you can get a hold of someone in customer service dep.
Take a look closely to this bullet points and you have any
questions please call me and let me know how I can be of help for your
particular situation.
