Avoid Foreclosure By Negotiating With The Lender
You’ve had more than your share of difficulties in the last few months. You’ve lost a loved one or been through a difficult divorce. You’ve lost a job or had to change jobs. You’ve lost your health and have medical expenses stacking up. Maybe you’re struggling with increased utility prices or fuel expenses or an adjustable rate mortgage (ARM) that is unbearable. Perhaps, your property tax bill has gone through the roof.
While you’re trying to think of how to stop foreclosure on your home, you’re getting near constant calls, letters and knocks on your door from foreclosure investors.
These investors are in the business of buying homes from people who are in danger of losing their homes to foreclosure and then selling these properties for a profit. They know that many people who are facing foreclosure have no alternative other than to sell their home for whatever price they can get.
Is it a good idea to sell your home to these investors to prevent a foreclosure? This depends, it should not be your first choice though; before selling to one of these investors, you should investigate other options like rearranging your loan first.
Rearrange Your Loan To Stop Foreclosure
Once you missed a few payments, your credit report will reflect them, and your credit score will drop dramatically. This low credit score will likely prevent you from being able to get a new loan to refinance your current loan in default.
Every mortgage lender in the country has a Loss Mitigation department established with the sole purpose of reducing lender’s losses on loans. They work to put homeowners who fell behind on payments on a repayment plan to bring your loan out of default. The best thing about Loss Mitigation alternative is, unlike a new loan, it doesn’t require a credit approval.
If You Do Get a Workout Plan, Beware of the Challenges
Loss Mitigation departments are lightly staffed. One of the biggest problems with workout plans is caused by employee overload. At time of high default rates, like we’re experiencing now, the employees have too many files to work on. And they have a limited time to process each case. The result is, the lender offers you a ‘canned’ repayment plan that has too short of a ‘catch up’ time and too large of monthly payment increase that is not realistic for your budget to sustain.
Because you’re between a rock and a hard place you’re tempted to take it to keep your home from being foreclosed on. In reality you just set yourself up for a failure. A few months down the stretch, you’ll be back in foreclosure again.
How to Hire Foreclosure Workout Professionals
One of the easiest ways to get out of foreclosure by using the loss mitigation process is by getting a professional in the field to negotiate with the mortgage lender for you. There are companies who have extensive experience in this area and have negotiated thousands of repayment cases successfully for homeowners whose mortgages are in default. Some of these companies have strong working relationships with the loss mitigation departments of mortgage lenders all over the country.
They’ll review your finances with you to come up with a realistic repayment plan that’ll give you a lot more time and keep your payments at a comfortable level to assure your successful completion of the plan. They have insider’s information about variety of programs a given lender may have. In some cases they may be able to negotiate an interest reduction to lower your loan payments.
You may think in you current circumstances hiring a company like this could be prohibitively expensive. Not so. Most charge a reasonable flat fee equal to a single monthly mortgage payment. You’ll easily get your money back through a negotiated for you deferral of the next loan payment.
If Lender Mediation Is Not An Option
If the lender mediation process won’t work for you, then you will need to sell your home to keep from having a foreclosure record on your credit report. If there is enough time before foreclosure, you best bet is to list your home with a realtor, this will let you get a better price for your home. If your foreclosure is imminent, however, you may have no alternative but to sell to an investor. These companies can buy your home quickly, just make sure that they have the means to close the deal quickly, before your home goes into foreclosure.
Tags: Finance:Mortgage, financing, foreclosure, home, home loan, investing, investor, loss mitigation, loss mitigation company, money, mortgage, Mortgages, Real Estate, real estate financing, real estate investing, real;estate, Refinance, stopping foreclosure
March 16th, 2009 at 8:12 pm
When talking to customers that are considering foreclosure or have family and friends thinking about it, I try to remind them to try ALL other options first. Talking to the lenders is the first step.
March 24th, 2009 at 4:31 pm
Curtis is very right! Me, as a customer, i feel more secure when I am reminded all my options. I feel safe when they call and talk to me or invite me to their offices for a talking session! Nice post, btw!