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!
