Facing Foreclosure? Why Not Try to Modify....
Even though I am a Mortgage Broker in Palm Beach Gardens, Florida one thing stays constant know matter what part of the country you are in. That is Mortgage Brokers, Loan Officers, Mortgage Bankers and Loan Originators all earn a commission when your loan closes so before you come to us on your Foreclosure Bailouts why not try to work with your current Lenders to help modify your current Mortgage. Especially, at the present housing market these Lenders now more than ever DO NOT Want your property know matter how much equity you have in it.
Recently, I was working with a client who was served with Foreclosure papers and had assumed (we all know what that means) that the current lender would not help her modify the current mortgage. Her assumption was based that her loan-to-value (what you owe the bank versus the appraised value of the property) was only 35% and was certain that the lender was a greedy and wanted her property. I informed the client that this is not as cut and dry as you think. With the recent collapse of the lending industry banks are over loaded with properties and would much rather help you modify the mortgage and keep you in the property than foreclosing on it.
My client was getting frustrated with the amount of time and the amount of phone calls that was taking place between her and her lender and asked me to simply help her refinance her property and start over. This sounds simple enough but now comes the fun part. Since my client is currently in a foreclosure process and part of the reason this came about was that she lost her job over the summer and was unemployed for 6 months conventional financing is out of the question. We would have to look for either Private Money or Hard Equity to help save her home.
Now when looking towards these types of financing options, this comes at a steep price for the client. The normal programs usually are between 3 and 4 points and the rates begin around 11% and can go up from their.
Modify
After I explained how this program worked I informed my client to try one last time with her current Lender. This time she got to the right person and was asked for the following documentation:
•· 12 Months Bank statements
•· W-2's
•· Last 2 pay checks
Does this sound familiar? It should. Just like when you applied for your mortgage (unless stated or no doc) you had to prove your income and assets. You are asking the lender for help to save your home from foreclosure. The Lender wants to make sure that you really need help and if they do what you ask from them it will place you on the right path financially. By simply saying I am not going to pay, this is not an option. You did sign an agreement that you would pay that mortgage at the closing table.
After reviewing these documents her current Lender agreed to place the 3 months of unpaid mortgage payments on her balance. This would mean at the end of her mortgage she would have to pay 3 more payments. (30 years down the road) The good news is in addition of taking her out of the Foreclosure process her current lender would report to the credit bureaus that her mortgage is now current.
Now in this case the clients mortgage did not adjust it was an unemployment issue that caused her problem. However, I have seen other modifications when the borrowers demonstrated to the Lenders the ability or lack of ability to pay the new payment and refinancing is not an option do to high loan-to-values. Please keep in mind this is not a standard practice in the lending industry and you will have to have patients and must be proactive when speaking to the lenders. Don't wait for the sheriff to come a knocking.
In closing, before going to your local Mortgage Broker, Loan Officer, Mortgage Banker or Loan Originator remember they get paid only if they close a loan for you. This is why finding a true Mortgage Professional really counts.
For More Mortgage Advice: Mortgage Advice in South Florida
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Full-Time Mortgage Broker in South FL. Palm Beach County. Specializing in Hard Money / Private Money, Foreign Nationals, Jumbo and Super Jumbo Loans. In addition I work with Today's Premiere Lenders.
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Good advice Matt, a lot can be gained by communicating with your current Mortgage Holder first....
With this crisis, sometimes people just don't know where to turn or what their options are. This is a helpful post and provides guidance through a difficult time.
Jason, Thank you. I agree but running and hiding will not solve anything.
Lola, Thank you. I agree with you sometimes they don't know where to turn. They really just need to have patients especially if you are dealing with a servicer and not the end lender. Thank you for your comment
Matthew--
Thanks for the tips. I have pre-foreclosure sellers beginning to call me with questions. This information will be og grat use to several of them.
Hi Matt,
This is great information, many do not know this option is available and some unfortunately wait until its too late. You are a true professional! :)
Matthew.... I agree with Jason.... besides, just getting out there to educate the general public is something that we need to keep doing, especially in these trying times. So many as this client almost did, throw their arms up in the air and quick too quickly. Good job here.
Great advice Matthew, you have to ask!!! We are often surprised by the answer. Thanks for bringing this up.
Demetria, My pleasure hope it helps
Suzanne, Thank you. Communication is always the key
Jeff, You are right they just throw their arms up and that is when the vulchers will circle..:-)
Barbara, Thank you, My pleasure
Dear Matthew,
Thank you for your informative blog. I'm hoping that it may help my clients.
This post will help the many who need to do something. Most are still under the impression that the bank will not work with you. Another great job Matt.
Mirela, My pleasure I hope it works for them
Keith & Robin, Thank you.:-)
Matt,
This is ecellent advice, and the lenders work well with this. I remember them doing many years ago as well.
Thats Consumer Love right there,
Tom Weiss
Tom, Thank you. Some will but not all. The big thing to remember is it is cheaper to try to modify then to refi.:-)
Matt,
Ive seen this...it could be a good alternative if the bank is willing to work with you. Most should in this day and age. I guess the other routes would be short sale or trying a deed in lieu.
Neal, One would think. My advice would be prepared to prove you can't afford it. Just like when you applied for the mortgage you had proof you could afford it.
I am seeing more and more mortgage companies willing to modify the loan - they would rather do that than face owning an empty home for a good year -
This is an excellent post. Loan modification is an excellent alternative for some facing foreclosure. One thing that these homeowners should understand is that once the application is approved it is not necessarily a media. I recently helped some people modify their current home loan and it was approved however they would not allow them to start making new payments until after March.
Bill & Barbara, Especially in this market most of these companies are really trying to help
Rey, Thank you. All good things come to those who wait..:-) thanks again
Matthew- Very good information. The biggest problem with those who get served with the papers is that they put them on a table and think by not doing anything about it, it will go away. It won't, be proactive and do something about it! Now, if you committed mortgage fraud, it may not be such a great idea to show all your bank statements and W-2's if they are way off of what you said when you got your loan unless the change is legit and you can prove it. Katerina
Matthew... excellent advise! More and more lenders are working with consumers, especially with that LTV. I don't understand why some people ignore it and hope it goes away! The only thing that will go away is the home they worked so hard for if they don't fight to keep it!
Katerina, Thank you. You are right many times they get served and leave them on the table hoping and praying it will go away. The only thing going is them when the sheriff comes
Kim, I don't understand it either. My client did. I told her she would be going from a much lower to a new rate of 12% and 4 points to close the loan. That might have given her the push she needed to make those phone calls like I advised her to do in the first place.