OK, so after hanging up the phone with a client in trouble, I felt obligated to write a quick post about this. I will not use names or any personal information but this is a real live situation. I am completely AMAZED that a servicing lender would make such a comment. This person happens to be in the mortgage business as a loan officer but can't do the loan through their company so I have been contacted for assistance.
A troubled home owner in AZ contacted me to see what options might be available to them in order to keep their home by refinancing it or even sell it to avoid foreclosure. The problem was the current loan was an adjustable rate and had adjusted twice. This caused the interest rate to increase by like 4%. The home owner was current on the mortgage but the increased interest payments were causing late payments on other debts. I evaluated the financial situation and there just is not enough money coming in to pay everything every month so something is in need. I looked at refinancing the home and it was over 125% loan to value so this was not an option. I may be listing this property as a short sale in the near future but figured the owner should contact the lender to see if they would be willing to reduce the interest rate or convert it into a fixed loan without looking at the loan to value. There are several options the lender can offer in order to save the clients home and prevent getting the home back through foreclosure.
I had the owner submit a complete financial statement to the lenders loss mitigation department for them to review. When they contacted the home owner to discuss this situation, the representative said to the home owner......"With all due respect, with you being in the mortgage industry, why in the world did you select an ARM as your loan program?" The owner did not have a good reply other than they felt values would allow a refinance when the arm was due, but, that was not the case. All I could say was I am sorry and shocked. The lender then went on to say well why don't you short sale the property along with another mind boggling statement. The statement was well since you are not currently late on your payments, there is nothing we can do.
No come on, we all know arm's are risky but doesn't this servicer buy loans? Didn't they buy this adjustable rate mortgage the home owner is in? I think this is a totally ridiculous statement this servicing lender would make about a loan program they are servicing. I told the owner to contact one of the media companies as they would love to eat up this servicer but they did not want to be exposed of their situation, which is understandable.
I also told the owner they should have said "you know, you are right and do you mind if I ask why would you service a loan that is going to end up in foreclosure where you will lose 50k or more? How many ARM's are you currently servicing? If you knew they were bad, why would you sell them or purchase them on the secondary market?"
I am at a loss for this specific situation having a lender who is trying to buy homes through foreclosure. Thank goodness, I know who this servicer is and will not send any loans to them or make sure my loan doesn't go to them because in this market, that is how you go out of business. I guess we can say good luck to you servicer and best wishes trying to make you money back on this one!!!
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