I have talked with too many borrowers in the last several months that are or are about to go into delinquency. It is not an easy conversation. Most borrowers do not know what their options are. I think that walking should be a last resort. I am pretty sure that all of us knows at least one person in default. Here is some information that may be helpful to them.
Most borrowers are unaware that servicers might be able to provide alternatives to foreclosures and help them stay in their home. To find out, they just have to pick up their phone and call their servicer. By working with your servicer, there are several options to avoid forclouser:
- paying off their mortgage in a single lump sum.
- missed payments could be added to the loan balance through a loan modification
- mortgage terms could be extended under some circumstances.
- a temporary suspension of the mortgage payment or deed-in lieu of foreclosure
When you call your lender, be sure to have your account information handy and be ready to give a summary of the financial problems you are having. You should also have recent income statements and your household budget with you. Be prepared for more than one conversation. Your lender may require that you complete a "loan work-out" package - you may not be eligible for help without it, so complete it as soon as you receive it.
Questions you need to ask your servicer.
- How much time is the lender willing to give you to complete a work-out?
- What are your obligations under the work-out package?
- What are the specifics? Be sure to ask what is due and when.
- Will a foreclosure sale of your property be put on hold while your lender looks at the possibility of a work-out package?
For advice on calling your lender: Mortgage Bankers Association's Foreclosure Prevention Resource Center
The HUD has begin mailing letters to hundreds of thousands of at-risk homeowners, as part of a campaign to drum up refinancing activity for FHA-backed mortgages. The effort appears to target FHASecure applicant which targets delinquent and defaulting subprime borrowers. The HUD letter, interestingly, directs borrowers to call an FHA-specified help number if they want to speak to a housing counselor and does not direct borrowers to the so-called HOPE hotline (See Below) that has been promoted by administration officials heavily during the past few months.
Six of the nation's largest mortgage lenders are suspending foreclosures for 30 days (02/12/2008). The Six mortgage lenders are:
- Bank of America Corp.,
- Citigroup Inc.,
- Countrywide Financial Corp.,
- JPMorgan Chase & Co.,
- Washington Mutual Inc. and
- Wells Fargo & Co.
These are chief backers of President George Bush's Hope Now alliance, a private sector-led effort to help minimize the impact of the housing downturn on homeowners, neighborhoods and the U.S. economy.
See Don't Make Foreclosure Worse for Yourself .
Resources:
Finding a credit counselor: You can find a credit counseling agency in your local phone book or by contacting HUD at (800) 569-4287. You can find a list of HUD-approved agencies on their Web site.
http://www.hud.gov/offices/hsg/sfh/hcc/hccprof14.cfm
Getting debt advice: The HOPE National Helpline is open 24 hours and provides free assistance at 888-995-HOPE.
Additional housing agencies that may be able to help you with confidential budget and debt counseling include:
You can find AJ Nisen on Active Rain at Contra Costa California Mortgages or at Bank of America Mortgage
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This is great information. Thanks AJ!