We see banks folding and buyers being foreclosed on at a rate that hasn't been seen, quite possibly, ever. But, do I think mortgage fraud or sub-prime loans are the reason?
You see, I work with a lot of foreclosures, and the reasons I see for people going in to foreclosure are death, divorce, job loss and injury. None of these have to do with the type of loan someone has.
Yes, I do see the occasional ARM that can affect the ability for someone to pay, but this blog is going out to the mortgage industry. Not saying anything bad about you, but as the owner of four businesses in my life, you need to re-adjust your thinking instead of crying to the government.
I have a few ideas that I think may save you, if it isn't already too late. I do understand that some situations can't be helped when a home is involved. When a death or divorce is involved, there isn't much you can do. But, you can help!
If someone should die in a family, and that is half the family's income, you know they are not going to be able to keep up with the payments. Help this family in their time of loss and stop the payments for a few months. Let them sell the home without the stress of the bank sending nasty letters and adding late payment fees. If there is no equity in the home, let a real estate agent find someone who is willing to take over the payments as they are, just for the chance to own a home. There are agents like me that won't mind getting paid $100 a month until my fee is paid, just to get a buyer into a home who couldn't before.
If there is a job loss, the hardest thing for a person to do is be interviewed while thinking if they don't get this job their home will be foreclosed on, and the late fees are stacking up. If there is a job loss, keep charging interest, but tack it on to the end of the loan and give this person six months to find a new job. You won't get the home back via foreclosure and the home owner will continue to pay on time, once they find a new job.
The ARM has adjusted and all of a sudden the payments have gone up by $200 or more. I know you have an agreement with these people, but if they have not had a late in two or three years and then you raise the
interest and they start to fall behind, this may tell you something. Instead of taking the house back, offer to lock in their rate at the old interest rate for $500.00 and waive their late fees. If you do this, I bet you will have a few less of these loans foreclosed on.
I have discovered that injuries and medical bills are the number one reason for people falling behind on their payments. A lot of Americans, even with insurance, get into trouble when an injury happens. Instead of making it a profit center, like a lot of banks do, offer people who have loans with your disability insurance AT COST! You will end up helping these people and, in the end, keep one more home from going into default.
So, to the mortgage companies out there that are still in the business, WE NEED YOU and we don't want to see any home be foreclosed on. Start to think outside the box and give me a call, I have many more ideas up in my head that can help you and my clients, either stay in their home, or find a first time home buyer a home that they may not have been able to get into before.
UPDATE: Because of this blog I got invited to do a national radio show. Click here to hear the show.