Homeowners - Having Money Problems? Contact Your Lenders, DO NOT Avoid Them

By
Real Estate Broker/Owner with DDR Realty

If you are a homeowner who is starting to experience financial difficulty, contact your lender. Do Not Avoid your lender. Although it may be embarrassing to discuss your money problems, it is best to discuss your situation with your lender before payments are too far in arrears. If you find that you are unable to make your mortgage payments, you may qualify for one of several loan workout options. But you must check with your lender to find out which of these options may be available. The further behind you fall in payments, the fewer options will be available to you.

In general, lenders do not want to foreclosure on homeowners. The foreclosure process is an expense that lenders would much rather not incur. Lenders would much rather work with you to work out a solution to help you keep your home. Lenders are required by mortgage insurers, HUD/FHA, Freddie Mac and Fannie Mae to work with homeowners who are facing money problems. Counseling is also available. Free Counseling is provided by HUD Approved Counselors who will work with you and your lender in an attempt to avoid foreclosure.

In Orange County, NY, the organization below is listed as a HUD Approved Counselor:

ORANGE COUNTY RURAL DEVELOPMENT ADVISORY CORP

3136 Route 207 Professional Bldg
PO Box 7322 Campbell Hall, New York 10916
Phone: 845-291-7300 Fax: 845-291-7322

E-Mail:mailto:ocrdac@frontiernet.net

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Rainer
62,831
Allen C. Wright
RealtyU - Aliso Viejo, CA
NS, AHS, REPS

I would agree with you with one exception ... As a business consultant I worked with a company that had a personally guaranteed loan with USBANK.  The company and owner were experiencing financial difficulties and called USBANK.  They had the account for 8 years and had never missed a payment. 

USBANK would not discuss any changes to the loan term unless the loan was in DEFAULT ... I cannot think of a worse situation from a bank ... go into default and then we will talk to you.

I did not believe it myself until my client showed me the email that said specifically ... "Your loan must be in default before we will discuss changing loan terms."

Oct 19, 2007 05:22 AM #1
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY

Allen - This policy is not the best one and does sound to be an exception. Maybe a HUD Approved counselor would get a different response from them. Thanks.

Oct 19, 2007 05:32 AM #2
Ambassador
1,654,850
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection
Derrick- great advice.  Talking to the mortgage company right away would be the best thing to do.  Working out a term to avoid foreclosure would be a win win for both parties.
Oct 19, 2007 06:47 AM #3
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Jennifer - It is unfortunate that so many homeowners avoid speaking to their lenders and eventually lose their homes.
Oct 19, 2007 08:06 AM #4
Rainmaker
224,127
Laurie Mindnich
Centennial, CO
Derrick this is so important.  Many homeowners go into a denial state, and become unwilling to work things out- offering services to assist them is huge right now.  Thanks for the post- it may well help someone.
Oct 19, 2007 12:18 PM #5
Rainmaker
405,566
Simon Conway
Orlando Area Real Estate Services - Orlando, FL
One of the biggest problems is that lenders will not talk to you when you are current. A friend of mine has an investment property which he is current on, but he knows difficulty is coming so he called the lender and the lender told him directly "call us again when you are 60-90 days behind". That kind of attitude is ridiculous and dangerous for all concerned.
Oct 19, 2007 02:23 PM #6
Ambassador
2,089,987
Barbara-Jo Roberts Berberi, MA, PSA, TRC - Greater Clearwater Florida Residential Real Estate Professional
Charles Rutenberg Realty - Clearwater, FL
Palm Harbor, Dunedin, Clearwater, Safety Harbor
People do not realize how important it is to keep the lines of communication open!!! They call us when they have already missed 4 or 5 payments and want us to perform miracles - generally they have not contacted the lender the entire time!
Oct 19, 2007 02:59 PM #7
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Laurie - Many homeowners do go into a state of denial when faced with possible foreclosure. If this advice helps them to act sooner rather than later, it served its purpose. Thanks.
Oct 19, 2007 07:51 PM #8
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Simon - That is interesting to hear since most lenders call owners who are late with just ONE payment. Before I converted to a bi-weekly program, my payment was due on the 1st of the month. I had an additional 15 day grace period. If payment was not received by the 16th of the month, I'd receive a phone call from my lender. For any lender to require the owner to fall 60-90 days behind before communicating is ridiculous.
Oct 19, 2007 08:04 PM #9
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Barbara-Jo & Bill - Missing that many payments and not communicating with the lender limits the options that are available to the homewowner and makes becoming current more difficult to achieve.
Oct 19, 2007 08:13 PM #10
Rainmaker
405,566
Simon Conway
Orlando Area Real Estate Services - Orlando, FL
Derrick - they may call you if you are a day late, but in my experience they won't negotiate with you until you are 60-90 days behind.
Oct 20, 2007 01:08 AM #11
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Simon - Fortunately waiting 60-90 days is not the case with all lenders.
Oct 20, 2007 01:24 AM #12
Rainer
104,204
Rosario Lewis
DDR Realty - Newburgh, NY
GRI, SRES - DDR Realty - Orange County, NY

Calling the lender right away may not always be productive, but in many instances it is helpful. I say, take a chance and call. You have nothing to lose.

Oct 20, 2007 03:10 AM #13
Rainer
178,223
Birmingham Alabama Real Estate, Stephen Wolfe
LivingInBirmingham.com - Birmingham, AL
Derrick, how accurate! It is a shame that so many people each year let fear and doubt and pride stand in the way of making a wise decision. I would much rather let down my guard about some difficulties than lose my house. However, I do understand that doesn't make it any easier for most of us.
Oct 20, 2007 06:49 AM #14
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Rosario - Establishing and keeping an open line of communication with the lender should definitely help the situation.
Oct 20, 2007 08:30 AM #15
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Stephen - I agree. It is not easy for most. It is difficult to discuss personal and financial problems with strangers. But to keep my home, I too would put pride aside and exercise wisdom.
Oct 20, 2007 08:39 AM #16
Ambassador
2,139,373
Todd Clark
eXp Realty LLC - Tigard, OR
Principle Broker Oregon

Very wise advice! I too often get in contact with people who wait until 15 days before and auction looking for relief. You need to call before you are in trouble not after. I had one client that had $250,000 in equity and almost gave the home back to the bank because she was afraid to call anyone out of embarrassment.

Call you bank, it is never as bad as you think and they maybe able to help or offer a solution.

Oct 22, 2007 03:41 AM #17
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Todd - Thanks. It very surprising that people would let pride cause them to possibly lose their homes. I guess the cliche "Pride Comes Before The Fall" does have some truth to it.
Oct 22, 2007 04:08 AM #18
Rainer
32,487
Danielle V. Lewis
DDR Realty - Newburgh, NY
DDR Realty
Avoidance is definitely common. But tackling would bad news is the best course.
Oct 27, 2007 12:46 AM #19
Rainmaker
120,370
DDR Realty
DDR Realty - Newburgh, NY
Orange County NY
Danielle - Unfortunately avoidance is much too common. More positive results would be attained via an open line of communication with the lender.
Oct 27, 2007 01:03 AM #20
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