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5 Secrets LENDERS Don't Tell Homeowners Facing Foreclosure
by Derrick Ali
My name is Derrick Ali, and I'm a RE Investment Manager and Consumer Mortgage Loan Advocate. I assist both homeowners and owners of small businesses here in Michigan and throughout the United States.
Statistics say that 1 in 4 homeowners will experience a delinquency leading them to 70% to default on their mortgage loan this year.
Being a former mortgage professional, I also still talk with lenders from Banks and/or Mortgage companies around the country. We discuss issues and problems encountered in our experiences and also share insights.
Here are some of the things they should tell borrowers facing foreclosure, including programs that could help you deal with your own mortgage delinquency and maybe even save you money either on your monthly payments or over the life of your loan, if only you knew.
Here are five things your lender probably never told by You:
1. That first phone call? You can probably avoid most of the pain if you got your stuff together. Most lenders will approve a request for a 'modified' mortgage workout-plan for your delinquent loan based on the complexity of your financial situation, and/or certain personal circumstances. Not clearly explaining or providing details on this is called the "Why bother?" factor.
When information trickles in partially complete form sent this week, a note on job changes given the next week increases the why bother factor, and decreases the likely-hood your workout plan is not going to be approved. As one lender put it, "I wish there was a nice way I could tell loan customers to wait until they think they've got all their information together but remember time is Not on your side so Don't send me part of it now and part later. I am not good at putting together puzzles and I can't do so if they Don't give me ALL the pieces."
Another lender more directly stated: "When I get a workout request from a loan customer I open a file. Every time I look at the file and that is not complete the request gets tabled for another week or so...if the borrower could care less about insuring their ability to keep their own home, then who am I to do it for them? "And as the days and/or weeks go by without me receiving the needed information, the costs to the homeowner facing Foreclosure goes up as well!" he said. "The Courts & Attorneys charge us for their time. So we pass it on to the borrower!"
2. The early bird gets the Worm. It's human nature. Early in the beginning stages of a loan default, lenders have more time to respond to your request. This doesn't necessarily mean you're going to get a "better" workout plan a professional lender should go through the same questions and process regardless of when you make the request for a workout.
If there has been a severe change in your household income, (job- loss or transfer), health-related (sickness or death), Divorce/Partnership dissolution, etc. it should all be explained so draft a letter of explanation (LOX) as a checklist to discuss over the phone with the lender as well as accompany your application.
By doing this detailed work early on the clearer/surer you will obtain positive results. If I had to obtain a workout plan with my lender, I would call him or her before I missed my 3rd loan payment to explain my needs. (Only after completing a new financial statement & drafting an LOX.)
Each lender has its own "seasoning" period before their full repertoire of workout options becomes available, but for most loan customers usually respond during the worst period between the last 30 days before the sale.
3. Lenders don't like last-second rush jobs. Interestingly, this last minute rush to seek a workout plan isn't always in vain.
Many lender professionals, have the ability to perform loss- mitigation up to day before the Sheriff's sale. Last-second calls and requests are not recommended nor seriously taken by most lenders. It is always best to approach your lender while they have the most time to review your request and make a decision in your favor. Personally, I wouldn't want to take on a new workout request that close to the deadline and potentially take time away from those early-bird loan customers having difficulties.
4. Don't ask for a Free Ride from Bankruptcy. Lenders don't want to do it. Lenders can't do it. And in a legal proceeding, such as bankruptcy the lender would forfeit their ability to get their money back and/or right to keep the property as security.
Any plan and/or request arranged outside of the bankruptcy court Trustee would certainly tick off the judge so get permission from the Trustee and be prepared to live up to your agreed to plan. (While loan professionals maintain the confidentiality of their client's information, but we generally do not have the same kind of attorney-client privilege that lawyers enjoy.)
"One client called me and said they were going to have some income that they would not be declaring in the BK from an Investor friend who wants to help the save their home..." Look out it this just could land you in jail!
There's a lot a good consumer debt-negotiation services and advocates like myself who can help you to keep your home legally. There's nothing a good consumer Mortgage Loan Advocate can do to help you cheat or otherwise violate the law. If that's the kind of "help" you want, you should just do your own negotiating of a workout plan.
5. The person you choose to get you a workout plan should be a Professional. I was in a restaurant one day talking with a client. The waiter whom overheard our discussion as it turns out stated he also worked in the workout dept. for a national debt- counseling company. His other job: processing mortgage loan workout plan requests to lenders!
For this part-time, evening work, the debt-negotiation firm paid him less than $10 per hour low budget for someone doing a job that could make or break your home's financial life! He wasn't a lawyer, clerk, not even a CPA (certified public accountant or intern) professionals recognized as specialists are called consumer mortgage loan advocates, CMLA designation. And he didn't have to have any formal training beyond the coursework offered by the company that hired him.
Debt Counseling Services may have more highly trained or experienced people reviewing the work of low-paid assistants. If you should want help submitting your a practical workout plan request please do your own due diligence to research firms offering help to homeowners facing pre-foreclosure and ask the 'right' questions before choosing a debt negotiator.
Derrick Ali is the author of "How to Quickly & Painlessly Buy or Sell Any Property?." He has helped hundreds of individuals to get a quick-start in real estate investor marketing success both online and offline. Visit his site to find out how you can get a free consultation http://www.Homelossprevention.com
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