You won't take my money, but you want to foreclose on me???

Jeff - I say that banks aren't in the business of owning homes (they seem to be very bad homeowners, just take a gander at short sales for example).  Communication is vital.  I believe borrowers should call their lenders BEFORE they know they are going to fall behind, that will avoid a lot of headaches in the long run.

... and as far as legal fees, I wonder if their fees (legal/attorney) should be regulated just like lender's... their version of Section 32.

Now wait a sec......  isnt foreclosure help and stopping it all part of this "bailout"?  Are not the lenders suppose to work with the distressed homeowner to work things out????????

One would hope, Joe.  One would hope...

Jeff--Wow! That is one ugly situation! Good advice to find legal assistance on this one.

Jeff,

These stories will be coming forth more often, unfortunately as we continue to wait for the economy to turn. It is no secret or maybe it is, that one of the biggest cash flow /revenue generators for servicers is late fee and legal fees. Most notes in the fine print stat that of course here is a grace period, but 31 days late is grounds to call the note (although I have never seen that happen) and I think a lender /servicer would be hard pressed to exploit it if there was a strong payment history. But the sad truth is when the fine print is read closely, albeit with a 200x300 microscope, the lender pretty much has all the rules in their favor.

Noneheless, hwat Jason says is true, one, they do not wish to be in the RE biz and 2 most will owrk wih you, if you communicate with them. I think it is important to tell clients at closing and throughout the relationship that this is critical to having an open working relationship with the lender. As for the bi-monthly payments, the borrower could do this himself.

Interesting post. I hipe this works out for he above.

Thanks

Bo

Does any of that now 700 Billion pitched in by the Government go to people like the one above? I bet not......

I agree Jeff. Something should be better than nothing for the lenders today.

Jeff, I just talked to a homeowner this last week that was having difficulty with the same lender. Do you suppose there is a pattern here? I think that most lenders, if they have any sense, will do whatever they can to help the homeowner get out of this predicament. Some, are just stupid!

I feel for this homeowner.  Times are tough and it sounds like he is trying to be honorable in making his payments as best he can and keep his home and not just hang it up and walk away.

This type of treatment has reached epidemic proportions.  Banks are completely unable and unwilling to work with borrowers in a way that will actually help folks out.  This is the downside of securitization and non-local lending and servicing.  Damn sad.

Jeff, It's hard to believe the banks not only won't work with these homeowners who are trying so hard but they are now adding expensive legal fees?  I like your advice to get an attorney themselves to represent them and help them hold onto their homes.

Brian,

Thanks for the post. This mentality of the lenders is what one would have expected in the past. However, today one would think that some money and no foreclosure costs would be the preferred approach.

So, is it legal? Aren't the lenders required to disclose what will happen, when they fund the loan? What are the laws? Or does each lender get to make up their own rules?

Sorry to say but it seems the decision makers in many banks are not the brightest bulbs. There are so many times I hear stories like this and I am just left to scratch my head in disbelief. It's the same thing with short sales.

There are lenders helping homeowners.  I can not speak for the example above, but lenders are looking at customers financials.  If they work with them, can the homeowner actually afford the house?  if the answer is no, the customer has too many bills and ultimately will lose their house, then the lender will end up further in debt themselves (foreclosure expenses).  At some point, the lender must cut the strings and let homeowners fall into foreclosure.  Its very sad, but its true.  As pointed out in other comments, if the customer communicates, they may be able to salvage something earlier.  If they wait for things to happen, certain laws fall into place.  if the lender accepts one payment, then they will start over again with the foreclosure proceedings.  As you know, if you start over, you incur additional expenses.  Why would a lender do this, knowing what your past payment history has been?  Again, if the customer can show from their bills and income that they can afford the payments, then most lenders will work with you.  As you mentioned, they do not want to own these homes.

Unfortunately, if they take "partial payments" they seem to have set a standard by acquiescing to non-performance or partial peformance.  I think that these issues need to be addressed so that Lenders can acquiesce without losing their ability to foreclose on the property.

Jeff- I had a mortgage with the aforementioned co. years ago. Never again!  I don't doubt the scenario one bit. I think we are going to continue to see events like these for awhile before it gets better. It is a sad state of affairs.

Jeff - Long before owning my own Broker office, I used to work in Loss Mitigation at Mellon Bank (I'm dating myself: Mellon Bank sold their mortgage side to Chase in 1998'ish).  Banks won't accept partial payments because they are afraid that it will hinder their ability to foreclosure (not that we need anymore of that right now, anyway).

To answer Jason Sardi's question: Yes, there are limits to attorney fees and costs - they are determined at the state level.

In the example you gave, it is CRAZY (absolutely CRAZY!) that the bank won't accept his money!!!  If this borrower were to contact me in "the day", I would put him on a forbearance agreement without thinking twice.  The problem we have now, however, is that loss mitigation "specialists" are no longer specialists.  They are hired hands with one job to do: collect money, period.

It's sad.