Stop My Foreclosure! How to Convince Your Mortgage Company to Give You Another Chance

Statistics show that national foreclosure filings were up 72% in the first quarter of 2006. Clearly more and more homeowners are facing the possibility of losing their house as they struggle to stay current on their payments. Being in foreclosure is a scary situation – but with a little knowledge and a willingness to deal with the problem, you can stop your foreclosure.

The first thing you need to realize is, your lender does not want to foreclose, and they do not want your house. Mortgage companies are in business to loan money, not to own real estate. However, you and the lender are legally bound by the contract you both signed when you bought your house. Your security agreement states that if you do not pay, they must foreclose. If they do not foreclose, investors won’t invest in mortgages and that is bad for everyone.

Here is an astonishing fact: According to Freddie Mac, over half of homeowners who are foreclosed on never even try to work with their lender! Thousands of people lose their home each year because they simply did not pick up the phone and try to work it out with their lender. If you are behind on your payment(s) by even 15 days, you need to contact your lender and let them know what the situation is.

Before you go any further, spend a moment to make a very important decision. Something has caused you to miss your payments – is it a temporary setback that will soon be in the past, or a permanent or semi-permanent situation? If this is just a bump in the road, then try to find a way to keep your house. But major life change such as divorce, job loss, family problems, health issues, etc. may mean your best option is to sell the house and make a fresh start. Make a logical, not emotional decision.

If you have missed a payment or two, foreclosure is just around the corner unless you work out an agreement with your lender. Before you call, take a few minutes to prepare. Write down your budget – all expenses and sources of income – as you will likely be asked about it by the representative so they can attempt to qualify you for a program. Call the customer service phone number and ask for the loss mitigation department. Here are four common agreements that can get you out of hot water and back on track.

A Reinstatement – simply means pay all your back payments in one lump sum at some point, now or in the near future. The lender the reinstates your loan and you continue to make your payments. May be combined with a forbearance agreement.

A Forbearance – allows you to make no payment or partial payment with the understanding that you will soon pay all the past due amount. You will have to have a realistic source that the funds are coming from such as a bonus, tax refund, loan proceeds, etc.

A Payment Agreement – is when you make a partial payment on the past due amount along with your normal payment for a period of months until you are caught up and current. Your lender will want to know that your budget (income less expenses) will leave room for that increased payment, so be prepared to prove it to them.

A Loan Modification – is a renegotiation of the terms of your original note to make your payment more affordable. You might be able to extend the loan and add the payments to the end, simply add the amount to the principal balance and increase the payment accordingly, or transform the loan from adjustable-rate to fixed-rate.

One final thing to remember when calling loss mitigation – the person on the other end of the phone is not your enemy. They are just doing their job, and it’s a not-too-fun job, and most of the people they talk to do not want to talk to them. Let them know you are serious about remedying your situation, but be friendly, upbeat, positive, and gracious.

There are many more radical ways of stopping a foreclosure, but the first and best option is simply good communication and a negotiating a win-win arrangement with your lender. Good luck!

Mortgage Scam Report – Foreclosure Scam #5 – The Bait and Switch Quit Claim Deed

If you are considering refinancing your home in order to avoid foreclosure, be cautious. A common refinance mortgage scam uses adverting with words like “rescue loan” or “rescue refinance.”

To avoid this mortgage scam, you MUST read your loan papers carefully. If you do not trust yourself to be able to sort out the paperwork, hire a lawyer or ask a trusted friend to help you with understanding the agreement.

Even in legitimate loan transactions, the amount of paperwork is astounding. So it is easy to miss hidden clauses that scammers slip in on you.

Be on guard for something called a “deed transfer clause.” This part of the agreement actually transfers the title of the home to the scammer. It may mention a “trust,” or a “land trust.” In any case, you are essentially giving up all ownership rights to the home, but you are still on the hook for the mortgage.

Another piece of paperwork that con artists will try to sneak into the transaction is a form called a “quit claim deed” or “quitclaim deed.” Sometimes it is mispronounced, “quick claim deed.” This document is a sworn statement declaring that you surrender any rights of ownership to your home.

Quit Claim Deeds are used in cases such as a divorce. When the party that kept the house wishes to sell, the ex-spouse signs a Quit Claim Deed. This assures all parties that the ex-spouse has terminated all ownership interest in the home. It renders a clear title for the new owner.

So Quit Claim Deeds are legal and useful in many cases, but do not sign one unless you wish to terminate, or “quit,” all legal “claim” to your home.

Mortgage Modifications – The Dirt the Mortgage Loan Mod Companies Would Like to Hide

So here you are. You are in a sticky financial situation and due to recent hardships; you would like to change the terms or your loan. What do you do, you call or do a search for a mortgage modification company.

Guess what the rep tells you when you contact them! You have to pay anywhere from $1500 – $5000 for them to go to bat for you. Guess what else! Many of them do not even have a guarantee of the end result NOR will they give you your money back if they cannot perform on your behalf. Garbage I say!

 

Here is what they do not want you to know.

 

Just a mere two to three years ago, they had no idea how to modify a loan. Beyond that, they were probably working as a loan officer and were instructed to tell customers that asked about a mod that the bank did not offer that service.  

 

So how did all the people that are doing mortgage mods learn how to do it?

 

1.       They were either coached personally how to do it by someone that had a good working knowledge on the successful execution of a change in terms on a home loan.

 

OR

 

2.       They learned from a book or training manual. Basically, if you can follow instructions, you have as good a chance of succeeding as any of these companies do. Seriously, 6 months ago or a year or two ago many of these folks had no idea how to do it. 

 

The bottom line is this; you do not need to pay thousands of dollars to modify your mortgage loan. You CAN do it yourself.