"Do Lenders Work Out Payments"

Many homeowners who get behind on their mortgage payments often trash unopened envelopes from their lenders because they figure it's just another late notice. But what most homeowners do not realize is that lenders bend over backward to keep financially troubled owners in their homes.

Investors and the companies that service the loans for investors won't do anything to help homeowners who won't make any effort to pay. But if you have a legitimate reason for not being able to meet your financial obligation such as illness, or some other major sudden catastrophe lenders will be more than happy to help YOU.

Most companies that administer Freddie Mac mortgages have what are variously known as work-out departments. The main goal of these departments is to help those homeowners who are serious and want to remain in their homes.

No companies want to keep things running smoothly because they don't earn any fees when things are not running smoothly. Loans in default are much more expensive to administer. Everybody loses in those situation not just the homeowner but the investor as well when a loan goes into foreclosure. These situations bring headaches to everybody.

Please note that help doesn't come automatically. You have to get in touch with your lender and explain your situation. They will be most likely to respect YOU if you pick up your phone and show that you are sorry for your situation and try to make efforts to rectify the problem. Unfortunately, studies show that most people don't. About 55% of all delinquent borrowers allow their homes to "go all the way to foreclosure" without ever talking to the lender. That is so unfortunate. Don't assume that lenders are not understanding

When borrowers do call, though, four out of five go on to be happy homeowners. It is critical to call your lenders rapidly to let them know about your situation. "Early intervention is key, because you are not in arrears as much.

Some mortgage company work out programs that allow borrowers the couple to make up their missed payments.

Here are some of the options lenders can make available to delinquent borrowers:

•  Loan modification: an agreement that permanently changes one or more terms of the original loan so the payment is more affordable. As an example, the borrower and lender may agree to add the missed payments to the loan balance due.

•  Forbearance: an agreement that temporarily allows borrowers to pay less than a full payment, or no payment at all, for a certain period. Forbearance is an option when you can show that funds from a bonus, tax refund or other source will let you bring the mortgage current at a specific time in the future.

•  Reinstatement: Sometimes combined with a forbearance, this allows the borrower to pay the amount they are behind in one lump sum by a specific date.

•  Repayment plan: an agreement that gives a fixed amount of time to repay what is owed by combining a portion of what is past due with the regular monthly payment.


A lender might be willing to help homeowners who do not want or cannot keep their home. Indeed, there are different ways to avoid foreclosure and reduce the impact on credit standing. It is critical that homeowners try to contact the lenders and explain the situation. It is worth trying at least and homeowners have nothing to lose but everything to gain.

A buyer could be allowed to take over the mortgage debt, even if the loan is considered non-assumable. Or if the house can be sold for less than what is owed, the lender might agree to a "short payoff" in which the lender writes off the portion of the mortgage that exceeds the proceeds from the sale. A third option allows the transfer of the title of the home to the lender in exchange for canceling the debt.

 

Andre Plessis

Andre Plessis
"The Mortgage Guru"
"A Mortgage Professional whose primary goal is to provide the expertise, guidance and skills necessary to obtain the best mortgage to meet your personal needs".
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P.S. If you are at all intimidated or unsure about the mortgage process if you don’t understand how to evaluate your options in getting a mortgage loan our 15 key questions will help you feel comfortable that you are making the best decisions. Also if you are in the process of refinancing your home with anyone, CALL ME and I will let you know if you are being offered the best loan option based on market conditions and your financial situation.

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