Dealing With Your Lender
Are you headed down a path to foreclosure, and want to turn things around? You are not powerless here! There are steps you can take to avoid foreclosure. Here are a few things to consider!
Explain your financial hardship and why it is/was temporary.
If you lost a job, explain why and give details as to why you believe you will be re-employed soon. If your mortgage rate and payment are adjusting, explain that and show that you made your payments on time consistently before the adjustment.
Demonstrate that you have tried to improve your situation.
Provide proof that you have been job hunting, have reduced your monthly expenses or have taken on a second job or a roommate to boost your monthly income.
Make a specific proposal or specific alternative proposals.
Ask for what you want in verbal and written requests. Call your lender and speak to a representative in the workout or loss mitigation department. Have a discussion with him of what you are considering requesting, then get his name and fax number and issue your request(s) in writing. For example, if you currently have a 15-year fully adjustable mortgage with a current 7.25 percent interest rate for a monthly payment of $2,500, you might request that the lender extend the term of your loan to 30 years, change the interest rate from adjustable to fixed, and drop the rate to 6.75 percent for a monthly payment of $1,900. Consider providing several alternatives which would work for you if the lender cannot or will not agree to your first proposal.
Demonstrate that you are financially able to keep your end of the bargain.
In the former example, show that you now have or soon will have the income required to make the payment you are requesting.
Make your request ASAP.
As soon as you believe you might be in financial trouble and unable to make your payments, call your lender! While it’s true that some lenders will want to see you deplete your savings before they buy your hardship story, many prefer to do workouts with people who haven’t yet fallen behind; they believe responsible borrowers are more likely to live up to their end of the workout bargain.
Make a show of good faith.
If you are significantly behind on your mortgage, you might need to beg, borrow or steal (well, don’t really steal!) to come up with some lump sum as a show of your good faith and commitment to keeping your home. Try to negotiate some payment greater than a month’s mortgage payment, but less than the total amount you are behind as your “down payment” on your workout arrangement. Then, pay it — exactly when you say you will. If you are late making this payment, your lender will lose all confidence that you will comply with the terms of the workout.
– via HGTV
When It’s Time to Negotiate
When dealing with your lender, having some negotiation tools in your back pocket can go a long way. Here are a few tips and tricks to do your best in negotiating about your mortgage.
Know the laws in your state:
Each state has different rules for how the process of foreclosure will go. In certain states, a bank can get a deficiency judgment against you if they don’t make all the money back you owe from the foreclosure process. If this is the case, the bank may be less willing to negotiate since they will be confident they can recoup their losses.
Understand debt collection laws:
Under the Fair Debt Collection Practices Act, lenders have certain limitations in how they may collect debt. They cannot call you early in the morning or late at night, for example. In addition, if you request to see the original note that proves you owe the mortgage debt, they must produce it and cannot continue the foreclosure until they do. This can slow down the foreclosure process.
Document all your communications:
If you do negotiate with your lender, keep track of all letters and conversations sent so you will have a record of what is decided. Even if you don’t negotiate or try to stop foreclosure, it is still a good idea to keep copies of all of the court documents and other information from the lender so you will have records in case any problems arise.
Know what you want out of the negotiations:
Before you start negotiating, think about whether it is really in your best interests to keep your house. If you owe far more than the house is worth or you truly can’t afford it, renegotiating your loan to stay in the house may just extend your problems.
– via Enlighten Me
Do you have any tips for negotiations with a lender?