Lenders Put Foreclosures on Hold for 30 Days

February 12, 2008, 10:00, am By 3 Comments

Lenders are in a bind. With foreclosures increasing every day, their REO departments are overloaded. Foreclosure is expensive and banks are in no mood to be property owners. So, why not just try to work thing out with the distressed borrower? That seems to be the line of thinking as major lenders have announced that they will put foreclosures on hold for 30 days. During this time they will work with the borrower to figure a workable solution for both parties. This applies to all kinds of borrowers, not just subprime. From MSNBC:

These lenders say they will contact homeowners who are 90 or more days overdue on their monthly mortgage payments. They will be given the opportunity to put the foreclosure process on pause for 30 days while the lenders try to work out a way to make the mortgage more affordable to the homeowner.

To clarify, this appears to be a voluntary program and is not a “law”. Which means a lender has the last word and is not under any obligation to award the 30 day freeze. If you think you qualify contact your lender directly.

Filed Under: Banker, Mortgages, Real Estate Tagged With: , ,

Facing Foreclosure? 12 Things You Should Know When You Call Your Lender

October 16, 2007, 8:57, am By 4 Comments

If you are having trouble making payments on your home then the first thing you should do is call your lender/servicer. For many people this can be a frightening proposition. You might be afraid you’ll end up saying something that will put your home in jeopardy. Or, you might not understand the different options the lender offers. Or, you may simply just not know what to say.

The Mortgage Bankers Association has created a foreclosure avoidance center website. Under this page it has published a twelve-step guide on the things you need to know when you call your lender. This should ease your fears a bit. Additionally, as you go through this guide you’ll realize that a successful resolution is in the lenders best interest as well. Contrary to public perception the bank does not want to own your home and bank executives do not go to bed at night salivating at the prospect of foreclosing on your home.

Below is a quick run down of the twelve steps, but read the “12 Things You Should Know When You Call Your Lender” page on their webpage for complete information.

  1. Contact your servicer immediately
  2. Ask your servicer about alternatives to foreclosure
  3. Provide any information requested by your servicer
  4. Be prepared to provide detailed financial information
  5. Be ready to change your spending habits
  6. If you’re uncomfortable calling your servicer, then call a reputable third party (see HUD website)
  7. Open all mail you receive from the servicer or it’s law firm
  8. Do not hesitate to ask critical questions
  9. Resolve any payment issues on your escrow accounts (taxes and insurance)
  10. Stay in contact with your servicer and/or counselor at all times
  11. Be realistic about your own financial condition
  12. Understand that the servicer wants a positive outcome

Related entry: Kits to help you avoid foreclosure and payment defaults

Filed Under: Banker, Mortgages, Personal Finance

Regulators Urge Restructuring Loan Terms For Struggling Borrowers

September 5, 2007, 8:23, am By 1 Comment

I saw a news flash on Drudge yesterday afternoon saying banking regulators and the Federal Reserve had issued some loan guidelines. There was no meat in the story. It was a breaking story at the time. This morning I found that various regulatory bodies as well as the Federal Reserve are asking lenders and loan servicers to restructure loans for borrowers facing difficulty. According to the WSJ:

The guidance doesn’t compel lenders and the investors who buy loans to restructure the loans — but it puts an added burden on them to try to do so, while clarifying that they shouldn’t face negative tax or accounting implications from such restructuring. The statement was issued by the Federal Reserve, the Federal Deposit Insurance Corp., the Office of the Comptroller of the Currency, the Office of Thrift Supervision, the National Credit Union Administration and the Conference of State Banking Supervisors.

The WSJ story also said it’s unclear how many would benefit from restructuring loans. Given the sheer number of ARM’s (in excess of 1 million) which will reset in the next year or so this should have a significant impact.

It is a make sense idea in my opinion. From the lenders perspective taking a smaller loss as opposed to  having to write off the entire loan may make sense. Same goes for investors. However, these companies appear to be concerned about the tax consequences. That should be no problem to  Uncle Sam though, all they have to do is add one more page to the 60,000 + pages in the current tax code.

Filed Under: Banker, Broker, Subprime Mortgages
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