If you do not stay in touch with your lender, you might only have a few months left in your home. The laws vary from state to state. It is important to find out what the law is where you live. In some states, such as Texas, lenders are allowed to begin the process after you miss a single payment.
On the other hand, the banks are not allowed to harass you. Once you have contacted them and explained your situation, you should not receive numerous harassing phone calls. As with other creditors, they are not allowed to call you at work.
When you do call your bank, make a note of the date, time and the person with whom you spoke. These notes could come in handy, if you need or want to file a complaint, or if you are defending against a foreclosure lawsuit and need to show how you have attempted to work with the lender for a solution.
Because of the new government guidelines and because home values are falling, many banks are offering foreclosure help to their customers. It makes more sense for them to keep you in your home than it does to foreclose. But, that does not mean that you have the upper hand.
The banks have been advised by the FDIC to thoroughly review each customer’s financial condition and creditworthiness, before approving a refinance or mortgage modification. The FDIC is concerned about all of the banks that have failed in recent months. The closures cost the FDIC billions of dollars.
It may be worth your while to investigate options, such as companies that offer foreclosure help. Some companies are willing to buy properties quickly. More than likely, your desire is to stay in your home, if at all possible, but if your mortgage is really unaffordable, you have to be realistic.
Some financial experts say that renting is a better option right now, anyway. That might not be something that you want to hear at the moment but keep it in mind as you are looking at your alternatives. They say renting is a better choice because home values are falling, while other investment options are still profitable.
If your bank does offer foreclosure help it is probably due to the Making Home Affordable program that was launched in March 2009. Under the plan, millions of homeowners are supposed to be able to get lower interest rates, a waiver of late fees and sometimes an adjustment in the principal portion of their mortgage.
In years past, refinancing to get a lower monthly payment was not always possible. Banks often required that a customer have thousands of dollars worth of equity in their homes. Loan modifications as they exist today were not available.
Not all banks are offering modifications. Estimates vary about how many banks are offering the option to their customers that need foreclosure help. 3-13% of mortgage companies’ delinquent customers are currently in a trial period for modification.
The 3% estimate comes from the US Treasury Department. The 13% comes from US bank, who says that the Treasury Department’s estimate is an error. Regardless of which estimate is correct, at least we know that some people are taking advantage of the loan modification program, which should reduce the number of foreclosures significantly.
If you do sign up for a modification, you can expect some red tape to get through during the process. Tens of thousands of customers are applying for refinancing or modification. As a result, there is something of a bottleneck in many banks.
But, if you need foreclosure help, you should not let a little red tape deter you. A foreclosure could destroy your credit rating, making it impossible for you to ever purchase another home. Unless you are a very young person, it could be close to impossible to restore it in a timely manner.
If dealing with your bank seems to be particularly difficult, there are some companies that will handle the negotiations for you. This includes making many of the phone calls and spending the hours on hold that it can take to contact a bank. It is a specialty that has been around for years, although it is not well known.
Despite the government’s foreclosure help programs, many people are rejected for refinancing or modification. But with the right help and advice, as well as an honest look at your current financial situation, you will be one of the lucky ones.