Mortgage companies say that the last thing they want to do is foreclose, because seizing a delinquent borrower's house costs money. It follows, then, that the key to keeping the house is to make it less expensive for the lender to work with you than to foreclose.
How does one go about working out a plan to keep his or her home?
When you fall behind on payments, your chances of
getting cooperation from the mortgage servicer are better if you
follow these guidelines.
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Step-by-step plan
for seeking help: |
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Respond to the mortgage company's phone calls and letters
The mortgage servicer is the company that collects monthly payments, passes along the payments to the homeowners insurance company and tax collector, and makes phone calls and sends letters when borrowers fall behind.
Academic researchers have found that, in about half of foreclosures, the delinquent borrower never talked to the servicer.
"Our biggest challenge is getting folks to respond,"
says William Rinehart, vice president and chief risk officer for
Ocwen Financial Corp., a large servicer of subprime mortgages in
West Palm Beach, Fla. Fear, embarrassment and shame keep delinquent
borrowers from talking to servicers. "These folks, in many
cases, are financially unsophisticated, so the whole process is
intimidating to them," Rinehart says. "They feel that
if they just ignore it, it will go away."
It won't.
Delinquencies and foreclosures have been rising nationwide for more than a year. As mortgage lenders lay off loan officers, mortgage servicers hire debt collectors and loss-mitigation specialists. Ocwen's loan resolution department has 123 full-time employees. A year ago, it had about 70 employees.
"We train our collectors to have empathy," says Teresa Bratcher, Ocwen's director of foreclosure prevention. "These people, for the most part, didn't choose the circumstances that they're in."
Tip: Answer the phone and open your mail, but don't agree to any terms until you read the next tip.
Seek advice and negotiating help from a third party
Respond to the mortgage servicer, but don't be rushed into making a promise that you can't keep. Before making a deal with the servicer, describe your situation to an attorney, accountant or a knowledgable mortgage person, advises Neil Garfinkel, a lawyer with Abrams Garfinkel Margolis Bergson law firm in New York City.
When you are in danger of foreclosure, "those are perilous waters and you want to make sure you have a good adviser who can maybe serve as an intermediary to the lender," Garfinkel says.
Another place to go is a housing counseling agency
or a consumer credit counseling service. A good place to start is
the NeighborWorks
Center for Foreclosure Solutions' Web site. NeighborWorks counselors
will make referrals to local agencies.
"I urge people to get some kind of help with
this process, to the extent that they can," says Michelle Lewis,
president of Northwest Counseling Service, an agency in Philadelphia
that offers mortgage counseling. "They can go out and do it
on their own, but they need to be cautious."
Tip: Choices for guidance include consulting an attorney, a credit counselor or a housing counseling agency. |
