Truth in Foreclosure

The background

It seems all the focus in the press and on the Internet these days is about homes in foreclosure and what you can do to exit foreclosure.  But what if you’re not in foreclosure yet?  What if you haven’t missed any payments?  What if you’re struggling every month to put food on the table and pay all the bills but so far you’ve been able to do so?

First of all, let me say you’re not alone!

I’ve had many people contact me in the same position you’re in.  They’re not behind on their mortgage yet…but they’re teetering on the edge.

The question

Everyone that’s contacted me in this situation has the same question…how do I deal with my mortgage company when I’m not behind yet?

More background

The answer to this has changed over the past 18 months or so.  It used to be that mortgage companies wouldn’t even talk to you unless you were behind.  The commonly accepted train of thought behind this was simple:

If you can still pay your mortgage payment every month, you must be OK financially.  If you weren’t OK, you wouldn’t be able to pay your house payment every month.

Over the past 18 months or so, many lenders have been forced to see how ridiculous that logic is.  These lenders have learned that by dealing with proactive homeowners that contact them, they can save everyone a lot of time, energy, and frustration by simply working together.  More importantly, though, lenders have learned they can save themselves a lot of money by being proactive rather than waiting until homeowners are several months behind.

What’s it mean for you?

So what does this mean for the homeowners that have contacted me?  It means they have more of a chance now than they did 12 or 18 months ago.

Unfortunately, that’s about it, though.  As with all mortgage workouts, your options are completely dependent upon your lender or servicer and the loan you have.  There are no guarantees and there is no one-size-fits-all solution.

The best thing you can do is contact your lender and ask them what programs exist to help homeowners in your situation.  You can also contact a HUD housing counselor if you like, but they are normally inundated with people already behind on their payments so it may be difficult to get through.

What can you do now?

Your lender doesn’t know you have a problem until you tell them.  As far as they know, if your payments have been coming in every month, things must be OK with you financially.  If they’re not:

1. Call your servicer and explain your situation
2. If the person you talk to is unresponsive, ask for a supervisor or the loss mitigation or foreclosure prevention department
3. Ask what programs are available to help homeowners in your situation
4. Ask them how to obtain a hardship package and then fill it out completly including the hardship letter and return it to them quickly
5. Follow up
6. Follow up
7. Follow up

In the final analysis, it’s your home and it will be your effort that saves it.  No one will be as proactive or care as much as you do.  Your lender doesn’t have to deal with you until you are past due on payments.  Luckily, though, many are beginning to realize it’s in their best interest to do so.

If your servicer or lender won’t deal with you until you’re past due, I’d recommend writing your state’s attorney general and your Senators and/or Congressperson and explaining your situation.

Sample Hardship Letter

When you turn in your hardship package to get the ball rolling with your servicer or lender, you will have to write a hardhsip letter to explain your situation.  While the rest of the package describes your financial situation, the hardship letter is your opportunity to tell your side of the story.  If you’d like to download our free sample hardship letter, simply click here.

I Forgot Something

I forgot something when I wrote this post, so make sure to check out my What I Forgot to Say post.

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