Why a mortgage Lender Will Work with You in Foreclosure
It may seem illogical, but your mortgage lender may be willing to compromise with a homeowner who is behind on payments. While all institutions may not be as compassionate as others a foreclosure can cost banks up to $80,000! Because of this reaching out to your mortgage lender and seeing if you can complete a workout might be your best option.
What is a Workout?
When a homeowner who is behind on payments or anticipates a default soon and their lender come to compromise this is called a workout. A workout can be defined as a multitude of things. It may involve modifying the terms of the loan temporarily while you catch up on your payments. Some loan modifications may even be permanent. These can allow the homeowner to more easily fix or catch up on their payments.
Your Workout Choices
A mortgage lender has the choice to come to a compromise with a homeowner who has defaulted on payments. Mortgage lenders can:
- “Fix” or keep constant an interest rate or payment that is about to adjust.
- They can grant a homeowner temporary forbearance which allows the borrower to stop making payments for up to six months.
- Allow a homeowner to sell their home to use towards their debt.
- They can defer some payments to the end of the loan effectively making the loan term a couple of months longer.
- Adding the lump sum of money that is defaulted on back to the loan to allow the homeowner to pay it off in payments over time along with their normal monthly payments.
- Grant a homeowner a longer time on their introductory interest rate or payment allowing the homeowner to pay a lesser cost for a short time.
- Allow the homeowner to transfer the home to a new buyer who will assume the mortgage, even if the mortgage was nonassumable.
- Take a deed in lieu of foreclosure, which lets the homeowner voluntarily give the property back to the lender instead of going through the foreclosure process.
Increase Your Chance of a Workout
Lenders are not obligated to come to a compromise with a homeowner who has defaulted. Though with the costly expenses of a foreclosure they may be just as willing as the homeowner. To increase your chances of coming to a solution with your lender read below-
- Explaining why you went or are currently going through a financial hardship and why it is temporary can help persuade the lender into working with you. If you lost a job giving details as to why the job was lost and why and how you will get a new job will help your chances. If an adjustment was made, showing timely payments before the event happened will also help.
- Showing that you have tried to improve your situation can also help show to your lender that you are willing to do what you have to do make on-time payments. Getting a second job, reduced your living costs or even getting a roommate can all be ways to show your intent of fixing the issue.
- Having in mind a specific proposal or alternatives and how they work can help show your lender you have put thought and crafted a plan to get back on track. This can help them agree as they see you understand what you have to do. Providing several alternatives can help the lender feel more open.
- Financially being able to show you can handle payments and will keep your end of the deal will help convince and persuade them that you are trustworthy.
- MOVE FAST! By quickly reaching out and taking the blame and explaining the reasons for your default you will be able to persuade and get the lender to be more trustworthy and in return willing to help.
Working out a deal with your mortgage lender isn’t hard and as long as you are motivated and willing many lenders won’t turn you away. When facing foreclosure knowing your options is your best defense. Reach out to us at 407Foreclosure to get professional foreclosure help in Orlando!