Lenders Work Out Payment Deals For Borrowers In Jams
Many folks who get behind on their loans often trash unopened envelopes from their lenders because they figure it's just another dunning notice. But when they opened and get in touch with their lender then they discover the world of loss mitigation, a relatively new cosmos in which most mortgage investors bend over backward to keep financially troubled owners in their homes.
They help you if you have a legitimate reason for not being able to meet your obligation - illness, for example or some other major catastrophe, they want to help. Where is economically feasible, we do whatever we can to get "nonperforming loans reperforming again," said Bill Merrill director of nonperforming loans at Freddie Mac.
Most companies that administer Freddie Mac mortgages have what are variously known as work-out departments or portfolio retention sections. Their goal is to help those who want to remain in their homes and not because they are paid to do so. "Profit isn't the motive, at least is not intended to be," Merrill said.
Servicers want to keep things running smoothly because they don't earn any fees when things are not running smoothly. Loans in default are much more expensive to administer. Everybody loses not just the homeowner but the investor as well, when a loan goes into foreclosure.
Help doesn't come automatically however, you have to get in touch with your servicer, unfortunately studies show that most people don't. About 56% of all delinquent borrowers allow their homes to go all the way to foreclosing without ever taking to the lender accodring to merrill. When borrowers do call, though, four out of five go on to be happy homeowners. Early intervention is key, because you are not in arrears as much, Merrill said
Here are some of the options lenders can make available to delinquent borrowers.
forbearance: An agreement that temporarily allows borrowers to pay less than a full payment, or no payment at all, for a set period. Forbearance is an option when you can show that funds from bonus, tax refund or other source will let you bring the mortgage current at specific time in the future.
Reinstatement: Sometimes combined with a forbearance, this allows the borrowert to pay the amount they are behind in one lump sum by specific date.
Repayment Plan: An agreement that gives a fixed amount of time to repay what is owed by combining a portion of what is past due with the regular monthly payment.
Loan Modification: An agreement that permanently changes one or more terms of the original mortgage so the payment is more affordable. The borrower and lender may agree to add the missed payments to the loan balance.
A lender might be able to help homeowners who do not want or cannot keep their home. Indeed there are different ways to avoid foreclosing and reduce the impact on credit standing.
A buyer could be allowed to take over the mortgage debt, even if the loan is considered non-assumable. Or if the house can be sold for less than what is owed, the lender might agree to a "short payoff" in which the lender writes off the portion of the mortgage that exceed the proceeds from the sale. A third choice allows the transfer of the title of the home to the lender in exchange for canceling the debt.
Many folks who get behind on their loans often trash unopened envelopes from their lenders because they figure it's just another dunning notice. But when they opened and get in touch with their lender then they discover the world of loss mitigation, a relatively new cosmos in which most mortgage investors bend over backward to keep financially troubled owners in their homes.
They help you if you have a legitimate reason for not being able to meet your obligation - illness, for example or some other major catastrophe, they want to help. Where is economically feasible, we do whatever we can to get "nonperforming loans reperforming again," said Bill Merrill director of nonperforming loans at Freddie Mac.
Most companies that administer Freddie Mac mortgages have what are variously known as work-out departments or portfolio retention sections. Their goal is to help those who want to remain in their homes and not because they are paid to do so. "Profit isn't the motive, at least is not intended to be," Merrill said.
Servicers want to keep things running smoothly because they don't earn any fees when things are not running smoothly. Loans in default are much more expensive to administer. Everybody loses not just the homeowner but the investor as well, when a loan goes into foreclosure.
Help doesn't come automatically however, you have to get in touch with your servicer, unfortunately studies show that most people don't. About 56% of all delinquent borrowers allow their homes to go all the way to foreclosing without ever taking to the lender accodring to merrill. When borrowers do call, though, four out of five go on to be happy homeowners. Early intervention is key, because you are not in arrears as much, Merrill said
Here are some of the options lenders can make available to delinquent borrowers.
forbearance: An agreement that temporarily allows borrowers to pay less than a full payment, or no payment at all, for a set period. Forbearance is an option when you can show that funds from bonus, tax refund or other source will let you bring the mortgage current at specific time in the future.
Reinstatement: Sometimes combined with a forbearance, this allows the borrowert to pay the amount they are behind in one lump sum by specific date.
Repayment Plan: An agreement that gives a fixed amount of time to repay what is owed by combining a portion of what is past due with the regular monthly payment.
Loan Modification: An agreement that permanently changes one or more terms of the original mortgage so the payment is more affordable. The borrower and lender may agree to add the missed payments to the loan balance.
A lender might be able to help homeowners who do not want or cannot keep their home. Indeed there are different ways to avoid foreclosing and reduce the impact on credit standing.
A buyer could be allowed to take over the mortgage debt, even if the loan is considered non-assumable. Or if the house can be sold for less than what is owed, the lender might agree to a "short payoff" in which the lender writes off the portion of the mortgage that exceed the proceeds from the sale. A third choice allows the transfer of the title of the home to the lender in exchange for canceling the debt.
Alberto Pacheco
Realtor Calbre Lic 01200694
818 481 9211
Keller Williams Porter Ranch
Real Estate Consultant
http://www.granadahills.kwrealty.com Real Estate News, Mortgages, Trends
