Stop Foreclosure

“The telephone is a good way to talk to people without having to offer them a drink.” — Fran Lebowitz

According to the Mortgage Bankers Association, there are 167,000 new families entering foreclosure every three months. Lew Sichelman wrote an article that appeared in the LA Times a few weeks ago about how the mortgage industry is taking action to prevent “what could be a flood of foreclosures.”

He writes, “Lenders and the companies that administer loans have a wide array of tools at their disposal to help troubled borrowers. Among other things, they can reduce or suspend your payments and cancel late fees, allow you to make up what you owe in small increments over 24 months, add what you owe to your loan balance and allow you to start over with a clean slate, sometimes at a lower interest rate, or extend the term of your loan.”

“But the problem is that, in many instances, borrowers don’t reach out to their lenders. Many people believe their lenders want to take their houses away from them because they make money doing so. But the truth is lenders lose too ” up to 60 cents on the dollar, in some cases. The typical cost of a foreclosure, which is a long, drawn-out legal procedure that can take months in some states, is $59,800, according to Freddie Mac, a major supplier of money for mortgages.”

“Nevertheless, studies show that half of all borrowers in default have no contact with their lender, and two out of five who go into foreclosure never talk to their lender.”

Can’t pay? Talk to Mortgage Lender is good advice and written by Noelle Knox at the USA TODAY. She offers this statistic, “Almost 280,000 Americans lost their homes through foreclosure last year. But that’s not the surprising part. This is: Half of them never even talked to their lenders.”

The solution: Pick up the phone. She writes, “Instead of foreclosure, a lender might agree to:

1. Refinance. Allow the homeowner to refinance the current loan into a new loan. For example, you could refinance from an ARM into a fixed-rate loan.

2. Repayment plans. Long-term ‘catch up’ plans that allow homeowners who have fallen behind to pay more per month on their mortgage, gradually bringing their loan up to date.

3. Loan modification/restructure. Agreement to change the interest rate or other terms of the loan.

4. Forbearance. To postpone the interest or payments on the loan for a fixed period of time.

5. Quick sale. Allows the borrower to sell the property for less than the loan, and consider the loan paid in full.”

NeighborWorks America offers some other good resources. NWA is a national nonprofit organization created by Congress to provide financial support and training for community-based revitalization efforts as well as foreclosure prevention.

Here are their Tips for Preventing and Stopping Foreclosure. Once again, calling for help tops the list. It’s the most important thing you can do to stop the foreclosure process.