Rhino Rollover
If you're reading this you are probably in where I have found myself quite recently.
I have a property, I can no longer afford to keep. But, the housing market has landed on it’s ear and my house is upside down. My mortgage is $142,000 and the current property value is about $90,000. So, with no way to sell it, and no way to refinance it I have but 2 choices left. I can let it fall into default or I can take a stab at a loan modification.

The good news is that there are a few options you can look into and possibly go for to try to save your home even if you have fallen behind in payments and have started down the road to foreclosure.

Here are the basic scenarios of negotiating a restructure of your mortgage.

Situation I – You call your mortgage company and throw yourself on their mercy. They usually have a department dedicated to working with folks in your position. They make it seem like they are doing you a big favor by forgiving your late/missing payments. Dropping your rate for up to 5 years and tacking everything onto the back of your loan. Your payment drops for now, and maybe you get to stay in your home, but 5 years down the road everything goes back like it was including your payment. In this scenario your lender is really only taking care of themselves. If the market bounces back in 5yrs maybe you can sell your way clear of the debt, but really you haven’t got much to look forward to.

Situation II – You find a “nice” company that is willing to negotiate your mortgage for you. They have an attorney at their disposal and will “really” pick apart your loan and try to nail the lender down to a new agreement. The reason I have my above words in quotes is because I am being sarcastic. I found one of these places that were willing to “help” me out for $7,500.00 which they were even willing to finance. But the catch was, that they were only going to perform a band-aid fix such as is described in Situation I. So they wanted $7,500.00 to accomplish the same thing you could likely do on your own with minimal effort. This company I ran into told me they were averaging a 33% reduction in most monthly mortgage payments.

Situation III – You find a real company offering “Loss Mitigation Services” and you contract with them to restructure your mortgage. They also have an attorney and will pick through your loan for “predatory” lending practices and other funky contract issues. They will negotiate on your behalf to permanently change your mortgage. They may be able to drop your interest rate and even lower your principle balance. They also want their money up front to perform these things for you. The company I found charges $2000.00 up front to handle these negotiations. They make permanent changes to your mortgage contract. They offer you the option of suing over your mortgage contract if their attorney feels you have a good case. (Costs extra of course but it is an option.) They can not guarantee a specific result as each case is different. But my favorite part is that they will stop the foreclosure process so no worries there.

The question is can you save your $$$ and negotiate with your lender on your own? The answer is yes and no. You can assemble all the documents and make the phone calls and faxes to try to negotiate. Some people are challenged just in trying to get their information together and then trying to find the right department to speak with from their mortgage company. You can try to do this at no cost other than your time. You won’t have the clout behind you of an attorney unless of course you are an attorney. But you can take a crack at negotiating a change all the same. If it doesn’t go the way you want, you could always hire a company, so long as you haven’t signed a new contract with your lender and you find a way to raise up the cash.

Below you will find a list of the items that were requested by the “Situation III” company that I have chosen to work with.

- A copy of your current driver’s license
- A copy of your 2 most current and consecutive pay stubs
- A copy of your most recent social security awards letter
- A copy of your 2 most current AFDC, Aid or support statements
- A copy of your income tax return statements for the most recent 2 years
- A copy of your corporate tax return statements for the last 3 years (if self employed/own business)
- A copy of contributing parties pay stubs to verify income
- A copy of cancelled checks for room rent
- A copy of 3 most recent bank statements
- A complete set of copies of original loan document
- A copy of your monthly mortgage statement
- A copy of Mortgage Note and Final Settlement Statement (final HUD)
- A copy of listing agreement with realtor (if applicable)
- A hardship letter explaining your situation

As you can see you will need to get your ducks in a row before you can expect to get some relief. But it is worth it if you can save your home.

I hope you found this article helpful in not getting “taken for ride” by your lender or a disreputable company just trying to make a buck. There will always be predators and victims, just do your best not to be either of them.

May God Bless You in your hour of need,

FreeCracker4Jack