If you're having trouble making the payments on your mortgage, the first thing you should do is call your mortgage lender or servicer and ask if they have a department for loan modifications or loss mitigation. (Might even be the collections department.)
KEEP THIS FACT IN MIND AND REPEAT IT IF YOU START TO CHICKEN OUT ABOUT CALLING THEM:
Lenders do not want your house back and in many cases they are way ahead if they negotiate a modification with you. It is literally a win-win. They want you to call.
If the person you talk to doesn't know what you're talking about, ask to speak to someone else. Every lender is going through this and many have set up some sort of structure to deal with it. You might try asking for the person or department that handles loan modifications.
The key is to be proactive and to be your own advocate. This is one thing you definitely don't want to procrastinate on and you must tenaciously stand up for yourself. Be prepared with information regarding your current finances. Ask if there are forms you will need to complete for the lender. Many lenders will email or fax the forms to you. You should complete them and return them within a day. Once you've started this you want to keep your momentum.
Keep notes of who you talk to and what was said and keep copies of all forms you send back. Sometimes they touch down on the wrong desk. Check with the person they're going to and make sure he/she has got them.
Modifications can take many forms like a reduced interest rate, a reduced balance, a change in the term. The idea is to get the payment back into the range you can handle and to keep you in your home.
DON'T CALL A LOAN MODIFICATION COMPANY!
New "Loan Modification" companies are popping up offering to be an intermediary to mortgage lenders for people who are under water. Word has it they charge several thousands of dollars.
You should NEVER pay someone a large sum of money to do this. You can do this on your own for free and you can probably do it better. (If you need/want assistance see the last two paragraphs of this post.)
One expert in the field, talking about loan modification companies, warns, “It is a disaster of space riddled with fraud…most are very shady being run by flunky mortgage brokers promising things like short refi’s and principal reductions they can never get.”
In other words a shady lender who was part of the problem will not be the solution! (Legitimate lenders will tell you up front if a refinance is feasible and if it is to your advantage. However, if you owe more than the house is now worth you won't be able to re-finance unless you are able to pay down your balance.)
There is a good article on loan modifications here along with a list of links to some mortgage lenders.
The Wisconsin Association of Realtors suggests the following:
If the homeowner doesn’t feel comfortable calling the lender, one good option is to call the Homeownership Preservation Foundation at 888-995-HOPE to receive free advice from counselors who work for HUD- nonprofit agencies certified by the U.S. Department of Housing and Urban Development (HUD). The Homeownership Preservation Foundation (HPF) is a Minneapolis-based IRS § 501(c)(3) nonprofit dedicated to reducing foreclosures and preserving homeownership for American homeowners. For more information about the Homeownership Preservation Foundation visit www.hpfonline.org.
Address root problems with housing or other counselors and agencies. The homeowner should contact a HUD-approved housing counseling agency. He or she may call (800) 569-4287 or TDD (800) 877-8339, or go online to www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm?webListAction=search&searchstate=WI for a listing of HUD-approved housing counseling agencies in Wisconsin. These agencies are valuable resources and frequently have information on local services and programs that provide financial, legal, medical or other support that can help address any root problems as well as the mortgage default. The housing counseling agency may also offer credit counseling. These services are usually free. BEWARE of phony counseling agencies (deal only with HUD-certified agencies), as well as offers in the mail or by phone that seem too good to be true.
Take Care,
Chuck
Chuck Karpfinger
RE/MAX Realty 100
414-453-8223
CharlesK@execpc.com
http://www.chuckkarpfinger.com/
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