Help with Foreclosure

Posted on February 22nd, 2008 by saman

It is harrowing for home owners to be behind in their mortgage payments and lenders are often unsympathetic. However, recently a group of lenders decided to help delinquent homeowners. They decided that homeowners who were seriously behind on their payments will be given one month’s leeway before proceeding with foreclosures. These efforts came about after the Bush administration introduced an interest rate freeze. This freeze affects homeowners with subprime, adjustable rate mortgages.

If you are not a homeowner with a subprime adjustable rate mortgage, you can still get help. There are a lot of options for homeowners. A lender may offer different options if it is found that the homeowner can handle the payments.

It is very important for borrowers to contact their lenders or a housing counselor if they are having problems with their mortgage. The counselor should be certified by the U.S. Department of Housing and Urban Development.

When a struggling homeowner contacts a counseling agency, a worker will go over the borrower’s income, assets and expenses. Then a budget is developed. These sessions can typically last ninety minutes or less. Counseling sessions can be held over the phone but most will be face to face. During a face to face meeting, a counselor will ask you to present proof of income and copies of your bills. This allows the counselor to get a proper picture of what mortgage payment a homeowner can realistically handle.

Lenders work with counseling agencies because they obtain the proper information from them when they are trying to work with homeowners. Fortune 500 companies such as Bank of America and J.P. Morgan Chase work with financial counselors to let them know what questions to ask homeowners in order to work with them properly. Citigroup set up a team within their own company to work with borrowers. The team is located within its Office of Home Ownership. This offices sets up meetings with non-profit agencies in order to explain to debt counselors the specific information that needs to obtained from borrowers.

Banks prefer that delinquent borrowers come to them through counselors or agencies. This is because agencies gather the needed information, explains the process, and can develop a relationship with the borrower.This gets the borrower to the right place with the bank. When counselors understand the borrower’s situation they have the appropriate knowledge to present valid options. However, the lender makes the final decision about what financial plan to offer the borrower.

There are a few options that lenders may offer. The first is refinancing. A borrower with home equity and a high credit score may be able to refinance their home. They can get a fixed rate loan. However, this can be difficult considering the fact the home values are dropping and lenders are stricter with their refinancing guidelines.

Repayment Plans may also be an option. If a homeowner has only missed a few payments due to a temporary financial hardship, they may qualify for a repayment plan. The homeowner sends in extra money for a few months in order to give themselves time to make up any payments they missed. In a repayment plan, the loan terms stay the same so a borrower needs to be able to afford the monthly payments.

It is important to weigh your options when trying to prevent foreclosure.