Options available for troubled mortgages and clients you cannot refinanceSherene CostanzoForeclosure prevention
Are you turning several clients away because they cannot qualify
for a refinance on their loans? Do they owe more than their
property is worth? Are they having trouble selling for what they
owe? Are they having trouble paying their current mortgage?
There is a way to help your clients who are facing mortgage and
real estate troubles. Many options are available to financially
strapped homeowners and investors. Most people are not aware of the
options available to them. This lack of awareness is leading to
increasing numbers of foreclosures across the country. Since
troubled borrowers are not aware that they have options other than
foreclosure, they are experiencing major financial distress. They
usually ignore the problem and begin to fall behind on their
mortgage payments. They ignore letters and calls from their lenders
because they believe there is no option available to change their
situation. They simply wait it out and eventually lose their home
to foreclosure or are financially strapped to their homes.
Borrowers who cannot afford their mortgage have many options
available to them. It is extremely important for the borrower to
take action immediately before it is too late. Due to the
increasing number of foreclosures, many lenders are willing to
negotiate the loans. Negotiating with the lender and finding a
solution can save borrowers from foreclosure, deficiency judgments
or just get them out of a financial mess.
Options available to troubled borrowers include:
• Forbearance agreements: This is when you prove to the
lender that you can catch up with a lump sum by a specific date.
Lump sums may come from tax returns or a bonus at work.
• Reinstatement: The lender reinstates the loan after the
mortgage payments are caught up and the loan is current.
• Loan restructuring or modification: Lenders negotiate a new
loan, lower the interest rate or extend the length of the loan to
give the borrower a more affordable payment. They may also tack
missed payments onto the principle balance of the loan.
• Short sales: This is when house or property is sold for
less than the principle balance of the loan and the lender relieves
the borrower from the unpaid balance.
• Repayment plan: If you had a financial hardship and missed
a few mortgage payments but are now back on track, lenders will
negotiate a repayment plan.
• Deed in lieu of foreclosure: If you have faced or are
facing financial hardship and have actively had your home on the
market but cannot sell, the lender may be able to negotiate a deed
in lieu. This is when you voluntarily turn over your deed instead
of allowing the lender to foreclose.
• Exit strategies from pre-construction contracts: Buyers who
cannot qualify for a preconstruction property they purchased may
have options to exit the contract.
These options and strategies are available to anyone and are
extremely successful. Many borrowers do not feel they have the
knowledge, strength or power to negotiate with their lenders. There
are consulting firms and law firms who assist with these tough
financial negotiations and loan workouts. These consulting firms
can be extremely helpful because they have the knowledge and
expertise in dealing with the lenders and banks in negotiating
deals for the borrowers. These consulting firms will charge a
consulting fee. A typical consulting fee will range from
$750-$1,500 depending on the complexity of the situation. If legal
work is needed from an attorney, there may be additional legal fees
involved; however, these fees are well worth it to the client
because they relieve the borrower from the financial troubles they
are dealing with, as well as the future financial troubles they
will endure if they sit back, ignore the issues or end up in
foreclosure.
The key is to get these troubled borrowers to act and receive
help as soon as possible. Many of these firms are willing to pay
referral fees. As with any industry, it is extremely important to
find a reputable company. There are government counselors who
provide support and education at no cost to the troubled borrower.
These counselors can be helpful, but they do not provide the
services available from a consulting or law firm.
Foreclosure does not just hurt the defaulted borrower, but can
impact an entire community or nation. An increasing number of
foreclosures will result in decreased property values. This will
cause several property owners trouble when trying to sell or
refinance a property. It will have a trickle effect on the real
estate market.
Do not turn these clients away—you can help them. We all
must do our part to save our community from increasing foreclosures
and the impact it will have on our communities. Troubled borrowers
do have options; they just need to be made aware that there are
options and solutions to come out from under the financial mess
they are in. Mortgage brokers and loan officers need to make their
clients aware before it is too late. Helping clients will build
your morality and your business.
Sherene Costanzo received her Bachelor of Arts in finance
and real estate from Florida Atlantic University. She may be
reached at (866) 502-8472 or e-mail
[email protected].
