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].
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