If you’ve determined that your financial hardship is temporary, then a workout with the mortgage bank is a valid option to stop foreclosure and avoid it.
The bank would also entertain it because it’s really all about the money.
The good news to you is that the bank is always going to be on your side to keep and save your property.
But I am also sure that you understand that they are not just being charitable.
They want the money.
So as long as you have a plan to pay what you owe and catch up on late monthly payments, they will always lend you their listening ears.
All you have to do is ask and you can stop foreclosure on your home; you can avoid foreclosure all day.
If you don’t have means of coming up with arrears that you owe, workout plans will not be entertained by your lien holder or your mortgage bank.
It simply makes no business sense for them to allow you to keep your home.
A prospect called me one time from East Orange New Jersey.
She had been taking very good care of the house for 15 years but was also about to lose the house.
She had not made a single payment in about 3 years.
Somehow she concluded she could and wanted to save her home.
She thought it was her right since she had being babysitting the house for 15 years.
But there was a big issue with that mindset.
The longest she had kept a job in the 5 year prior to that was about 3 weeks.
She was feeling entitled and being very illogical about her rights to pay bills in America; misplaced rights if you will.
I don’t mean to be condescending when I say this.
In America, adults typically have to create some kind of regular income indefinitely until we die.
About 25% – 30% of the reason for that income is to keep a roof of your head at least; if not for your whole family.
But I feel sometimes, I may come of as being condescending.
The reason is because I don’t have the ability to comprehend or reason with a person who has not had an income for whatever reason, paid rent or some type of fees for housing but expects to live rent free; especially in America.
After working with clients over the years, I have now learned that a home is a highly emotional accomplishment and property for a homeowner; especially if they live there.
So I understand that a homeowner may not be in their most logical thinking ability zone when it comes to their home.
So this lady called me because she heard that I could apparently make a miracle happen.
The fact is that I can’t.
The whole mortgage system operates on the cash flow that’s created for the banking industry from your monthly mortgage payments.
So there are typically 2 conditions to being able to save a home with workout plans from the bank to stop and avoid foreclosure:
- Ability to pay what’s owed in arrears, late payments and fees.
- Proof of ability to continue regular monthly payment as planned
It’s easy to get the bank to help bring the loan back current if the term of the original mortgage loan is not being changed.
Remember they are typically in it for 30 years period.
2 or 3 late payments is not a big deal as long it’s paid with late fees.
Being late for no matter how long is not a big deal at all as long as you can catch up before an official sheriff auction foreclosure sale.
So it’s ultimately about your ability to catch up on all late payments, late fees and proof that you can continue to stay current i.e a job.
There are 3 different options that you can find in a typical workout plan or a combination of any or all of them in any format:
- Reinstatement – So the longer you are late, the more arrears you accrue. With this option, the bank will agree to accept all the late payments and late fees by a specific date as a condition to reinstate your mortgage standing to normal and stop all foreclosure processes.
- Forbearance – Sometimes, the bank can see your effort to secure a new or adequate income in the future. Forbearance allows them to lower your monthly payment temporarily for a while to be revisited after expiration of the forbearance agreement.
- Repayment plan – This involves spreading your late payment and fees with your regular payments until you are all caught up.
As you can see, anything is possible provided that you can prove that the cause of your financial hardship is temporary.
The bank only cares about one thing and one thing only.
It’s all about the Benjamins.
There are 2 other options that you can use to avoid foreclosure.
They are typically very difficult because it involves altering the terms of the original mortgage loan agreement.
However it’s possible if you can present a good case.
- Loan Mortgage modification – The mortgage bank does not mind flexibility in helping you stay or come current on original terms. Terms such as interest rate, number of years of amortization, forgiving missed payment or principal balance on your loan can be adjusted to help you. I will cover this in details in other parts of the book.
- Claim Advance – This comes with insured loans where you may qualify to change the loan to interest only loan for a long time. It’s possible but I’ve personally never seen this happen before. If you have to use this option, there are high chances that you should be selling the property.
Ultimately, these workout plans should be explored once you determine that you have income to proof that hardship was temporary.
The bank wants that money.
But I have to warn you.
Sometimes, the hardship wasn’t just the income or not the income at all.
You may be stuck with a property that’s simply underwater and unprofitable to own if you had a good income.
In that case, it’s best to let go of the property and start fresh.
The only thing better than owning a home is owning a home fresh with peace of mind profitably.