Posted on: 09th Apr, 2004 12:24 am
if you are behind on your payments and facing foreclosure, you may need loss mitigation help. loss mitigation options (forbearance, loan modification, etc) help a borrower avoid foreclosure by providing them with alternatives to pay down their mortgage. it also minimizes the lender's credit loss resulting from the borrower's inability to repay the loan.
how do i negotiate for loss mitigation?
here's an overview of what you should do when you cannot keep up with your usual payments, how to negotiate with the lender, and what actually happens when you are considered for a loss mitigation/loan workout plan.
contact the lender: unless you've missed a few payments, some lenders will not negotiate with you for a workout plan. however, if the lender refuses to negotiate unless you're behind, you should keep trying. contact the lender's loss mitigation department and request a loan workout option to help you pay down the mortgage.
hardship letter: prepare a hardship letter including the specific date when the hardship started. take a look at this sample hardship letter. you should attach documents supporting your hardship claim. learn more on how to write a hardship letter.
lender's analysis of your loan: after the lender has agreed to discuss a loan modification, they will send you a packet of forms. they will want you to provide as much information as you can about your finances so they can evaluate your situation using their own calculations. the types of information they are looking for include:
contact the lender: unless you've missed a few payments, some lenders will not negotiate with you for a workout plan. however, if the lender refuses to negotiate unless you're behind, you should keep trying. contact the lender's loss mitigation department and request a loan workout option to help you pay down the mortgage.
hardship letter: prepare a hardship letter including the specific date when the hardship started. take a look at this sample hardship letter. you should attach documents supporting your hardship claim. learn more on how to write a hardship letter.
lender's analysis of your loan: after the lender has agreed to discuss a loan modification, they will send you a packet of forms. they will want you to provide as much information as you can about your finances so they can evaluate your situation using their own calculations. the types of information they are looking for include:
- 2 months of bank statements
- tax filings for past 2 years
- receipts of 4 months of regular monthly payments
- personal statement about your finances
- situation that made you delinquent
- paystubs for past 2 months (to check for current ability to pay off loan)
- name and contact details of borrower's current employer
- for self-employed persons, last 2 years of tax information and year-to-date and profit and loss business statement for past 2 years
- recent utility bill
- monthly net income for past 2 years (adjusted to changes in income)
- monthly living expenses (under normal conditions) with debt payments (adjustments are made to reflect rise or fall in expenses for each of the first 3 months of the loss mitigation option)
- surplus income available each month by deducting expenses from income
- surplus income percentage by diving surplus income by total monthly expense
what are the loss mitigation options?
here's a rundown of the workout options available to you in order to avoid a foreclosure.
| options | how to benefit | who qualifies | when to qualify | property condition |
special forbearance | repayment plan for the borrower to cover the debt and get current on loan until you can make the usual payments through a structured payment plan or loan modification. |
| delinquent for 3 months but not more than 12 months. | property should not need repairs which may affect payment under forbearance. |
loan modification | permanent change in terms of the loan - the debt is included in the loan balance and reamortized at a reduced interest rate. |
| behind on payments for 3 months or more and 1 year has passed since the loan was signed. | property should be in good physical condition; otherwise costs to complete repair work will drain out enough cash and borrower won't be able to make payments under the modification. |
short sale/ pre-foreclosure sale | sell off property to pay off the debt, though property value has declined to less than the money owed. know more… |
| one who is already behind on payments or likely to be behind soon. | no serious damage to property. even if damaged, cost of repair should not exceed 10% of the repaired appraised value. property should be able to be sold free and clear of liens. |
deed-in-lieu of foreclosure | borrower offers property to lender who sells it off to retrieve the unpaid balance. learn more… |
| the loan is in default (that is, the borrower is more than 30 days late on their payments and the cause of the default cannot be eliminated). | property should be free of any liens. property shouldn't have been used as rental property for more than 1 year. |
partial claim | placing your past debts into a subordinate 2nd mortgage (not exceeding 12 months of piti) payable to hud (2nd loan payment to begin only after first mortgage is paid down; there's no interest on the 2nd loan). |
| delinquent for 4 months but not more than 12 months. | property should be in good physical condition. |
*n.b: the criteria and conditions stated in the table above may vary from one lender/mortgage company to another.
of all the loss mitigation options, special forbearance is the best. it may be combined with loan modification when there's doubt about the borrower's income stability. especially in these tough economic times, if you're unable to get a loan modification, your lender may be open to a short sale or a deed-in-lieu to avoid foreclosure. if you convince your lender to accept a deed-in-lieu you can even talk to the lender about rental options. whichever option you decide is best to help you avoid foreclosure, you'll need to submit the same documents to prove your hardship.
of all the loss mitigation options, special forbearance is the best. it may be combined with loan modification when there's doubt about the borrower's income stability. especially in these tough economic times, if you're unable to get a loan modification, your lender may be open to a short sale or a deed-in-lieu to avoid foreclosure. if you convince your lender to accept a deed-in-lieu you can even talk to the lender about rental options. whichever option you decide is best to help you avoid foreclosure, you'll need to submit the same documents to prove your hardship.
related readings
Welcome Sanissa,
A short sale will help you in selling off the property. However, you'll be liable for paying the balance amount resulting from the sale of the property to the lender. Moreover, a sale will reduce your credit score by 80-100 points.
A short sale will help you in selling off the property. However, you'll be liable for paying the balance amount resulting from the sale of the property to the lender. Moreover, a sale will reduce your credit score by 80-100 points.
husband abandon wife need quit claim deed
im buying a house, and need to take out a mortgage of $250,000. I'm not sure how long i should make the loan over and so decide to knoe the amount i would need to pay per fortnight, the total amount i will pay over the life of the loan, and the total amount of interest i will pay. i want to see this for all lengths from 1 to 30 years. The current lending rate is 7%.
1. If i take 25 years to pay off the mortgage at 7% per annum, what will the fortnightly payments be ?
2. Yo can afford $1100 a fortnight. What is the minimum length term i can afford now ?
4. What is the total interest paid at 7% over 30 years, with fortnightly payments ?
5. What is the total interest paid at 7% over 30 years, with monthly payments?
...thanks in advance...my sincerest thanx :)
1. If i take 25 years to pay off the mortgage at 7% per annum, what will the fortnightly payments be ?
2. Yo can afford $1100 a fortnight. What is the minimum length term i can afford now ?
4. What is the total interest paid at 7% over 30 years, with fortnightly payments ?
5. What is the total interest paid at 7% over 30 years, with monthly payments?
...thanks in advance...my sincerest thanx :)
Hi anonymous,
The husband needs to sign a quit claim deed in favor of the wife. Once he does so, the wife would become the owner of the property. As the husband is missing, I would suggest the wife to contact a real estate attorney and take his opinion in this matter.
To ashlynn,
By using the FRM calculator, if your loan amount is $ 250000 and your interest rate is 7 % and loan term is 25 years, your monthly payment will be $1766.95.
If your interest rate is 7% and Installment = $2200 ($1100 +$1100), then the total interest paid will be $161267.48 in 15 Years and 7 Months. You can calculate yourself by using the given calculator: http://www.mortgagefit.com/calculators/pay.html .
Thanks
The husband needs to sign a quit claim deed in favor of the wife. Once he does so, the wife would become the owner of the property. As the husband is missing, I would suggest the wife to contact a real estate attorney and take his opinion in this matter.
To ashlynn,
By using the FRM calculator, if your loan amount is $ 250000 and your interest rate is 7 % and loan term is 25 years, your monthly payment will be $1766.95.
If your interest rate is 7% and Installment = $2200 ($1100 +$1100), then the total interest paid will be $161267.48 in 15 Years and 7 Months. You can calculate yourself by using the given calculator: http://www.mortgagefit.com/calculators/pay.html .
Thanks
If you want to delete the property, then you better go and act instead of closing. This not only helps to get rid of the property, but you can not answer your lack of balance even.If entitled to a loan modification, you reduce the interest rate and term of the loan increase.
should I decide to use this option, could I still qualify for the cash-for-keys and how long would I have to vacate the property?
hi belinda,
if you're delinquent on your mortgage payments, you should contact your lender and apply for a deed in lieu of foreclosure. after the property sale is over, you'll get an eviction notice and the time period to leave the property will be mentioned in that notice.
thanks
if you're delinquent on your mortgage payments, you should contact your lender and apply for a deed in lieu of foreclosure. after the property sale is over, you'll get an eviction notice and the time period to leave the property will be mentioned in that notice.
thanks
I was contact in August 2010 by Chase to find out if I was interested in keeping my house, I had already filed Chapter 11 but a payment to the Trustee in Tenn. (I lve in Texas) got there a day late so they disallowed my bankruptcy. After several phone conversations and emails and 4507T hardship forms snet via email I cannot reach these same people by email or phone. I guess I should just my lawyer to go Chap 7 and let them absorb the loos. I tred to do the right. I can make the payments but they will not work with me. Do you have things I have not tied and should try becasue I would like to pay my mortgage? AS they have me in forclosure now I can't even pay them the normal house payment. They won't take it.
Hi John!
Welcome to forums!
You should get in touch with Chase and inform them that you want to make the normal mortgage payments to them. You should request them to let you make the payments so that you're able to save the property.
Sussane
Welcome to forums!
You should get in touch with Chase and inform them that you want to make the normal mortgage payments to them. You should request them to let you make the payments so that you're able to save the property.
Sussane
I purchased a house in 2006. As a result of a job transfer, i moved to a different state in 2008. The value of the house declined substantially from the time that i obtained the mortgage therefore i could not sell the house. To offset the loss from the mortgage payment each month, due to changes in the market, i had rented the house for less than the mortgage payment. As a result of a major illness, i was unable to continue covering the difference and have missed some payments. I tried to work with the mortgage company to obtain a loan modification but my application was not approved.
Can i still qualify for deed in lieu? Should i seek legal representation?
Can i still qualify for deed in lieu? Should i seek legal representation?
Hi annon!
Welcome to forums!
You can definitely seek legal representation. If you want to get rid of the property, then you should apply for a deed in lieu of foreclosure. If the lender accepts your request, you will be able to sell off the property and you won't be liable for paying off the deficient balance resulting from the sale.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
You can definitely seek legal representation. If you want to get rid of the property, then you should apply for a deed in lieu of foreclosure. If the lender accepts your request, you will be able to sell off the property and you won't be liable for paying off the deficient balance resulting from the sale.
Feel free to ask if you've further queries.
Sussane
There are many approaches to handling a foreclosure. Unfortunately, most of them don't work out too well. You already know that time is short here. If you want to get in touch with us right now to get the help you need, call us, or click,
My mother owns a 2-flat rental property in which she occupies one apartment. A little more than a year ago my mother began a loan modification. She was at that time one month behind in her mortgage payments. While they were reviewing her case they gave her a temporary payment plan for six months of half her regular mortgage payment. After the 6 months she was to return to the full payment amount. She made her "partial" mortgage payments on time for the 6 months as scheduled. She continued to contact the bank as to the status of her modification. She was always told that they were still reviewing and had not made a decision yet. Once she neared the one year mark to when she originally started, they advised her she had to start all over again. This was just a few months ago. She once again completed the required paperwork and submitted everything requested. She once again has been calling to see if they required any further documentation and to check on the status and still no answer. Now she is a real jam because according to the bank she is behind 6 months mortgage payments and they are looking for a total of about 14k to "reinstate" her loan. She does not have this much money and now she is looking at a foreclosure. What could I do to help her out of this? She is not on the loan by herself, my brother is a co-signer but does not live there or contribute anything to the loan payments. Is there anything that can be done to protect him as well?
Looking for any advice anyone can provide....
Thank you in advance.
Desperately need advice.
Looking for any advice anyone can provide....
Thank you in advance.
Desperately need advice.
Hi Guest,
Unless the lender modifies the mortgage for your mother, she won't be able to save the property. You and your mother will have to convince the lender so that he gives your mother a loan modification.
Thanks
Unless the lender modifies the mortgage for your mother, she won't be able to save the property. You and your mother will have to convince the lender so that he gives your mother a loan modification.
Thanks