Ryan’s Mortgage Blog:
I heard an idea on the news the other day that would help people that are almost in default on their loan because of late fees and missed payments. The idea was to encourage lenders to roll back late fees/missed payments to the end of the loan (add more payments to the life of the loan). It’s apparent that once people get in a hole it’s difficult to get out. Basically re-arrange their agreement (in other words refinance or restructure their loan) with the borrower which may help get them out of their hole by moving their debt and allowing to pay it off later and start fresh. Many of these foreclosures aren’t because people lost their job or have no money; it is because they can’t afford their rising payments from these bad/confusing/adjustable loans. It sounds like this would help all involved, both lenders and borrowers, but I am not sure how easy this would be to do (obviously every case would be different). A majority of lenders don’t want to see a foreclosure happen because they lose all the profit they would have received from future interest, plus they end up having to pay fees and taxes associated with the home. Lenders actually try and call you when they think you are headed towards default and work out a plan with you. I wouldn’t avoid their call because before you know it you may lose your home. As for the Lender’s that don’t care if they foreclose on your home, their reputation will catch up with them.
It would be nice if there was a government or industry standard program that was created to save people from going into default by refinancing/restructuring the “problem” loans. Some lenders really try and work with you but others may not. BUT you may be dealing with the same company who put you in the loan so how much could you actually trust them? If there is closing costs involved with getting you out of the “problem” loan they could be financed into the loan which shouldn’t cause a big problem to the monthly payments. Some people don’t look at the big picture when it comes to closing costs. Sure it stinks to have to refinance and go through all the paperwork and fees, but isn’t that better than watching your credit score drop or even worse loosing your home? The ideal solution would be to prevent the problem before it happens. If you are in a loan that is about the adjust I suggest meeting with a mortgage broker to see what your options are. This is a free/no obligation service that could really benefit you. I would be glad to help you so feel free to contact me. I could also help explain what kind of loan you have if you aren’t real sure. You could also try and negotiate with your current lender to refinance you into a better program, but do this before you start missing payments. Once you miss payments your credit score is going to tank which can cause massive problems. Sorry if this all sounds similar to some of my other blogs, but it is still a hot topic and I want to make sure people are aware of it. You can reach me at 805-540-0866 or RBaker@PeregrineLending.com
Ryan’s Mortgage Blog: