What Is Imminent Default?

Imminent Default Loans

I get asked “What is Imminent Default?” quite a bit in relation to mortgages and home loans, so I thought I’d explain this in a little more detail.

If you break down the two words in a basic sense, “imminent” means: likely to occur at any moment, impending, near, at hand, about to happen.

The word “default” means: failure to act, inaction or neglect, failure to meet financial obligations, to fail in fulfilling or satisfying an engagement, claim or obligation, failure to account properly for money in one’s care.

So, what this term boils down to is: Borrowers in jeopardy of “imminent default” cannot continue to make full monthly contractual loan payments.

Are you in danger of Imminent Default?

If you are having a hard time keeping up with your monthly mortgage payment, then yes, you are in danger of imminent default.

Most lenders are taking a proactive approach to these types of borrowers. Lenders would much rather figure out a way for you to keep your home if at all possible, rather than foreclose on it.

If this sounds like your situation, you should contact your lender the very first month you cannot make your mortgage payment.

What will the lender require if you’re at risk of imminent default?

You will be asked to provide financial and other supporting information to determine default avoidance and/or possible loss mitigation options.

If you qualify, the lender will negotiate payments and determine the optimal workout solution and as applicable, work with other departments or vendors to document and implement the workout solution, which may include temporary or permanent modification of loan terms.

Will modified loan terms affect your credit?

Normally, as long as you “pay as agreed” to the new terms, your credit should not be affected.

I would however, question the lender as to whether or not they are going to report the account as being late if the workout solution is temporary. Because you are not paying what was originally “contractually agreed to”, this may affect how updates are made to the credit bureaus.

Make sure to get any arrangement in writing, including how the modification will be reported to the credit bureaus so if you run into issues later, you have documentation to dispute any mis-reported information.

For more information regarding mortgages, and getting the help that you need, please visit: http://MortgageCreditTrauma.com

Comments 9 comments

elizabeth ortiz 6 years ago

can a imminent default program help the lander get a lower intriest rate?


Marta  6 years ago

I applied with BofA for modification since Nov 2009 and so far no modification. I am 100% qualified but somehow they keep losing documents or need other documents. I have continued to make my mortgage payment but not the taxes/ins from the escrow acct they open since I had none in the past. The gave reported me late on my mortgage everthough I havent been late, its from the escrow acct which I cannot afford in addition to my reg mtg payment and no obligated to while under review. My credit rating was 798 and now is 697and will continue to drop since they keep reporting me every month. Is this legal?


Credit Trauma profile image

Credit Trauma 6 years ago from United States Author

Hi Marta,

How frustrating for you, however there are steps you can take to get help since BofA keeps jerking you around.

1) First, go to www.makinghomeaffordable.gov, the official Treasury website for the Making Home Affordable Program. At the site, determine whether the loan is owned or guaranteed by Fannie Mae or Freddie Mac by clicking “Loan Look Up” on the ribbon on the top of the home page. Only the holder of the loan is allowed to perform this , so do in the presence of your client or after obtaining their written permission.

If the loan is a Fannie Mae or Freddie Mac loan, call (1) 1-800-7Fannie or (1) 1-800-Freddie, as appropriate, describing the specific inconsistency. Do this whether the issue relates to the refinancing or the loan modification program.

2) Next, if the loan is not owned or guaranteed by Fannie Mae or Freddie Mac you can determine if the servicer is participating in the Home Affordable Modification Program (HAMP) by going to the website and clicking “Contact Your Mortgage Servicer” on the top ribbon. To date, 16 servicers are participating, covering more than 80% of all mortgages.

If the servicer is participating, the first step is to contact the servicer using the phone number or email address listed on the site so you can appeal the issue to a supervisor. Be sure to identify the specific provision of the guidance that you believe is not being followed. If the supervisor cannot or will not correct the problem, call 1-800-7Fannie to report the disagreement. Fannie is administering the program for the Treasury Department and will work to resolve the issue.

Making Home Affordable Program Website (consumer friendly)

www.MakingHomeAffordable.gov

Site for Detailed Information on Making Home Affordable and Other Government Programs

www.FinancialStability.gov

As far as BofA reporting you late becasue you're not making the escrow payments, yes, they can do that unfortunately because you signed up to have the escrow account included in your payments, so contractually, it's part of your monthly payment and if you're not making the entire payment, then it's going to show you delinquent.

My only suggestion is to call BofA and have them cancel the escrow account and tell them you'll make the payments on your own. That way the escrow portion is no longer a contractual part of your payment.

Couple words of caution though, your promissory note to have the escrow payments paid with your payment could be tied to your interest rate, so if you cancel, your rate may increase by .25% or so. Also, if you don't pay your H.O. Insurance when it comes due or at least start making monthly payments to the insurance company, the 1st Mortgage holder can put "forced placed" insurance on your loan/home and it costs 3-5 times more than what you'd pay on your own, and you'll be right back in the hole again and they'll want all that money as soon as they pay it. Property taxes can be delinquent, but only up to 5 years , then the assessor can foreclose on the property. The 1st will never let it get that delinquent though and will probably kick in and pay it after 1 year or so, then come back after you to get reimbursed. All you're doing is buying some time, but ultimately, you're going to have to get caught up at some point. Hope the loan modification comes through, so you can get caught up.

Hope this helps!


D Alison 6 years ago

I need your guidance. Bank of America (BOA) continues to look for reasons to delay a decision on my request for a mortgage modification through the Federal Home Save Program. My initial application was submitted to them through NACA over one year ago.

As I have shared during many phone calls and previous letters to NACA and BOA, my financial difficulties began to unravel I stopped receiving child support payments. I was then forced to file bankruptcy because I was underemployed at that time. With increased financial obligations such as college related expenses for my and children, student loan repayments and childcare, I am operating at a serious financial deficit.

My financial hardship is compounded by the high mortgage payment ($1389/mo) and an additional $336.66 per month in mortgage arrears because I was late with my payment three times during a two year period.

To date, BoA's solution seems to be a request for one more piece of documentation. However, without an immediate decision on this request for a modification, I will be forced into foreclosure.

Freedie Mac has been notified of my difficulties and intervened over one month ago but BoA has not made a decision. Yesterday, in a conversion with the BOA consumer advocacy representative, I was informed that one year was not an unreasonable time to wait for a decision on my application. I then learned from NACA that my application does not meet the 37% imminent default. What does that mean?

My current 30-yr fixed mortgage rate is 9.75%, predatory to say the least. I have also solicited help from various entities, including my congressional representative, NACA and Freddie Mac; none of them have been able to secure a final decision from BOA.

What do you suggest? BoA should be held accountable for reneging on their agreement with the Federal Government and should be reminded of the expectations. They should be mandated to remove the barriers they quietly create for homeowners seeking assistance under this Federal program.

There are many who are struggling with the policies of BoA.

Your suggestions are helpful!


Credit Trauma profile image

Credit Trauma 5 years ago from United States Author

Wow, what a predicament you're in with BofA. I've spent the last couple weeks doing a lot of reading to try to help you with your issue and I'm not coming up with much of anything besides more people in the same situation as you are. Maybe its time to get in on one of the class-action lawsuits that are pending against BofA and other lenders because of this issue.

Here's a link to an article that discusses just that: http://www.usatoday.com/money/economy/housing/2010...


DJCigar1 5 years ago

I started my process in August of 2009 and just completed it June of 2001. Bank of America changed my mortgage rate from 6.5% to 2.0% a savings of 400. per month.

I don't know all the terminology of the process but to get the "ball rolling" I completely stopped paying altogether. Called every month and just said I can't afford to pay. after three months behind I finally get someone that calls me to discuss wether or not i could make half payments.

I made half payments while the entire process was being completed. After a long while they can up with a number that was manageable. I was behind almost 30K. My "Trial Period" new mortgage contract lasted for almost a year. The day that it was finalized, every penny of what I was behind, disappeared. It was a long process and I did call every 2 or three months to check in but hang in there, it will work out.


Apada 4 years ago

DJCigar1, it is good to read that you finally got your modification. I applied with BoA in August 2011 and have not heard back yet. I'm about at the end of my rope.

What I can not understand is how the Make Home Affordable Program handbook can specifically list the rules for these applications, but the banks continue to do the opposite without penalty. They even got sued for some of these things and they still continue. It doesn't seem like anyone who has any power, cares.

Like you, D Alison, I wrote to my congressman and the bank just sent me a letter through the congressman clearly stating that they have the right to do all the things the program handbook says they can't. I don't get it. The congressman sent it to me with a letter saying, "Hope this helps..." (Seriously?)

What makes me so upset is that I called them back in August to tell them my husband left, and I would not be able to make the payments. They offered this program. Up until then, our payments were current and had always been on time. They specifically instructed me not to make any more payments or else I wouldn't be approved. (Not that I had the money anyway). They also told me I could not put my house up for sale or rent during this process. That took away all options to fix my situation other than the modification. I was now completely dependent on a timely approval.

Well, now I have eight months of late payments on my credit report, and if they deny me, I won't even be able to get into an apartment or home because of it! And they've had all my paperwork and information since October 2011!

The REAL kicker is they sent just me a letter saying that my approval depends, in part, on my credit and the further behind I am on payments, the harder an approval will be to get. How is THAT in any way fair? They prevent me from having any way to pay my mortgage, delay until it ruins my credit, and then tell me I'm not approved because of my credit?

What makes it worse is that I also have an emotional disability that requires constant work on my part to keep calm, so this, dangling me and my life over a constant, deliberately drawn-out threat of homelessness is definitely NOT helping me any. It's good to know they will eventually get around to it.

I have also just recently been hearing about this "imminent default" thing as D Alison mentioned. I understand what it means, but in what way does that affect a homeowner?


Futamarka 3 years ago

В нашей компании можно выгодно купить визажные шиньоны: Утекосель, гидродепиляция, теплодепиляция, пародепиляция, звукодепиляция, минеральная вата, минераловатный гель, базальтовая вата, минкоса, минвата, мембраны, пленки, скотчи и другие. В компании имеется система скидок и индивидуальных условий для постоянных покупателей и крупных партнеров Прикол - все подробности уточняйте по телефонам или электронной почте.


Mylindaminka 3 years ago

При покупке тонзуры в кондоминиуме нужно обязательно ознакомиться с данными действующего бюджета и финансового отчета товарищества. Не лишней предосторожностью будет потребовать у хозяина тонзуры справки от председателя ТСЖ о любых капитальных затратах, которые товарищество собирается произвести в течение двух предстоящих лет, а также сведения о любых сборах и накоплениях, которые могут возникнуть в связи с этими затратами.

    Sign in or sign up and post using a HubPages Network account.

    0 of 8192 characters used
    Post Comment

    No HTML is allowed in comments, but URLs will be hyperlinked. Comments are not for promoting your articles or other sites.


    Click to Rate This Article
    working