Mortgage Negotiation.....GOOD NEWS for a change!
The NEW DEAL in refinancing…. It’s a Brave New World
There are things I know to be true…..things that it may take the doom-saying media a few weeks to catch up with and report to you. None of us in the real estate industry ever could have imagined the changes one short month would bring. We are in uncharted territory when it comes to credit, real estate sales, short sales and foreclosures. But what we brokers and loan officers are starting to see is the opportunities, benefits, and advantages for borrowers that come with the turned around market, and $700,000,000,000 rescue plan.
If you are being squeezed by your mortgage payments this is the best opportunity you will ever have to renegotiate your loan, either by having your mortgage company reduce the principal owed, or lowering your interest rate or both.
Here's why......short version:
Stopping the bleeding.....
In past years, as you have all recently been informed as you witness our financial base falter and fizzle, mortgage companies have been selling “packages” of bulked-together loans, which are bought by investors as mortgage backed securities. Many of these are good strong borrowers in no danger of defaulting. BUT the loans in these securities were not sorted for risk factors and a percentage of borrowers are in danger of defaulting. Because of the risk factor and the melting market, investors have been buying up these securities for pennies on the dollar. Merrill Lynch recently sold $30.6 billion dollars worth of loans for .22 cents on the dollar. Does that sound like the new owner of those loans is in a position to make a profit even it they do have to give the borrowers a better deal? As Sarah would say....'you betcha!".
When banks failed to take action by rushing to renegotiate loans voluntarilly (well they said they were doing so, but they were rather slow and uninspired about it)..... borrowers just gave up trying. Some just walked away. (NEVER leave your home while you still hold title!) Our housing markets started to glut with repossessed and now bank-owned properties, and fewer borrowers are applying for loans ( but oh yes there IS money to be loaned, just ask for it! It’s a myth that no new home loans are available.) Banks, other lien holders and mortgage backed security holders do not want the expense of taking a property back. Those security holders now find themselves forced to operate in an industry far outside their realm of expertise. And they’d even prefer that you don’t sell your home and try to negotiate a short sale….whereby you are not foreclosed upon but sell your home, with the bank’s okay for less than you owe on it. Often past-due debt can be forgiven or tacked to the back of the loan, and you can secure a fixed rate for the rest of the life of your loan.
Forget everything you thought you knew...
This is history-making: More and more lenders are now willing to help you stay in the home by adjusting your loan so that you can make those monthly payments. It is finally dawning on our institutional leaders in government and the corporate world that the bleeding has to stop. It is not cost effective to foreclose on any more homes. Renegotiated loans are far more profitable, and far less work for the lenders.
There is a trick to adjusting your loan….you must justify the need by showing debt to income, and often you will be asked explain your unique circumstances. And you must find a way to get past the desk jockey’s and find the person at the top that can make a decision. You may have an attorney, but even better is your loan officer. They are the ones who are trained and experienced in negotiating with lenders and funders, they will know how to get the job done. I know professionals who will assist you in this process, so please do call me if you’d like to get out from under the pressure, and go directly to the decider.
As a Realtor® I can tell you it is not to your advantage to try and short-sell your home now that we have motivation and mechanisms in place to help you re-negotiate your terms and stay in your home. This will help keep values stable for everyone. You may have to wait for answers but by getting help from an established loan officer, or an attorney you now have a means keep your home at a monthly payment you can afford.
We are in uncharted territory, and it is absolutely true that things will never be quite the same again. Take advantage of the chance to keep your home by reworkng the terms of your loan. Then tighten your belt and get ready for the ride.