Mortgage Nightmare….Can you actually talk to your lender?
Read the last paragraph for a real shocker!
Are they deliberately making it difficult to "work with you"?
I've just spent the last 10 days or so talking to homeowners who are, for a number of different reasons, behind on their mortgage payments and receiving notices of foreclosure. I get these notices sent to me by a local title company, and for the longest time I didn't do anything with them other than watch the numbers rise drastically over the past year. I started looking a little closer when I saw a certain percentage of them were not upside down in their homes....they had plenty of equity. It's not unusual to see borrowers who've been in their homes for 10 or 15 years suddenly facing the imminent sale of their family home on the courthouse steps.
What happened? For some it was a second mortgage, for some it was the loss of a job, or a medical emergency that racked up bills and destroyed their otherwise good credit score. And for some it was an unwise refinance or home equity loan with an adjustable rate that kicked in and raised the house payment to an amount so high the homeowner just didn't have funds to cover it.
But in an alarming number of these cases, the amount in arrears was under $5,000.....owed against a mortgage where the borrower owns a higher percentage of the property than the lender does, on a house worth well over $250,000.
When the borrowers applied for and received the loan, they were aware of the adjustable rate that would raise up in two or three years. They figured (were often told by the lender and their real estate agents) they could, at that future time, refinance into a 30 year fixed rate loan. NO one told them there was a chance that even though rates would remain appealingly low, the credit scoring guidelines would become much more stringent and the score that got their loan approved last time would not be enough to be approved for a refinance. No one told them if you take on any more credit, even though you might be financially capable of paying those credit cards or car payments on time every month....it will change your credit score for the worse. And make them ineligible for a reasonably priced refinance. Some folks have been appalled to find merely reaching a certain level on their credit cards...that's level, not limit... allowed by the credit card company, that also lowers one's credit score. If you apply for and receive say, a store credit card and never even use it, it lowers your credit score.
So if you are trying to renegotiate with your lender....before you even make contact, cancel any unused credit cards. One lady I spoke with told me she used about two house payments worth of funds to pay off credit cards....just to make herself more worthy of a refinance in the eyes of her mortgage company.
But then came the reality. Try as she might, she could not actually speak to her lender, never got through the maze of phone menus to talk to anyone who had a clue as to how to assist her. Negotiating with them is a moot point right now; she cannot even get someone with a pulse to discuss the matter with her. She was shuffled from department to department, put on hold for literally hours, was told information and documents she'd faxed or sent by certified mail had not been received. She was disconnected. She does work full time so trying to reach the company during business hours is not easy. She took time off work to get the job done....wasted the whole day in frustration, on hold, not getting answers. She never spoke with one person who seemed remotely competent or in a position of power to arrange a payment plan with her. The mortgage companies are staffed with folks who define the Peter Principle...where every employee rises to a point of incompetence.
This is not a singular incident, this is more like the norm. These mortgage companies are completely overwhelmed with the inundation of borrowers who are racing the clock of foreclosure, trying to renegotiate the terms or their loan so their families can stay in their home. The one they worked so hard for, paid so long on, always in good faith.
But is it deliberate on the part of the lenders? And are they actively trying to hire and train staff to help? Is it really to their advantage to work with you? Or are they simply lying when they say "we really don't want your house back"? I contend for every borrower who now owes more than their house can sell for, and for every sale that involves a short sale (where the bank does not foreclose but agrees to take a lesser amount than the borrower owes on it)....there are also thousands of homes that represent pure profit for the lender. Remember...the bank gets it all, every penny you've paid in interest or principle so far. And your house to sell for the going market rate. Especially in cases where the borrower has been in their home for years and holds lots of equity, and are only two or three payment behind, that looks like a real money maker to me.
It seems to me that for a lender there are many ways to approach loss mitigation, and being able to grab the assets of those unfortunate borrowers with large equity in their homes would be a great way to offset those mortgages where they might take a loss.
And here's a little fact that few are aware of: During the years when G.W. Bush was telling us home ownership was something all Americans could aspire to, a good number of homes were bought with grant money down payments from a company called Ameriquest. (Since then the IRS has raised some real questions about the legality of those grants, and the write-off the sellers were taking.) Ameriquest contributed $7.8 million dollars to Bushes re-election campaign. Coincidence or serendipity? You decide.