Times have been tough the last several months for homeowners facing foreclosure. In apparent disregard for the statistics showing a steady rise in the numbers of Americans defaulting on their mortgages, many banks have continued to play hard ball in the negotiation process, refusing short sales and showing reluctance to help homeowners work out acceptable payment plans. Recent news shows that this attitude might finally be shifting. Government agencies are now pushing mortgage servicers to work with families facing foreclosure rather than allowing the loans to default.
Recently, several federal and state agencies banded together to issue a staement urging mortgage banks to be more flexible and proactive in their negotiations with borrowers. According to Mortgage News Daily, "This statement is aimed at companies that are servicing sub prime and other mortgage loans...A number of the servicing companies (Wells Fargo and WaMu for example) are subsidiaries of government regulated banks. While the statement is not binding on the servicing companies, it asks that they review the governing documents for the securitization trusts to see how much authority they have to restructure loans that are in risk of default.
The statement points out that these documents may permit the servicer to be proactive in contacting borrowers and, where appropriate, apply loss mitigation strategies. It outlines four areas where servicers could be proactive:
Identifying borrowers at heightened risk of delinquency or default;
Contacting borrowers to assess their ability to repay;
Assessing whether default is "reasonably foreseeable;"
Exploring a loss mitigation strategy that avoids foreclosure or other actions resulting in the loss of home ownership.
The statement said that loss mitigation is generally less costly than foreclosure, particularly when undertaken early in the process. Such strategies can include loan modifications; deferral of payments, extension of the loan term, conversion of ARMs into fixed rate or fully amortizing ARMs, capitalization of delinquent amounts, or a combination of solutions."
To read the entire post click on: http://www.mortgagenewsdaily.com/962007_Mortgage_Servicing.asp
If banks follow the above suggestions, it may become a little easier to avoid foreclosure, if avoiding foreclosure and keeping your home is in your best interest. We advocate that foreclosure and bankruptcy are powerful tools to consider when you are facing financial challenges and should not be dismissed as only a last resort. However, for those who do decide to attempt to renegotiate their loan and keep their home, the above statement is certainly a little bit of good news.
If you would like more information or a referral to a bankruptcy or short sale professional in your area, please contact us at foreclosureandbankruptcy@gmail.com
