I’ve heard an increasing number of reports about lenders who positively refuse to speak with their borrowers about loan modifications and/or impending foreclosures.
I suspect a primary reason for this is that many lenders are waiting to see how the Bailout Bill will play out, and whether they’ll be able to sell their toxic assets to the government without adjusting the borrower’s loan.
Regardless of the reason, this is a horrendous practice. Lenders should at the very least have a discussion with their challenged borrowers, even if the lender ultimately exercises its right to continue with a foreclosure.
If you face a situation in which your lender will not communicate with you, here are three alternatives to consider:
- Mortgage Insurer: If you made a down payment of under 20% when you acquired your property, your loan almost certainly has a mortgage insurance policy. The insurer who wrote your policy will be on the hook for a part of the loss in the event that the lender forecloses your property, so it may be helpful to communicate with your mortgage insurer and have them apply pressure directly to your lender.
- Forensic Loan Audit: A very high percentage of loans contain inaccuracies or outright violations of law which may seriously pressure the lender to modify the loan in the borrower’s favor, and a great way to discover those issues is through a Forensic Loan Audit.
- Your Attorney: Frequently your attorney can prompt a response even when you can not. If you have a relationship with an attorney, ask them to contact the lender on your behalf. If not, here is a link to Prepaid Legal Services, a very low-cost legal program
Whatever you do, don’t just stand by and agree to be ignored by your lender. Ultimately, it’s their choice to determine whether to modify your loan. But it is within your power to force the issue if necessary using one of the above tools/resources.
If you have other ideas or thoughts about this issue, I welcome your comments below.
Thanks for reading RealEstate.BryanEllis.com!
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2 Comments So Far»
Good information for the times! Thanks Bryan!
Hi: I am a Loss Mitigation Specialist that works on behalf of clients to help stop the foreclosure process, work with the homeowner for home retention, or take the property through a short sale. I have found that filing a complaint against the lender with HUD is also a very effective tool in getting despondent lenders to communicate with me/homeowner about a work-out strategy on behalf of the homeowner.
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