Thursday, April 05, 2007

Lenders Willing to Help Struggling Homeowners

Associated Press
April 5, 2007

As home foreclosures mount, mortgage companies are knocking on doors, sending letters and making phone calls with a simple message for struggling homeowners: They’d rather modify your loan than foreclose.

Lenders have long modified loans for homeowners facing job loss, illness, divorce or a death in the family. But with many borrowers across the country struggling to keep up with mortgage payments, mortgage companies increasingly are prodding anyone who’s having trouble making payments for any reason to give them a call.

Critics say lenders made loans to borrowers who were not creditworthy with terms that would be impossible for them to meet. Whether the current wave of workouts will merely postpone foreclosures — and delay bad loans hitting lenders’ books — is an open question.

New foreclosures hit their highest ever level in the fourth quarter of 2006, according to the Mortgage Bankers Association. Home owners are the obvious losers, but all the financial services companies involved lose. The lender loses the steady stream of payments it counted on. If it sold the loan as part of a securitization, a package of mortgage-backed securities, that investor loses. Loan servicers, who are usually paid a fraction of the interest on a loan, lose too.

Richard's notes... If you're unable to make your mortgage payments on time, please contact your lender and explain the situation. It's in the lenders best interest to help you find a solution and it may be possible the lender will renegotiate the note on the property. You always have the option to list and sell your house if you and the lender cannot come to an agreement.

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