DrunkenSailor
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The following is not legal advice. I am not an attorney. I don't have much so suing me would be a bad idea... That said there are a couple of points that I think are important as people who are out of work now and in the future are going to have some issues making the mortgage payment and I figured a thread to help people out would be helpful. I have been on the loss mitigation and secondary market side of the business for a long time and have seen most everything.
Rule 1: Don't pay anyone to work with your mortgage company unless they are an attorney and you are paying them their fee for assisting you. Lots of people got sucked into scams last time around where they were making payments to the company that was supposedly helping them workout their mortgage and that money never made it to the servicer. The only place you should make a mortgage payment to is the servicer who is servicing your loan or the bankruptcy trustee if you are in active ch13 or ch11 bk.
Rule 2: You cannot modify the terms of your mortgage without signing documentation. Things like adding delinquent amounts to the back end, extending terms, changing the rate, the monthly payment amount or anything else requires the terms of the original note to change. To do this you have to sign a document agreeing to those changes. This document needs to be notarized and filed with the county recorder as an addendum to your note. If a rep on the phone says "oh don't worry about it," I would ask to speak to a manager.
Rule 3: Never sign a modification if they require you to also sign a Deed In Lieu. This is called a pocket deed in lieu and is illegal in most states. What they are saying is that if you default under the modification terms we have a right to record the deed in lieu that you executed allowing us to take possession of your home without going through the foreclosure process.
Rule 4: If you fall behind work with your mortgage company. There are a lots of programs post 2008 in place to assist borrowers who need it. The longer you go without making a payment the harder it is to get help. Be proactive it will benefit you in the long run.
Rule 5: Pay attention to what programs are being rolled out by the government you may qualify for special assistance. Take advantage if you do.
Rule 6: If you are doing a shortsale, deed in lieu, are in a foreclosure or pretty much any program where the bank is going to receive less than the amount owed on your loan file a chapter 7 bk. There are firms out there that are going after deficiency balances. If you remove the liability now it will help you later.
Here are some common programs:
Forbearance Plan: A forbearance plan will forbear the interest due on a loan to a later date. When the forbearance plan is done those amounts deferred will be due.
Repayment Plan: Usually put in place after a forbearance or missed payments. A repayment plans goal is to bring you current by increasing your normal monthly payment over a period of time to allow you to catch back up to the correct interest amount owed based on the original amortization schedule of our loan.
Principle deferment: A principal deferment will move principle to a balloon payment due at the maturity date of the loan. You will not pay interest on this portion of your mortgage and your payment will be reduced accordingly.
Modification: These come under multiple names and programs depending on who owns your loan and what type of loan it was at origination. A modifcation will modify the terms of your original mortgage note. Depending on the program there are different types but as a general rule they all have a waterfall that they follow to make your payment affordable for your monthly income. For example if your loan is owned by Fannie Mae the goal is to match your payment to 31% of your gross income. The first step is to reduce the rate to a floor rate. The second step is to extend the term of the loan. The third step is to defer principal (see above). The fourth step is to forgive principal.
Short Sale: a short sale is used when a borrower cannot afford the payment and does not qualify for retention options. They owe more on the property than the property is worth and the bank agrees to accept a lower amount than owed. In this situation the borrower will list the house for sale with an agent and the bank will approve the offer to sell the home.
Deed in Lieu of Foreclosure: This program is used when the borrower does not have the ability to sell the home, code violations, deferred maintenance, etc... or the borrower just wants to walk away. By signing a deed in lieu you are agree to hand over the deed in lieu of payment. The bank does not have the expense or time involved of pursuing foreclosure and the borrower can walk away. Read these documents carefully to ensure that their is no future liability for yourself.
RDP has been a great community of like minded people for me. I have been given help by members here countless times.
If you are trying to work something out and you have a question on documents that you receive, how they are calculating figures, etc... feel free to shoot me a pm.
If I can help out our community who over the past few years have helped me out in many different ways I figure this is my opportunity to give back as this is my industry.
Rule 1: Don't pay anyone to work with your mortgage company unless they are an attorney and you are paying them their fee for assisting you. Lots of people got sucked into scams last time around where they were making payments to the company that was supposedly helping them workout their mortgage and that money never made it to the servicer. The only place you should make a mortgage payment to is the servicer who is servicing your loan or the bankruptcy trustee if you are in active ch13 or ch11 bk.
Rule 2: You cannot modify the terms of your mortgage without signing documentation. Things like adding delinquent amounts to the back end, extending terms, changing the rate, the monthly payment amount or anything else requires the terms of the original note to change. To do this you have to sign a document agreeing to those changes. This document needs to be notarized and filed with the county recorder as an addendum to your note. If a rep on the phone says "oh don't worry about it," I would ask to speak to a manager.
Rule 3: Never sign a modification if they require you to also sign a Deed In Lieu. This is called a pocket deed in lieu and is illegal in most states. What they are saying is that if you default under the modification terms we have a right to record the deed in lieu that you executed allowing us to take possession of your home without going through the foreclosure process.
Rule 4: If you fall behind work with your mortgage company. There are a lots of programs post 2008 in place to assist borrowers who need it. The longer you go without making a payment the harder it is to get help. Be proactive it will benefit you in the long run.
Rule 5: Pay attention to what programs are being rolled out by the government you may qualify for special assistance. Take advantage if you do.
Rule 6: If you are doing a shortsale, deed in lieu, are in a foreclosure or pretty much any program where the bank is going to receive less than the amount owed on your loan file a chapter 7 bk. There are firms out there that are going after deficiency balances. If you remove the liability now it will help you later.
Here are some common programs:
Forbearance Plan: A forbearance plan will forbear the interest due on a loan to a later date. When the forbearance plan is done those amounts deferred will be due.
Repayment Plan: Usually put in place after a forbearance or missed payments. A repayment plans goal is to bring you current by increasing your normal monthly payment over a period of time to allow you to catch back up to the correct interest amount owed based on the original amortization schedule of our loan.
Principle deferment: A principal deferment will move principle to a balloon payment due at the maturity date of the loan. You will not pay interest on this portion of your mortgage and your payment will be reduced accordingly.
Modification: These come under multiple names and programs depending on who owns your loan and what type of loan it was at origination. A modifcation will modify the terms of your original mortgage note. Depending on the program there are different types but as a general rule they all have a waterfall that they follow to make your payment affordable for your monthly income. For example if your loan is owned by Fannie Mae the goal is to match your payment to 31% of your gross income. The first step is to reduce the rate to a floor rate. The second step is to extend the term of the loan. The third step is to defer principal (see above). The fourth step is to forgive principal.
Short Sale: a short sale is used when a borrower cannot afford the payment and does not qualify for retention options. They owe more on the property than the property is worth and the bank agrees to accept a lower amount than owed. In this situation the borrower will list the house for sale with an agent and the bank will approve the offer to sell the home.
Deed in Lieu of Foreclosure: This program is used when the borrower does not have the ability to sell the home, code violations, deferred maintenance, etc... or the borrower just wants to walk away. By signing a deed in lieu you are agree to hand over the deed in lieu of payment. The bank does not have the expense or time involved of pursuing foreclosure and the borrower can walk away. Read these documents carefully to ensure that their is no future liability for yourself.
RDP has been a great community of like minded people for me. I have been given help by members here countless times.
If you are trying to work something out and you have a question on documents that you receive, how they are calculating figures, etc... feel free to shoot me a pm.
If I can help out our community who over the past few years have helped me out in many different ways I figure this is my opportunity to give back as this is my industry.
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