Not that long ago we told people with mortgage problems coming into our office, who were not yet in foreclosure, to come back when they received their foreclosure complaint. The reason, as I explained to them, was that until there was a “mechanism,” in the way of a court action, in place to allow us to fight back against the bank’s fraud, there was no way of cracking through the veneer of the bank’s unwillingness to work with homeowners instead of driving them into foreclosure. As evidenced by Bill’s story, boy have times changed.
Bill came into our office just a little over three months ago, in desperate straits on his mortgage. Although he was two months behind in payments, he was not yet in foreclosure. Hardly having a horrible interest rate at 5.875 percent, Bill’s payment was $431 a month which, without a job, was beyond his means. At that time, we suggested going back at the bank proactively and aggressively, and demanding that it consider Bill for a loan modification which would allow him to save his home.
The efforts paid off handsomely for Bill and his family. After several months of getting Bill’s bank financial information (usually a necessary prerequisite to a modification), it came back with great news. First, his monthly payment of principal and interest is being reduced from $431 to $250, a reduction of over 40 percent. Better still, if Bill remains current on his modified payments, the bank will lop $8,666 a year for the first three years off his principal balance. That means that the amount he owes on his loan (currently $62,000) will be reduced by over $26,000.
All told, Bill has achieved a loan modification which will save him tens of thousands of dollars over the life of the loan. The lesson in Bill’s story is this: when in trouble on your mortgage, don’t wait until you are sued for foreclosure to seek help. Be proactive. As with Bill, there is a good likelihood you may be able to save your home and avoid foreclosure altogether.
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Kate Eyster and Lauren McGookey contributed to this article.
Copyright 2013 Daniel L. McGookey