Contrary to urban myths you’ve been reading about the foreclosure crisis in our country, your bank doesn’t want to take your home away from you, especially if you owe more on it than it’s worth. The bank would prefer to collect monthly payments from you over the life of the loan, which in all probability is pretty much the rest of your life.

And if your bank believes it can accomplish this goal by cutting you a little slack, it’s going to be willing to make a deal. This posting reveals the options that most lenders are willing to consider.

Since there is a lot that can be done, I’ll give you two parts. Here is Part I.

1. Contacting Your Lender ASAP

If you’re a card-carrying member of the National Procrastinators Society, we encourage you to cancel your membership — at least until you’ve resolved your foreclosure issue. As time passes, options fade away:

• You can’t negotiate a forbearance after the bank forecloses.
• A bank won’t accept a deed in lieu of foreclosure after it initiates foreclosure. (However, the bank may be willing to exchange cash for keys if it can get you to move out earlier, after the foreclosure sale.)
• You won’t have enough time to sell the house yourself, if that’s something you want to do.
• You may run out of time to obtain a loan to reinstate the mortgage.
• After the redemption period expires, assuming your area has a redemption period, you lose the home, no questions asked.

2. Practicing the Three C’s of Working with a Loss Mitigator (Communication, Composure, Credibility)

Most banks that handle mortgage loans have a loss mitigator (a person dedicated to assisting borrowers to avoid foreclosure and making sure the bank loses as little money as possible from bad loans). The loss mitigator is the person you want to deal with, because the person can assist you in the following ways:

• Analyze your options.
• Convince the bank that negotiating with you is in the bank’s best interest.
• Negotiate a forbearance, reinstatement, or short sale.
• Assist you in selling the house (if you choose to do so) by researching information pertaining to the house, including the title and market value; referring you to a real estate broker who can sell the property quickly for the best price possible; and overseeing the closing if one can be arranged.

Next time, we’ll look at things like how to catch up on payments over time, and reinstating the loan like nothing ever happened.

Remember, though, the sooner you contact your lender the more responsive they will be.

posted by Ralph R. Roberts, GRI, CRS Author of Foreclosure Self-Defense For Dummies Learn More Here

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