Borrowers In The Dark About Foreclosure Process

February 11th, 2008 | Tags: Foreclosure

With foreclosures closing in many borrowers do not know how to arm themselves and ward it off. Freddie Mac conducted a research and came to this conclusion. About 20% were under the false impression that missing out on three or even more payments will not have repercussions. But in reality the picture is otherwise – which they learn too late. In some state foreclosures can be clamped down within 30 days of defaulting.

Fear and shame also make borrowers burrow their heads in the sand like the proverbial ostrich. The survey has shown that only half of those served with foreclosure notices have tried to contact the lenders.

There was a jump of 80% of foreclosure listings in 2007 from 2006. This year the numbers could worsen if some of the 2 million facing foreclosure does not wake up to reality and take action to forestall it.

The largest players in the sub-prime market are Fannie Mae and Freddie Mac. Many are not aware that these two bodies instruct their mortgage servicers to avoid foreclosures as much as possible. They keep track of the servicers dealing with delinquent loans. The servicers are ranked and paid for the extra work.

As soon as the borrower finds difficulty in keeping up with monthly dues the lender should be contacted immediately without delay. Time is of great importance. The loan mitigation department is the place to knock.

Help can be sought from a reputed help counseling agency. Round the clock hotlines are running apart from websites hosted with details of numbers. Here the important point is to contact only accredited agencies and not fall for smart talking rescue scammers.

The borrower should read, talk and know about the various options. If the financial situation is such that there is no possibility of retaining the house then there are other options like loan assumption, short sale and deed in lieu of foreclosure. In loan assumption the lender will permit a third party to take over the payments to bring the loan current so as to enable a sale. In a short sale the lender permits the sale of the house for an amount that is less than the loan. The gap may be forgiven or paid to the lender subsequently at a later convenient date. In a deed-in-lieu the title deed of the house is handed over to the lender and the loan erased.