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Top Five Reasons Why Mortgage Lenders and Banks Will Not Rescue You from Foreclosure

Posted by  on Feb 08, 2010
 
Banks and mortgage lenders do not like foreclosure any more than the people who risk losing their homes. In foreclosure situations, lenders usually lose money on the deal, because the property is often sold for less than the amount owing on the mortgage. For this reason, if you are unable to make mortgage repayments for a short period, most mortgage lenders are willing to work with you on a solution. Sometimes, however, banks and lenders are not. Understanding the reasons why can be important in helping you save your home from foreclosure, or preventing the foreclosure process from starting in the first place.

You Ignored the Problem for Too Long

Unfortunately, the action that most people take when faced with foreclosure, or even simply missing one or two mortgage payments, is no action act all”and this is the absolute worst thing you can do. If you are going to miss mortgage payments, it is absolutely vital that you inform your lender as soon as possible. Ignoring the issue is never going to help”if you cannot afford to make payments, the bank is not going to let you miss them, and the problem is not going to go away. The sooner you inform your lender of the problem, the better, and the more willing they will be to help you work out a solution. If you ignore it and let payments slide, foreclosure is very much a certainty.

You’re not Helping them Help You

Most banks and lenders are willing to work with you on a solution, even if your current financial situation is such that you will not be able to make up the payments you’ve missed. In some cases, they will be willing to reschedule your amortization period, for example, to reduce your monthly payments to an affordable level. However, this is not going to happen unless you take the first steps. If you miss mortgage payments, your lender will not automatically assume that you are willing and able to meet a repayment schedule to get your payments up-to-date, or that you are interested in working out another solution.

You’re Unable to Show your Ability to Keep up With Payments

If you miss mortgage payments, your lender will require that you disclose your current financial situation. They will want to know why you cannot make the scheduled payments, and will also want information about your current income and expenses. If that information shows that you cannot meet your mortgage repayments in the long term, they are much less likely to be willing to help. Lenders want to avoid foreclosure if at all possible, but they also need to know that you will be able to follow through on any plans that are made to repay what you owe. They are more likely to pursue foreclosure if they have no confidence in your ability to pay the missed payments or stay current with your mortgage in the future.

They Want to Get the Matter Settled Quickly

Every month that you miss a payment, your lender is losing money. Dealing with delinquent payments and foreclosure can cost both you and the lender thousands of dollars, and the longer the matter drags on, the higher the fee total. It is in both yours and the lender’s best interests to settle the matter as quickly as possible. If the lender feels that getting it settled quickly requires proceeding with foreclosure, they are likely to do just that.

They’ll lose Less Money by Foreclosing

Like any other business, banks and mortgage lenders are motivated by money. Do not be deceived by advertising and public relations campaigns”mortgage lenders are in the business of making money, not helping people afford homes. Never assume that your bank or broker is always going to be interested in working the problem out, even if you have done everything right up until that point. If the situation gets to the point where the lender will lose the least amount of money through foreclosure, then that is likely what they will do.

Four Simple Rules

Once you understand the reasons and situations in which mortgage lenders and banks will not offer you help when faced with foreclosure, you will also understand what it is you need to do to prevent the situation from occurring. It comes down to just four basic rules:

· Never, ever ignore the situation. Inform your lender as soon as you know there will be a problem, and keep them up-to-date with your financial situation.
· Give your lender all the information they need to help you work out a solution, and show them that you are willing to do what’s required to fix the problem.
· Show your lender that you have the ability as well as the willingness to get up-to-date with your mortgage.
· Get the problem resolved as quickly as possible.

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