Mortgage holders must realize it’s not the end of the earth.
When the people we know of as friends and neighbors find they have mortgage problems, their first shock is the foreclosure service. They go to the front door one morning to pick up the daily paper, only to be greeted by a process server handing them a foreclosure notice. This is the first of many instances when these people will discover they have been let down by the ongoing failure of our federal and state governments. Because government has failed to force financial institutions to do their part and resolve our national housing instability, every well written summons and complaint seeking the foreclosure of a mortgage will result in a forced, judicial sale of a house. So is there life after being served notice? There can be.
Every mortgage simply says that if the borrower does not make the monthly payment, keep up homeowners insurance and avoid violations and a number of other conditions, they will be sued in State or Federal Court. Eventually, this is the first act that leads to a foreclosure sale. Sadly, the homebuyer will hear these words at the closing table while signing a mass of documents but will concentrate on anything but the potential chaos of these results.
What’s gone wrong for foreclosed homeowners
The numbers speak for themselves: mortgage loan defaults do not result in an equally significant number of sustainable loan modifications. This fact was pointed out last year by a group of 15 Attorneys General, including our New York State Banking Superintendent. The fifteen signed and sent a letter to the Comptroller of the Currency and the Director of Office of Thrift Supervision stating "the majority of loan modifications in the past year have not led to meaningful payment relief to homeowners. We are concerned that either the institutions supervised by the OCC and OTS have thus far failed to offer homeowners sustainable loan modifications, in contravention to guidance issued by the federal banking agencies...."
Now, a year later, this State Foreclosure Prevention Working Group issued its Data Report No.4, January 2010, showing that the number of homeowners in default continues to grow, not lessen. Efforts to mitigate loss are hopelessly backlogged, principal reductions are a rare bird indeed; and that our lenders and banks have "not succeeded in turning the corner to reduce the high levels of foreclosure." In her February 11, 2010 Newsday article, Ellen Yan lays bare the shocking facts that the "number of newly started foreclosure cases on Long Island went up last month." On a hopeful note, she adds that there are some positive trends now forthcoming and reports on one such successful loan modification for a Nassau county homeowner, even after the lender served a foreclosure papers.
Ms Yan described in an earlier article that "state law will require settlement conferences for all borrowers in the foreclosure process". She reported how court officials are "hoping to keep these people, more of them, in their homes." But due to reticence, ignorance of their options or merely the apathy of hopelessness, many people who have come face to face with the process server feel no hope in reaching out for guidance, counsel and assistance. This in spite of the fact that each foreclosure summons is required to provide phone numbers for counseling agencies, and each court house provides a Clerk's Office for homeowners to get information on their options.
What to do when foreclosure service strikes
There are several positive success oriented strategies homeowners in foreclosure can enact. Focus on the fact that homes can be saved and loans can be modified or at the very least a short sale can be worked out saving the owners from foreclosure. I regularly see homeowners who were served with a foreclosure summons and need counsel and defense to save their home. When we meet, I explain their options, and point them in the right directon of a good attorney to help. They often come away with the confidence that there is a process for solution. They also understand that if you do nothing you will get nothing.
The potential to succeed is limitless. Meeting a process server can feel as if the weight of the world is crashing down. But don’t just hang your head and start cleaning out the closets. Take action! Look to mentors, neighbors and professionals who have had experience in this area. And most of all, take heart. The statistics are overwhelming--- one out of seven borrowers are behind on their mortgage, according to the Mortgage Bankers Association 3rd Quarter 2009 survey. This clearly means that you are not alone.
But it also means that someone won't magically appear in your living room to describe what actions you need to consider. To succeed, it means that you must begin the process of rebuilding your financial confidence. When you do, you will be assured of meeting someone who has had a similar problem but has done something to start a process that will fight the foreclosure action, slow it down to the point of engaging your lender in Court at a foreclosure settlement hearing, submitting for a loan modification or if necessary, taking all the other actions legally yours to protect against a foreclosure sale.
The past three years have seen enormous actions from our financial institutions to engage this unheard-of concept of banks giving borrowers a second chance. And there are more to come. On the horizon, there are steps now in process to implement a Treasury Department plan to modify eligible borrowers who have a second mortgage lien. These ideas are bold and innovative and require much on the part of the lender, but also on the part of the homeowner. Remember, foreclosure service isn’t the end of the earth. It’s a new beginning for the many who head in the direction of a solution.
As a certified distressed property specialist, I am able to provide you with the information you'll need to go forward. There is no financial obligation to me for this information at any time.