Most homeowners believe that foreclosure laws are designed to hurt them rather than help them. Not so. The secret is that foreclosure laws have evolved to protect the borrower, not the lender. I have said it there. The secret is out! Now listen carefully and understand why I say this. The foreclosure process gives you, the borrower, specific periods of time in which you can:
o bring your loan current by making up missed payments (referred to as “reinstatement”), or
or pay off your loan in full (called a “redemption”).
If neither of these options is feasible, you still have time to prevent your property from being sold at public auction (the foreclosure sale).
You will get the most out of the foreclosure process if you view this secret as a “window of opportunity” to solve your financial problems. During this window of opportunity, you have time to learn about the foreclosure process and implement a strategy to stop foreclosure. Another basic misconception about foreclosure is that lenders want to foreclose. Could not be farther from the truth! Lenders are in the business of lending money, not owning real estate.
They don’t want to repossess your house for numerous reasons. Lenders are reluctant to incur the costs of a foreclosure. For example, if your lender is forced to foreclose, you will not only lose your missed payments, but you will also incur foreclosure fees, taxes, insurance, wear and tear while you (or your tenant) live in the property, repair to reform the property for sale, and a real estate agent commission once the property is sold. As a result, many lenders will do whatever they can to resolve, short of foreclosure, if you give them the chance.
A. Contact your lender
The secret to stopping your foreclosure is to contact your lender. With the sudden spate of foreclosures and defaults, lenders are more eager than ever to find a solution instead of foreclosure. Lenders will do almost anything to avoid adding to their overflowing REO inventory of foreclosed properties.
Don’t panic because you’re behind on your payments, you’re not worried about missing some payments in the future or your property has already been foreclosed on. Whether you communicate by phone, letter, email, fax, or in person, it will be much easier for you to stop (or at least delay) your foreclosure if you talk to your lender instead of adopting a code of silence. The secret is to deal directly with someone in “authority” at your lender’s office. The first step is to determine who your lender really is. (This is no small feat these days with lenders selling their loans to other lenders like hot potatoes.) If your property has already been foreclosed on, the first person you will need to deal with will be the foreclosure trustee or the lender’s attorney. If it is a judicial foreclosure, you will most likely be contacted by a process server, sent by the lender’s attorney. If it is a non-judicial foreclosure, the trustee is responsible for handling the foreclosure process. You will need to contact these people.
But the secret is that you will be more successful if you contact your lender directly, rather than the trustee or attorney. Therefore, you should ask the trustee or attorney for the name, phone number, and address of the foreclosure lender. In the unlikely event that they refuse to release the name of your lender, you can refer to the Notice of Default, or Summons and Complaint, or telephone the customer service department of a local title insurance company. Another situation may occur where you discover the name of your lender, but it turns out to be a servicing agent rather than the party who actually owns the deed of trust or mortgage. A servicing agent is a company (sometimes a bank, mortgage company, or private corporation) that is contracted by the actual lender to “service” the loan (issuing mortgage statements, payment coupons, and late notices, collect payments, monitor the seizure of insurance and tax payments, and handle foreclosures if necessary). Fortunately, most servicing agents will disclose the name of the lender. If they don’t, you may be forced to negotiate with the service agent.
Meanwhile, you will receive threatening calls from collection agents at the lender’s office. Under no circumstances should she ignore her lender’s contacts. Your goal should be to answer every phone call or letter. As difficult as it may be to talk about your financial problems, be courteous and cooperative. Follow up all phone calls with a letter to the person you spoke with, confirming what was said. If you’re not around when a call comes in, return it as soon as possible. Use these calls to gather information about your lender (ie, name, address, phone number, fax number, email address, department or person responsible for the lender). When you receive a letter from your lender (always keep the original), immediately write a response letter. The secret here is to establish a paper record so that you can show your lender (or a court, if necessary) that you have cooperated, especially during the initial stages of the foreclosure process.
It is also important to send copies of all your letters to:
or the CEO of the lender
or the branch manager (if applicable)
o The loan officer who helped you get your loan, and
or any other person you know by name at your lender’s office.
B. COMMUNICATE WITH PEOPLE YOU KNOW AT THE LENDER’S OFFICE
Make sure your letter indicates that you are sending copies by writing “cc:” and the name(s) of the person(s) below your signature. Don’t hesitate to send copies of your letters to these people, as there is nothing they can do to help you if they don’t know your situation. There’s a secret to sending copies to other people and displaying the “cc” at the bottom of your letters. At the very least, the person to whom you send the letter will not be able to ignore it because they know that the supervisors have received copies.
Typically, in your initial letters and phone calls, your lender will state that they have not received your payment(s) and will innocently ask whether or not you have mailed a payment. What you say in response to your lender’s inquiry is another matter. If you have already mailed your payment, provide the date to your lender. If you haven’t, tell the truth. In turn, your lender will want to know why you haven’t paid and what date you’ll send a payment. Recognize that you have temporary financial problems and will not be able to make the payments for the next few months.
Provide a good explanation of your financial hardship (ie, layoff, medical emergency, death in the family, loss of business, divorce). Contrary to popular belief, sharing this information will not speed up the foreclosure process. What you say can help the lender better understand your situation and can delay foreclosure. At the very least, it will foster a positive atmosphere for negotiations later in the process. Your lender may warn you that if payments are not made, your loan will be in default. You can also threaten to start foreclosure proceedings unless you bring all your current payments immediately. Don’t be intimidated. Stay calm and understand that the person you are dealing with is simply doing their job. At this point, write a letter explaining your financial problem and request an appointment with a senior loan officer to discuss your loan.
[continued in Part 2 of this article]