How to Negotiate With Your Lender

If it feels like the foundations of your financial world are starting to crumble, and the ugly words ‘foreclosure’ and ‘short sale’ are hanging above your head, it’s okay- you’re not alone. There are organizations that can help you, like ‘Hope Now’ and ‘Project Lifeline,’ so the sensation of the walls caving in doesn’t have to be your reality.
It’s undeniable, foreclosure feels like financial ruin, it can be defeating and leave you with little energy. Even so, when foreclosure is around the corner you have very few options, and you must try everything to avoid it. Plus, if worse comes to worse, you will at least have peace of mind knowing you tried all you could.
So ask yourself, have you tried to approach your Lender? If not, keep in mind that it’s likely they have no idea that you may be floundering. The Lender who paid for your property, be it a regular bank or a private Lender, will not want to take your house back, so if there is a way to work out a deal they would gladly jump at the opportunity. Keep in mind that your Lender does not want to take your house away; they want to make interest on your loan. They also know that we now have a buyer’s market, which makes it more difficult for Lenders to sell properties. Knowing this, if you go into a foreclosure or sell by a short sale, the Lender stands to lose money. Perhaps you can negotiate for some extra help, it never hurts to at least ask. Do you think that if you could miss three months of mortgage payments (and tack them onto the end of the amortization period) you would be able to keep up the current payments? Sometimes just being in arrears is a vicious circle and if once caught up to date, is easier to manage.
The Lender may offer to help you to re-finance your mortgage and adjust the payments to be smaller for a time. There is also a government backed organization that offers to help people on the verge of foreclosure. One of their conditions is that you must contact them before the procedure begins; check them out at ‘HopeNow.com’ to learn more before too much more time passes.
You can also try getting in touch with ‘Project Lifeline’, a newly developed agency that offers assistance for people in situations like yours. They have proved themselves to be highly effective in staving off foreclosures for all types of mortgages including sub prime, equity and second liens. They are capable of helping most people, other than homeowners with a foreclosure coming up before mid-March. One of their strategies is to ‘pause’ everything while they investigate your own personal scenario.
In some cases the help from HopeNow can come in the form of an interest rate freeze, rather than a complete change in mortgage plan, but this freeze will serve to tide mortgage holders over until they can re-finance without the panic of foreclosure over their heads. HopeNow has been created by lenders in the mortgage services field who represent 90% of the sub prime market. There are at least 2 milllion sub prime mortgage holders. This outreach program often contacts lenders before they get to foreclosures and offers to help them.
This help is a blessing for the nation as well as the individual people in distress; once the foreclosure problem is faced and dealt with by a system that has government backing, the property market will not have a glut and prices will be re-established and sales will continue at a more normal pace.
Your Lender may be willing to help you to apply to these organizations for help; they may know the procedures better than you. Refinanced mortgages with fixed rates are available now for homeowners struggling with sub-prime mortgages.
If you feel that foreclosure is inevitable, then think about negotiating for a short sale. This will at least save your credit rating. Not all Lenders will agree to it and not all properties qualify for it. It also leaves you with a tax bill, but that is not an immediate concern. You will need to send a hardship letter to the Lender, or more specifically, the person who can make the decision. Do not hold back on this letter. You also need to send a list of assets and proof of income. The list must show that you have no money, savings or anything that can be liquidated. If this list of assets indicates that you ‘stretched the truth’ when applying for the mortgage, you will have to be extra humble! Remember, this Lender is going to lose his money too; you need him to be on your side, so try to understand his point of view. You will also need a current market evaluation from your real estate agent.
Once you have all the pieces of the puzzle in place you can begin putting your home and life back together. One step at a time it will begin to feel less overwhelming and more surmountable. Just remember—you’re not alone.