If you have a repayment plan, modification or foreclosure postponement offer get it in writing.  Demanding you agree to an over the phone, verbal agreement is likely worthless and in my opinion proves that they aren’t willing to send it to you in writing.

Does this story sound familiar? A homeowner struggling with his mortgage payment wants to work something out to avoid foreclosure.  On TV and in his local paper he sees that lenders have pledged to help distressed homeowners.   He calls the loan servicer (whom he thinks is the actual owner of his mortgage), asking for the homeowner assistance department.  What follows is a series of transfers, hold music and vague answers.

Currently, the most likely answer is… “We’re here to help.  Please submit 10-15 documents and we’ll review you for a modification.”   Now the game is afoot but the homeowner has no idea he is starting the fax machine black hole game.  After sending documents two or three times, the servicer tells him that his file is now in review and he can skip the current payment.  This is where the homeowner could use a handy-dandy tape recorder.

30, 60, 90 days and few dozen phone calls later all without any payments and now the loan is seriously delinquent.  A trip to the mailbox reveals the Notice of Acceleration.  The homeowner is in a panic, so he calls the law firm at the bottom of the Notice. The law firm eventually puts the homeowner in touch with someone from the servicer that says, “Don’t worry. We’re gonna work this out.”

Now the homeowner is thinking, “Yeh you said that on the 12 previous phone calls and yet you are trying to foreclosure.”  He frantically calls the law firm back “Don’t worry,” they say, “We are just following the wishes of your servicer and if they are almost done with your paperwork and everything looks great.   You’ll be fine.”

The next letter is the Notice of Trustee Sale.  The house is going to be sold in 21 days on the first Tuesday of the next month.

The homeowner asks, “Why did they lie to me?”

Make no mistake, the lender is the enemy.  They are in business to make money.  In most every case, the lender wants the house back, plain and simple.

Why you ask?  Because very likely they either:

a)       Never put out a dime on your house.  (ex.  you borrowed the money from another bank and now the current bank reaps the rewards.)

b)       They bought your loan on the cheap.  (ex. they bought your loan for $0.25 on the $1.00 they want to foreclose and flip it for $0.80 and make a fast buck.)

If you are in default, seek help immediately.

-       The Bank Slayer