New Trend In Mortgage Work-Outs

Recently, I’ve been speaking with clients about what mortgage banks are offering in the way of accomodations prior to proceeding with, or filing a  foreclosure.  Previously, banks offered very little in the way of patience if the homeowner(s) did not have available cash on hand to catch up the mortgage arrears in full.  It was either pay us what you owe us, or we proceed with the foreclosure.  Now, I’m seeing something different from the lenders.  The lenders are accepting a reduced monthly payment from the homeowner(s).  For example, if your mortgage payment was $1500.00 a month, and you were 6 months behind, the lender may say something like, “pay us $1200.00 for the next 3-4 months, and then we’ll re-evaluate the matter.”  First of all, its amazing to me how these large banks – most of them located on the East or West coast – act so similar to one another.  In other words, I am seeing different banks exhibit this same behavior.  Secondly, there is a risk to accepting this accomodation.  If the lender, following the 3-4 month period, decides that it is not going to work with you, you have paid it money toward the arrearage to no avail.  If the bank has no intention of working something out with you, why offer to accept less money, only to be told later that the foreclosure will resume.  If could be a tough call to make.  Why are the lenders offering any sort of accomodation?  Who knows?  Maybe, there is something in the way of a government program (“bailout”) that will subsidize the lenders and make it worth their while, to allow people to remain in their homes.  Stay tuned.

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