I hate to say, "I told you so", but...
The Boston Globe reported yesterday that mortgage "reworks" aren't working. National statistics show that over half of homeowners who enter into a loan workout agreement fall behind again within six months. The media is buzzing with a new term... "redefault".
Why is this happening?
Well, dear readers, it's happening because people didn't take the most crucial step before calling their lenders... they didn't look at their own financial pictures before agreeing to a forbearance plan. If your lender asks you to pay more money monthly so you can catch up on your delinquent mortgage, most people are going to say "yes" just to stop the servicer's phone calls. But if you agree to a workout arrangement that you cannot sustain over the long term, what is the point? You will only create more stress for yourself and have to have yet another conversation with your lender.
Earlier this year, the cries of "call your lender first if you fall behind on your payments" were widespread. I have stated over and over again... DO NOT CALL YOUR LENDER FIRST. Find out your foreclosure deadlines, open your mail to discover the amount of your fines and fees, and get a clear understanding of your financial picture BEFORE you call your lender. Servicers are at the point where negotiation is better than foreclosure, so if they propose a workout that does not fit with your household budget, you can negotiate with them until you find a plan that does.
Do not dig yourself in a deeper hole just to get the phone to stop ringing.
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