Banks busting butt to avoid foreclosure

Years ago when I used to do advertising for some local banks (when only local banks handled mortgages) I used to hear the officers whining about foreclosures. They hated them, and would go out of their way to try to make a deal with the homeowner rather than foreclose.

That all changed when mortgages became a national businesse dominated by national banks. You were just a number to them, and when you defaulted they threw you into the foreclosure pot with everyone else.

Now they are having second thoughts according to the Wall Street Journal. With adjustable rates climbing and house prices dropping, more and more mortgages are falling into arrears (2.51% of mortgages were delinquent in the fourth quarter of 2006), and the banks are facing massive foreclosures. Some of them have decided to head off problems to reduce foreclosures.

Here are some of the things they are doing:

1. Let you switch from an adjustable rate mortgage into a fixed rate mortgage that you can afford, with no fees.

2. Contacting delinquent borrowers within ten days of their missing a payment to see what the situation is and to find out if they can head off trouble. For example, if the missed payment is due to temporary problems like illnees or job loss, the bank may cancel it (and a few more) and add it all to principle.

3. If nothing else can be done, and the house is now worth less than the mortgage, they are accepting a sale of the house at whatever price it can get as full payment of the mortgage. Normally the seller would be on the hook for any balance due after foreclosure and sale.

If you are faling behind in our mortage, for any reason, the firs thing to do is talk to the lender. But if you cannot make a deal, then talk to a bankruptcy attorney. They can work wonders, and it will not damage your credit as much you might think.

For more information on bankruptcy, click here.

Comments are closed.