The
rate of delinquencies on mortgage loans is on
the rise now that people who got adjustable-rate
mortgages in the mid-1990s are being hit hard by
interest-rate resets. This is a cyclical problem
and it will probably continue through mid-2008
until it settles down again. Money magazine
reports that calls to foreclosure counselors are
up 1730 percent as people face massive increases
in their monthly payments. Clark has advised
people to call their lenders early and often if
they're having trouble with their payments. Many
folks have been complaining that the lenders
don't want to hear it. Yet the mortgage lenders
one by one are coming around and developing some
workouts. A workout means that the lender will
modify the terms and conditions of your loan to
make payments possible for you moving forward.
The lender gives up a lot of money on paper, but
you win because you avoid foreclosure and can
protect your credit rating throughout the
process.
The
Los Angeles Times reports that people who make
the best candidates for mortgage workouts are
those who made every payment on time before
their interest-rate reset blew them out of the
water. Lenders won't be inclined to help those
who haven't been able to make payments from the
very beginning of their loan. The second
situation when you may be able to get a workout
from a lender is if you've made timely payments
and suddenly lose your job. Lenders will usually
help you out for three months, but it's
difficult to work things out any longer than
that. Keep in mind that not every lender is
willing to do a workout. But the smart ones will
embrace workouts so they don't wind up paying to
foreclose on a house they don't really want.
HSBC, which was one of the big lenders of weirdo
exotic loans, has been trying workouts. HSBC's
model involves reset your interest rate based on
a calculation of your basic expenses and how
much other income is left to pay the mortgage.
So Clark's advice stands. Call your lender
persistently if you're in trouble. You do not,
under any circumstances, want to just bury your
head in the sand!
Source: Clarkhoward.com
