Can I Bargain With A Lender During Hard Times?
Question: We’re in financial trouble. Anyway we can work-out something with the lender?
Answer: Maybe. The lender does not want to foreclose and does not want your home.
What the lender wants its loan repaid, in full, and with interest. But maybe that’s not possible. Some lenders, as an alternative to foreclosure, may be open to several ideas, depending on the facts and circumstance involved:
- Reducing the interest rate to today’s levels
- Modifying the loan to produce a longer term and slightly lower monthly costs.
- A refinance to better rates and terms
- Seeking a loan modification
- Going for a short-sale
- Getting a deed-in-lieu of foreclosure
Lenders will want to know about your entire financial picture before considering any of the steps above. The best approach is to have an attorney deal with the lender — this puts matters on a business-like basis and shows the seriousness of your intentions.
An important note: Not all loans can be modified, even in situations where lenders are sympathetic. Most probably you are now dealing with the “servicer” who handles the loan for the actual owner. The ability of the servicer to change loan terms may be limited by the “pooling and servicing agreement” (PAS) under which the servicer administers the mortgage.
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