An Alternative to Foreclosure: Use the law
- By:
- Tom Kerr | August 07, 2007
It's standard procedure for borrowers who get behind in their mortgage payments to contact lenders and credit counselors to help sort out the situation before it leads to foreclosure. But these days, many homeowners are getting results by calling an attorney instead.
The current rate of foreclosures across the U.S. is reaching historical levels, but homeowners see no immediate relief in sight as housing prices continue to soften. Interest rates-which determine the monthly payment for many who have mortgages-still remain relatively high. Some consumers are asking lawyers to help them negotiate modifications in the terms of their loans, while others are hiring attorneys to sue their mortgage lenders for alleged predatory lending practices.
Many homeowners who face imminent foreclosure are taking their cases to court, charging that they were duped into borrowing risky loans that they didn't fully understand. Consumers have testified that they were not provided proper disclosure of the rules governing their mortgages, and were not adequately informed about how introductory "teaser" rates on cheap loans could later convert to much higher monthly payments. Some unscrupulous lenders are being accused of intentionally misleading consumers. If you were preyed upon by this kind of lender, you might have your day in court and come out owing nothing. Some attorneys are accepting this kind of work on contingency. If they win the case, the mortgage debt is erased, and the lender who's found guilty pays for legal costs.
A more common scenario involves hiring an attorney to sit down with the lender and reach an agreement that is beneficial to both of you. When lenders foreclose on homes, they lose money. They would much rather let you stay in your home while working out a reasonable payment plan that ensures they eventually get repaid for their loan.
Here are some of the strategies that might help resolve a delinquent mortgage loan situation:
The lender agrees to lower your interest rate.
They let you extend the life of the loan to help lower the monthly payments.
The lender gives you a discount on the amount of principal you owe.
You add any skipped payments to the principal balance of your loan, and make up for those missed payments gradually over a long period of time.
Many lenders are letting homeowners suspend monthly payments for the time being until they get back on their feet. They still owe the money, but this gives them breathing room to regain some kind of financial stability.
All these ideas involve legal changes to the terms of your original loan. Therefore, you should enter into this kind of negotiation only with the expert help of a qualified real estate attorney. If hiring an attorney can help you avert a financial disaster while also keeping your home, you have nothing to lose and everything to gain.
The current rate of foreclosures across the U.S. is reaching historical levels, but homeowners see no immediate relief in sight as housing prices continue to soften. Interest rates-which determine the monthly payment for many who have mortgages-still remain relatively high. Some consumers are asking lawyers to help them negotiate modifications in the terms of their loans, while others are hiring attorneys to sue their mortgage lenders for alleged predatory lending practices.
Tell it to the judge
Many homeowners who face imminent foreclosure are taking their cases to court, charging that they were duped into borrowing risky loans that they didn't fully understand. Consumers have testified that they were not provided proper disclosure of the rules governing their mortgages, and were not adequately informed about how introductory "teaser" rates on cheap loans could later convert to much higher monthly payments. Some unscrupulous lenders are being accused of intentionally misleading consumers. If you were preyed upon by this kind of lender, you might have your day in court and come out owing nothing. Some attorneys are accepting this kind of work on contingency. If they win the case, the mortgage debt is erased, and the lender who's found guilty pays for legal costs.
Tell it to the mediator
A more common scenario involves hiring an attorney to sit down with the lender and reach an agreement that is beneficial to both of you. When lenders foreclose on homes, they lose money. They would much rather let you stay in your home while working out a reasonable payment plan that ensures they eventually get repaid for their loan.
Resolution tips
Here are some of the strategies that might help resolve a delinquent mortgage loan situation:
The lender agrees to lower your interest rate.
They let you extend the life of the loan to help lower the monthly payments.
The lender gives you a discount on the amount of principal you owe.
You add any skipped payments to the principal balance of your loan, and make up for those missed payments gradually over a long period of time.
Many lenders are letting homeowners suspend monthly payments for the time being until they get back on their feet. They still owe the money, but this gives them breathing room to regain some kind of financial stability.
All these ideas involve legal changes to the terms of your original loan. Therefore, you should enter into this kind of negotiation only with the expert help of a qualified real estate attorney. If hiring an attorney can help you avert a financial disaster while also keeping your home, you have nothing to lose and everything to gain.
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