How Do I Know If My Lender Is Going To Permit Participation In A Loss Mitigation Option; and Are There Any Lenders That Are Worse, Better, Easier or More Difficult Than Others?
Loss Mitigation options: Modification, Short Sale, Deed In Lieu of Foreclosure and Foreclosure Settlement. How do I know if my lender is going to permit participation in a loss mitigation option; and are there any lenders that are worse, better, easier or more difficult than others?
There is a misconception by the public in thinking that their lender would not permit a loss mitigation option. So many aspects of loss mitigation have advanced over the past few years. In part because lenders have woken up and realized the problems are overwhelming and not going away over night. The length of time we have been experiencing the housing crisis has forced Lenders to create internal loss mitigation departments, increase and train staff to effectively address a loss mitigation request, and appreciate the benefit to all involved in offering a resolution as efficiently as possible.
At the inception of the housing crisis, a phone call to a Lender or visit to a local branch requesting a loss mitigation option may have gone unanswered. Lenders were unequipped to provide any assistance. The improvement, although may not be optimal, stands to be recognized. Today, most Lenders have direct phone numbers available to reach their Loss Mitigation Departments. When calling such departments, individuals sound somewhat competent in answering questions and providing consistent direction. There is even a high percentage of receiving consistent responses to questions posed. The implementation of the government’s Making Home Affordable Program has assisted Lenders in developing standardized processes to address circumstances which meet the program’s criteria. However, while the Program utilizes standardized forms, some Lenders have created their own internal version which they require to be used. If circumstances are presented which fall outside of the scope of the Program, most Lenders have also developed processes to assist those borrowers as well.
While there is never a guaranteed result in a loss mitigation request, there is no reason Borrowers should not attempt to seek assistance. Over the years, Lenders have improved and demonstrate an acceptance of the need to assist Borrowers. While most of the Lenders have developed their internal processes, I cannot comment on whether any Lender is easier or more difficult to work with than others because we are experiencing improvement over all. However, in my years of representing Borrowers through loss mitigation options, I can caution you of the following. First Bank will not address deficiencies as part of the resolution of a loss mitigation request. ING will not communicate with Borrowers’ Counsel to work through a loss mitigation option. Interestingly enough, is by communicating through the Borrower to the Lender, a specific instance required a previously undisclosed amount to be paid by the Borrower at a closing of a short sale in order to permit the short sale to close. One must question why the Lender refused to communicate directly with Borrower’s Counsel and why this amount was not disclosed until last minute as a closing requirement.
There are important things to consider when requesting a loss mitigation option. Florida Law permits Lenders to seek money judgments against Borrowers if a loss mitigation option is not negotiated and settled in a manner in which the Borrowers receive a full release from the Mortgage and the Promissory Note. This money judgment is known as a deficiency judgment and can be detrimental for years to come, especially to those who have planned to go forward in an attempt to put this all behind them. It is crucial to seek assistance from an individual trained to assist in reviewing a Borrower’s entire situation to determine the best option available to them. There are many individuals and companies who attempt to assist Borrowers, but unfortunately, are not fully educated or experienced to do so.
One should also not shy away from requesting a loss mitigation option because their situation “does not follow a script” or is special or unique. Success comes from fully understanding the Borrower’s situation which allows presentation to the Lender in a very clear, concise and accurate manner. It also comes from effective negotiation and an understanding of how the Lenders’ internal Loss Mitigation Departments work.
Please call our Real Estate Department of the Dellutri Law Group for any questions you may have regarding possible Loss Mitigation options. We offer a free initial consultation and are proud to be able to assist Borrowers in successfully completing the remedy best suited for their personal circumstances.
This Blog was written by Annette Giardina Haber, Esquire, of the Dellutri Law Group, P.A. Ms. Haber runs the Firm’s Real Estate Department and concentrates her practice as a real estate transaction attorney. She represents clients through loss mitigation options, drafts contracts, title insurance and handles residential and commercial closings.
