Facing foreclosure?

Tardy borrowers need to take charge

By Lew Sichelman

November 8, 2009

Attention owners who are in danger of losing your homes: Your fate is in your own hands.

Sadly, there may be no way out for the worst off of you. If you have lost your job and have no prospects for another one, for example, there may be no getting around it: You might have to find another place to live.

But for most of the growing legion of financially stretched families, there is plenty of help available, if you will only stop burying your heads in the sand, or if you will only stop waiting for a white knight to come to your rescue.

According to industry estimates, half of all owners who lose homes to foreclosure have no contact with "servicers," which mail out your monthly statements, collect your payments, pay your taxes and insurance and send the rest to the investor that owns your mortgage.

That's a mind-numbing statistic given all the publicity that has surrounded the housing debacle and the government's efforts to keep people in their homes.

"Never in history have more resources been devoted" to solving the foreclosure crisis, said Faith Schwartz, executive director of the HOPE Now Alliance, a collaboration of housing counselors and mortgage-industry participants created to reach out to owners who cannot pay their mortgages.

But equally disturbing is the large number of homeowners who complain they hit the proverbial brick wall when they try to get through to their lenders. They are put on hold for insufferably long periods. And when they get through, they are told one thing by one person and something else by the next person with whom they speak.

That doesn't surprise Edward Fay, the founder of the Chicago-based specialty servicing company that bears his name.

"The problem with a lot of loss-mitigation efforts is that they're in the back (of the process) rather than the front," said Fay, whose firm takes over loans that are seriously delinquent. "You've got to be a glutton for punishment if you want to talk with someone in 'loss mit' after you've been pounced on by collectors."

To be fair, servicers have been overwhelmed by the magnitude of the problem. Many are still in the process of hiring people to work with troubled borrowers. And it can take months, if not years, to train them in the intricacies of loan modifications, workouts and other potential solutions.

"They never envisioned defaults to be at this level," said Jay Loeb, vice president of National Creditors Connections Inc., a Lake Forest, Calif., firm lenders hire to make contact with delinquent borrowers. "I remember when large servicers operated with a staff of 15. Now they're up to 2,000, and that's still not enough."

At the same time, Loeb said, servicers are just as frustrated as borrowers because they are not getting the kind of reply to their outreach efforts they envisioned. According to the Mortgage Bankers Association, servicers sometimes make two dozen attempts to connect to delinquent borrowers before actually evicting someone.

So what's a borrower to do? Take charge of your own destiny. Here's how:

Don't wait. At the very first sign of trouble, call your servicer. If you can't get through, keep trying.

"Expect long wait times," said Greg Hebner of the MOS Group, an Irvine, Calif., company that helps servicers contact hard-to-reach borrowers.

Ask for the "home retention team." If you are put on hold, hang on until someone comes back on the line. If you have a speaker phone, use it so you can be doing something else while you are waiting instead of just sitting there steaming. Keep a record of who you speak with and what was said.

Know your options. The Home Affordable Mortgage Modification Program, or HAMP, is the government's main program to prevent foreclosures. More than 2,300 servicing companies participate, covering about 85 percent of all single-family home loans, said Laurie Maggiano of the Treasury Department.

But the program is just one of many tools available to owners in danger of losing their homes. At the discretion of the owner of your mortgage, servicers have several options at their disposal, including giving you a new loan that would lower your payments, allowing you to skip your payments or make partial ones, and changing the terms of your loan.

However, don't wait for someone to tell you your choices. Learn about the various options available ahead of time so you can speak intelligently about them. Go first to your servicer's Web site. Then check other sources, including, among others: HUD.gov, HopeNow.com, MakingHomeAffordable.gov, HomeLoanLearningCenter.com and BetterBorrowers.com.

Build a budget. Don't let someone else decide what you can afford and what you cannot. Make a detailed list of your monthly expenditures, and then ask yourself what sacrifices you are willing to make to remain in your house.

Manage the process. The modification process is complicated. You will be asked to fill out scads of paperwork, so be prepared. And take your time. Mortgage Bankers Association Vice Chair Michael Young said 99 percent of the packages returned to servicers are either missing documents or contain errors.

Among other things, you will be asked to explain your financial hardship and the reason you cannot make your payments. Be honest and realistic. Also, your servicer will need to verify your income, unemployment benefits, household expenses, tax returns, property taxes, hazard and flood insurance premiums and condo or owners' association dues. Sign every page.

Whether the servicer asks for it or not, include a letter authorizing the company to speak with your advisers -- another family member, perhaps, or your lawyer.

Make copies of everything you send and then verify it was received. Make sure the servicer has everything it needs, and be certain it gets to the right person. The biggest mistake people make is waiting to be contacted by their servicer after they send in their packages, Loeb said.

If you are denied. You can reapply for HAMP if you are turned down, but once you enter the program's three-month trial period, there is no second chance if you don't comply with your new terms.

The end of the road. Not everyone qualifies for assistance. If you don't, perhaps it's time to consider exiting the property as gracefully as possible. Foreclosure is always a possibility, but it is usually the worst option for you and your servicer.

That's why most will allow you simply to hand over the keys and walk away. Some will forgive the difference between what the home eventually sells for and what you owe, and some offer cash incentives.

United Feature Syndicate


of all owners who lose

homes to foreclosure never

pick up the phone and


their lenders to ask

for help