WHAT TO DO WHEN YOU GET BEHIND ON YOUR MORTGAGE PAYMENTS

Let’s be practical, enough complaining. It is still possible in this great country, at least in my little patch of paradise; South Florida, to fight back. Sometimes you win, sometimes you lose, but falling behind on your mortgage payment does not mean you have to pack your bags and move out, not by a long shot.

The first thing to do is to contact the mortgage company as soon as possible, preferably before you fall behind, and ask for help.

In dealing with mortgage servicing companies, it’s helpful to be polite, but it’s more important to be to the point and to keep excellent records. You should have your loan statement and loan number; you should write down the time and date of the call, and you should ask the person you are speaking to, even if you have to go through three or four people, to tell you their name and ask them to spell it.

Under the various settlements that the mortgage companies have made with the various governmental agencies, the details of which will be the subject of various future postings, a universal complaint was how difficult it was for customers to deal with the mortgage servicers. One of the solutions, which most of the servicers profess to be implementing to correct this, is to assign to a customer a particular “loan preservation specialist” or “customer service representative.” Accordingly, in addition to collecting the names of the people you speak with and the correct spelling, you should try and collect direct telephone numbers, direct e-mail addresses, direct fax numbers, and the like. Half the battle is being able to deal with the same person who might actually remember something from the last conversation or communication.

The mortgage servicing companies refer to the process of helping customers retain their homes and salvage their mortgages and, hopefully their credit rating as “loss mitigation.” This label, which is universal in the residential mortgage servicing industry, should give you a good insight into what the process is really all about. It is not your “loss” that they are seeking to mitigate, it is the mortgage servicing company and the investor’s loss, and if applicable, the mortgage insurance underwriter’s loss. We will discuss this in detail in future postings, however, it is important to understand that a successful “loss mitigation” is where both sides derive a benefit. The homeowner gets to keep their house and the mortgage company minimizes its losses; presumably by modifying the loan so that they are better off in both the short and the long term than having to go through liquidation, where the property is foreclosed upon and sold at public auction.

It is easy to become cynical and in fact, disillusioned, when you get involved in trying to work something out with your bank. It is a bureaucracy that you are going to have to deal with in the worst sense of the word. We have all experienced the automated voice menu and how frustrating it can be. The process of trying to modify a residential mortgage loan is this on steroids, times three. Understand this from the beginning because the key to success is persistence, and the ability to keep your eye on the goal. It is also helpful to try and assume the calm personality of Mr. Rogers, coupled with the unsinkable good nature of Elmo, and don’t forget, keep scrupulous and detailed notes.