Summary:
Aly Adair has published similar content on the Internet. Foreclosure and loss mitigation are stressful processes that millions of homeowners now face. In our experience, the federal agency that guaranteed our home loan was the only agency that helped us from losing our home in foreclosure. The mortgage lender charged us thousands of dollars in interest and penalties during loss mitigation and was unwilling to help until the loan guarantor intervened. Here are ways to learn from our costly mistakes and save your home.

Details or Sample:
Almost everyone gets into financial trouble at some point in life. The reasons can be many, but when it comes to your mortgage payment, we learned that lenders do not care about the reasons. The only organization that cared about our stressed financial situation was the agency that guaranteed our loan: The United States Veterans Administration.

In fact, there are numerous foreclosure prevention options available through The Federal Housing Administration (FHA) and The Veterans Administration (VA) guaranteed home loan programs that were not offered through our lender until the VA intervened in the loss mitigation process. We saved our home from foreclosure with help from the VA office. This is our story along with resource information that will hopefully save you money during loss mitigation and keep you from losing your home.

In Loss Mitigation, Start with the People Who Really Care

Millions of homeowners have loans that are guaranteed by FHA or VA. FHA became part of the Department of Housing and Urban Development (HUD) in 1965. If you are not sure whether you have a guaranteed loan program, check the folder you received from your title company when you purchased your home or ask a realtor to look at the mortgage papers. Even if your mortgage is not guaranteed, HUD, FHA, and VA agencies have:

housing counseling resources.
legitimate refinancing sources that do not engage in unlawful predatory lending practices. legitimate sources free of debt relief scams.
information about consumer rights for lending.
programs for relief from natural disasters.
programs for relief if you are or your spouse is active duty military.

If your home loan is guaranteed by a federal agency, you should contact a HUD counselor or the FHA or the VA as soon as you know you are in financial trouble. Do not wait until the lender contacts the loan guarantor with threats of foreclosure. If you are already behind on your mortgage payments, contacting your loan guarantor might save you thousands of dollars charged in extra interest and penalties while waiting for your lender to help. Even when we sold our home, the lender gave us NO relief on penalties and interest for late payments, and by that time, the guarantor could not waive the lender’s extra charges.

If You Waste Your Time, The Lender May Waste Your Money

We began writing our home mortgage lender six months prior to missing any payments. We explained the financial difficulties we were having and pleaded for reduced interest rates, interest-only payments, refinancing, an equity loan, or any option that would help us from losing our home until we could get back on our feet. After three months of no response, we decided to sell our house and rent to help us get out from under all the expenses of home maintenance, insurance, and high utility bills. We wrote the mortgage lender again, explaining that we were selling our home and asked for help until we could close a sale. Here are some obstacles we faced with the very large national bank that bought our mortgage note (they were not the original lender):

The lender did not respond to our phone calls, emails, or certified letters until we missed three mortgage payments. The lender did, however, continue to add hundreds of dollars of interest and penalties each month.

When the lender’s loss mitigation specialist finally called us, we asked where to send a partial payment that we had saved. We wanted to send any amount of money toward our mortgage arrears that would prevent additional interest and penalties. We were told that it was against the bank policy to accept partial payments. The lender continued to add penalties and extra interest on the unpaid balance.

The lender’s loss mitigation department wanted us to short sell our house. The lender would send an appraiser right over. They explained that this would stop the foreclosure process. Good for the bank – bad for us: if we short sold for less than we owed, we would owe the difference to the VA and we would lose any further VA home loan benefit for defaulting. Short selling a home can be a very risky option for the homeowner. You cannot have any equity in your home for a short sale to work. If your lender suggests short selling your home, do some research with a realtor or get legal assistance to determine if short selling is best for you. Short selling your home may sound like a viable option to foreclosure, but can leave you with a high debt and a bad credit report.

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