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Take Action When Facing Foreclosure

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The mortgage industry now says that almost half of all homeowners who have lost their homes to foreclosure had never contacted their lenders for help. That is an alarming statistic in light of the unprecedented amount of resources directed to slow the tide of foreclosures in the United States. Never before in history has so much money been made available for mortgage relief. Additionally, the publicity surrounding the associated array of assistance programs has been immense. Yet, sadly, many homeowners fail to take advantage of these resources, eventually succumbing to the loss of their homes.

It's critical to know that there are a multitude of programs available to help distressed homeowners, but it is also imperative that homeowners take the initiative and contact their mortgage servicer and/or lender. One of the most effective resolution methods for people struggling with their mortgage is a loan modification - but this is a time-intensive process that requires a high degree of personal attention from the servicer.

Unfortunately for homeowners who have lost their job, and have no firm prospects on the horizon, the options are few. But for thousands of other homeowners facing foreclosure it pays to take charge and start the process right away.

Before we proceed, a word to explain what a servicer is. A mortgage servicer is a company that plays the middlemen role between a borrower and the lender that holds the mortgage. The servicer collects homeowners' monthly payments, handles property tax and insurance transactions, and forwards the monthly payment to the lender. Servicers also conduct collection, loss mitigation, and home retention activities. Hence, they are a necessary contact resource for any home assistance program.

Homeowner Frustration With Trying to Contact Servicer

Many homeowners feel frustrated, and rightly so, when trying to contact their mortgage servicer for help. When the housing market crisis hit it caught the mortgage industry unprepared to respond effectively to the influx of calls coming in. Their processes were highly automated, with a low propensity for human interaction. Consequently, many homeowners trying to reach their servicer for help were met with a frustrating litany of being put on hold, having to talk to multiple people, and not getting a clear answer or direction for help. Many homeowners, when faced with this proverbial brick wall, stopped calling. In the summer of 2009, the Obama administration directly called for the mortgage industry to hire and train more customer service staff.

The mortgage industry has in fact, and for the most part, dramatically ramped up their service - but, given the unprecedented amount of homeowners in distress the frustration has not disappeared completely. Training for loss mitigation can take months - or longer. The truth is that servicers may be struggling with call volumes for an extended period of time.

At the same time, it's fair to note that servicers have become frustrated as well. The Mortgage Bankers Association estimates that servicers can make up to two dozen unanswered call attempts to delinquent homeowners before finally proceeding with foreclosure.

The lesson to be learned from this picture, discouraging though it may be, is that persistence and knowledge are the keys to maximize the potential for a successful outcome

What Can a Homeowner Do?

  • Don't procrastinate. Time is of the essence when mortgage problems arise. When you think you have a problem, act immediately. Contact your servicer to speak with the loss mitigation department, or the home retention department. Expect long waits on the phone, but don't hang up. Always keep a record of your calls and who you spoke with.
  • Do your Research. Know all you options. Read up on the Home Affordable Mortgage Modification Program (HAMP), which is the Government's main mortgage assistance program. Be sure to visit your servicer's web site and explore the sections pertaining to homeowner assistance. Leverage the information at sites such as HUD.gov, HopeNow.com, MakingHomeAffordable.gov, and BetterBorrowers.com. You will quickly have a good understanding of the assistance options. Each site also has excellent information of whom to contact for assistance.
  • Organize yourself. Make a detailed list of expenditures and income. Know how much you can afford for a mortgage payment, and if you can forego any expenditures. Understand that the process is going to demand a great amount of paperwork. Servicers will want to document, among other things, income, unemployment benefits, taxes, household expenses, and homeowner's insurance. Be prepared to state and document any and all hardships that have helped to put you in this position.


Not all homeowners are going to qualify for assistance, but those that take charge of their situation stand a much better chance of a successful resolution. Be proactive, persistent, and do your research.