Many people are behind in their mortgage payments. This can be the result of an event like unemployment, divorce or illness or it could be the result of a bad or toxic loan. Many of these toxic unaffordable loans were taken on by homeowners during the 2000’s. The best strategy for someone with a substantial arrearage ( missed payments) or an interest rate above 6.5% or an adjustable rate loan or the poisonous “Pay Option ARM” is to try and get a loan modification ( loan Mod ). The politicians and the loan mod services want you to think this is an easy slam dunk. The truth is that most people do not get a loan mod. And the dirty little secret is that if you do not have a Fannie Mae or Freddie Mac loan it is just about impossible to get a loan modification. The pure sub-prime non-government insured loans come last on the list because they are owned by the bottom layer of hard money “investors” all over the world and these investors play hardball 24/7.
The first thing to do is figure out if your loan is insured by Fannie or Freddie. This is not as easy as it looks because the sub-prime companies many times used forms that say Fannie Freddie on the bottom. I think the best thing to do is call the mortgage company or their lawyer and ask if the loan is Fannie, Freddie, FHA or VA. If so, you should drop everything and make getting a loan mod your part time job, keeping especially meticulous records of every contact you have with the mortgage company, every document and every payment. Follow their directions and send them EVERYTHING they request and call them EVERYDAY. Its your new part time job. If they request documents VIA FAX, fax them at least twice, make sure every page goes through and keep every FAX receipt. You could pay one of these mortgage mod outfits $1500 – $2500 to hound you every day to do this but that is not what you should be spending your money on right now, you need it for the mortgage payments.
If you are turned down for a mod or if you have a pure sub-prime fixed, or the deadly toxic adjustable rate or pay option ARM you should go straight to a lawyer.