Are Mortgage Lenders Easing Up?

20 Apr Are Mortgage Lenders Easing Up?

Recently, I’ve seen several cases where the mortgagor is relaxing their heretofore steadfast position against re-structuring mortgages. This is indeed, good news for homeowners trying to keep their home. Some lenders will add arrearages on to the end of the loan, extending your obligation from thirty to thirty one or more years. Or, they will modify the insurance rate to something more reasonable than an adjustable rate.

What’s motivating this change? Probably the fact that foreclosures are at an all time high, and there is little market for houses at the prices paid at foreclosure sales by the mortgage companies.

There are, however, several things to remember when pursuing a re-structure. First of all, for a restructure, make sure you simply aren’t delaying the inevitable. If the mortgage company is going to give you a three month reduction, but then reinstate your current loan, will you be able to pay it at that time? If not, consider whether you are throwing good money after bad by accepting a reduced payment.

Secondly, make sure whoever you are speaking to on behalf of the lender has the authority to make the concessions, and has stopped further proceedings, such as a pending foreclosure. Often the lending company has multiple departments and one hand doesn’t always know what the other is doing. So, be sure that while you are negotiating with the mortgage company, they aren’t going forward with a foreclosure at the same time.

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Douglas Jacobs is a California bankruptcy attorney and partner in the Chico law firm of Jacobs, Anderson, Potter & Chaplin. Since 1988, Mr. Jacobs has taught Constitutional law and Debtor-Creditor/Bankruptcy law at the Cal Northern School of Law. He has served as Dean of Students since 1994. He is a frequent lecturer on the subject of consumer bankruptcy law, and has spoken at both state and national levels.
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