Should I make my mortgage payment?

28 Jan Should I make my mortgage payment?

If you want to work out a loan modification with your lender, the answer is simple: Don’t make your mortgage payment.

Saying this out loud still makes me nervous, but more and more, homeowners tell me that their own mortgage company tells them they need to be behind in order to be considered for any kind of modification of the mortgage terms.

I frequently meet with homeowners struggling with their monthly bills. Many tell me they are still current with everything but cannot keep it up. Some are even using cash advances to make their house payment, and many have “perfect credit.”

The truth of the matter is that you are not rewarded by your mortgage company for being a good borrower. If you are current with your mortgage company, there is no chance a modification is in your future.

It gets even worse. I have found that homeowners will not have meaningful dialog with their lender unless they are actively litigating a foreclosure. If you live in non-judicial foreclosure states, like California and North Carolina, you are doomed.

The reason is simple. Homeowners lack leverage when negotiating with their mortgage company. The lender will never offer terms reasonably calculated to keep the homeowner in his home. Any concession by the lender is minimal and never goes far enough.

Borrowers must shift negotiating leverage away from the banks through active litigation, and banks must be forced to recognize the shift. Only then will they engage in meaningful dialog designed to keep the borrower in his home.

Unfortunately, this absurd process must begin with your first missed payment.

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Chip Parker is the managing partner of Parker & DuFresne, P.A., where he represents Northeast Florida businesses and consumers facing bankruptcy, and homeowners facing foreclosure. His firm files more homeowners in the Mortgage Modification Mediation Program than any other law firm in Northeast Florida. Parker is the recipient of Jacksonville Area Legal Aid's prestigious Award for Outstanding Pro Bono Service. Mr. Parker is an active member of the National Association of Consumer Bankruptcy Attorneys and National Association of Consumer Advocates.
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