If you are one of the thousands of American’s facing foreclosure, you may have a great deal more bargaining power than you ever thought. Analysis from Freddie Mac and large banks show that their cost to foreclose on your home is in the range of 60,000 dollars on average.
The high cost of foreclosing on a loan is ample evidence that if you are having a hard time making your housing payment, talk with the lender. They have a strong incentive to work out the problems with the loan and try to find an accomodation.
Unfortunately, most borrowers do not contact their lending institution until the problem is too late. A forthright and honest approach will provide you a much better chance of saving your home and keeping the property out of foreclosure. Freddie Mac says that 68 percent of low income borrowers could be spared foreclosure if lenders created a new plan for them.
According to mortgage financier Freddie Mac, the typical foreclosure cost is nearly $60,000. And officials at HSBC North America, parent of HSBC Bank USA, HSBC Mortgage Corp. and HSBC Finance Corp., say their average loss on sale at foreclosure is 20 percent to 25 percent of the loan’s value.
“We truly believe that foreclosure is the worst alternative for all parties concerned and go to great lengths to avoid foreclosure,” Brendan McDonagh, CEO of Illinois-based HSBC Finance and former chief operating officer of HSBC Bank USA in Buffalo, said in March testimony to Congress. “Financially, it is our worst alternative.”
So like First Niagara, most lenders today have so-called “loss mitigation” departments whose sole purpose is to try to prevent a loss to the bank. But that also means doing whatever necessary, to a point, to help borrowers keep up with their payments and stay in their homes.
“Loss mitigation is working with borrowers to avoid foreclosure,” said Judith Palmer, loss mitigation manager at M&T Bank Corp. “Foreclosure isn’t good for anybody.” via The Buffalo News
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Tom – really appreciate insight like this. We have several clients in dire straits and we love to send them links to great articles like this.
Great blog indeed.Mortgage refinancing adds to online mortgage services.
This is a load of crap! I am sooo depressed and aggravated right now! I got my hopes up with articles such as these that my husband, I and our 2 kids would be able to keep our first home. However, HSBC has not helped us whatsoever! I have been calling often for weeks now to no avail. I have spoken to several supervisors and noone wants to help us. They told me that there is nothing they can do and that we would need to refinance! Our loan is 210k and our house is currently worth 80k. Refinancing is not an option! Mortgage companies act on the news and articles like they are bending over backwards to help people and the fact of the matter is it is apparantly all for publicity and show because they do not care about their people!
Greed and gulliblity have run rampant. What ahole at a lending institution abuses their trust, and gambles their clients money, with the hope of putting some greedy airhead in an untenable position regarding their debt accumulation on a piece of property, squeezing them dry along the way, leaving a mess for the rest of us to clean up? Our culture has moved away from biblical values, in which intest was not allowed to be charged to other Christians, and only 1% to pagans. GOD always has a better idea!!!
$60,000 is the average TOTAL cost. Court fees, appraisals, attorneys fees, etc… are usually in the range of 2,000. Where banks really get hit is in the difference between what they sell the house for post-foreclosure and what they are owed on the mortgage plus what they spend to get the house back AND keep it insured after the borrowers stop making payments.
Banks sell foreclosed properties for less than appraised value because they sell it without any warranties as to condition, etc… If your house appraises for 200 the bank might sell it for 160-170 to account for the fact that the buyer isn't getting any implied or express warranties.
That really hurts the banks if you owed 180 against the house. However, if you owe 150 and the house is worth 200, the bank isn't going to lose anything because they get the first dollars from any sales and anything left over goes to either the second mortgage or the person who lost the house. If you owe 150 and the house is worth 200, try for a loan modification but don't expect too many accomodations from the bank 'cause they know they'll get their money even at a fire sale.
In foreclosure or know someone who is? Owe more than your home is worth and need out of it? Banks not willing to help you out?
E-mail me at eoneinc@gmail.com to get more information on solving these problems. I buy houses cash, any kind, any where, and play hard ball with the banks to get it done and get you out of your situation.
It definitely would be so much better for the bank to negotiate with the homeowner either on a loan modification or a short sale, not only to save on the expenses involved on a foreclosure but the fact that the house is still maintained by the current owners avoiding the cost of possible vandalism and the cost of maintenance. The frustration of a lot of homeowners as well as with the people helping them with these alternatives, i.e., loan mod or short sales is the fact that most negotiators that work for the bank does not seem to understand how these benefits the bank. It takes them forever to look at a file, most of the time has an attitude problem, do not communicate well with the parties and don't know how to actually negotiate with the investors as they only stick to whatever policy they were given without arguing for what is better for the bank &/or investors. These are the people out there that were hired to try to minimize their losses, but unfortunately a lot of them don't know the real reason why they were hired!!!
Sure modifiy a loan and lower my payment 80 lousy $’s a month, big help to no one but the big bank and thier investors well im not paying the new modified payment due 10-09 and i hope it costs Wells Fargo (my lender) 200 000 to evict me. they are predators and the govt. backs them up a big farce this “Obama help for homeowners” what a joke
WHAT IF MY WIFE AND I ARE SEPARATED AND SHE WONT SIGN THE LOAN MODIFICATION AGREEMENT – CAN I GET THE MODIFICATION ON MY OWN WITH JUST MY SIGNATURE.
Having a forensic loan audit done on a mortgage can bypass the clogged up system of the loan mod departments and bring it straight to the legal department which also can cost the banks thousands of dollars to negotiate and they are more willing to agree to better terms like a principal reduction if you are sending your loan modification in with a forensic loan audit (the big stick). Check our http://www.pivotprocessing.com or call 1.877.332.8099 and see how this is the only true way of negotiating with your bank and getting the agreement you want.
The problem is the bankers don't care. It is not their monies. It is the investors monies. And of course the investors use as Tax write-off (loss) at the end of the year. Unfortunatly, the homeowners loss the most. Financially, and emontionally! There is no compasion. Trying to convence a customer service Rep. who has no power to decide is nothing but frustrating experience. Unfortunatly, a lot of homeowers are under the impression that anyone pick-up the phone can solve their problem. The Obama plan works only IF the Bankers were cooperating with his agenda. Majority of those rich Republicans Bankers like to see Obama and his plan fail. They dragged and move with the pace of a snail to help people. Some will give up upset and blaming the President and his agenda. He established good and sincere plan, but there is no one to help him. Everyone focus to see him fail.
Citi Mortgage actually caused my foreclosure problems by placing me in a trial modification where I paid about 60% of my mortgage payment for 4 months and then kicked me out and demanded thousands of dollars or they would foreclose. I have called everyday for a year; many days several times. They lead you on to help and then slam dunk you over and over. They have you send in paperwork every other week just to harass you obviously. The idea of any help from these crooks is useless. They have never allowed me to talk to a decision maker. Our gov't obviously cares more about big business with their love affair with the banks than any number of citizens pooled together. They gave our jobs away and now they steal our homes in the land of the free. Free from what? This is one of the worst countries to live in and the whole lot of washington elected officials are nothing but white collar criminals padding their own pockets every chance they can. God is still on the throne and revenge is the lords – so I wait patiently to one day he gives them what they are due.
You can have success with a do it yourself loan modification. You just have to know what you are doing before your do it. One bad move, could send you spiraling in the wrong direction.
Please explain if this makes since to you?
According to Freddie Mac the cost of a Foreclosure runs 60K, The Bank of America this morning announced that they are going to proceed to Foreclose on 100,000 properties.I am in the Real Estate business and I have to deal with this every day.The average price of homes in my market place is 90K.
Most of these homes sit empty for over a year and start to deteriorate and have mold issues.
Would it make more since to extend their loan a year on the end of their note,reduce their rate to the going rate of 4% today.
Let them stay in their home if they pay the insurance and taxes on their property .If they don't have employment or active in a technical school working toward another profession within a year.
Forclose on their home,most people will work hard to stay in their homes if someone will help them with their budget and help them set goals to keep their homes.
I still feel most people are embarrassed when they get their home foreclosed on and we should do what ever it takes to save their dignity and a safe environment for their families.
"Unfortunately, most borrowers do not contact their lending institution until the problem is too late. A forthright and honest approach will provide you a much better chance of saving your home and keeping the property out of foreclosure." Sorry, but this is a pile of crap. The lenders DO NOT want to talk to homeowners before, during or after the loan becomes a problem. If you DO find a lender who will talk to you and try to resolve your problem, you should also play the lottery – the odds of winning are about the same
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