Distressed Property Blog

You’ve heard me repeat repeatedly: Get into the negotiating game early with your lender. It’s easy to freak yourself past this process, but think about it… if you’re facing a foreclosure-like situation and you do not contact your lender early and often, after the foreclosure process commences, you cannot negotiate a forbearance, nor can you engineer a deed in lieu of foreclosure. In other words, a late start quickly clips options from your coupon book.

Oh, yeah, once your file lands on the lender’s attorney’s desk, you get more fees added to what you owe.

Take the following advice to heart and your lender can actually do you some good.

Your lender would really like you to stay in the home (especially if you owe more than it’s worth), rather than risk big bucks foreclosing, then wrapping the business all up with a renovation, refinance, resale wholesale, or all three. Get this; your lender would really like to find a home-loan deal that works for you both if you are capable of pulling something off that is reasonable.

In working with your lender to find a solution, they have another treat up their sleeve, called a loss mitigation department. What happens here is a loss mitigator–someone who can be a real estate broker or sometimes an attorney the bank hires–works with you and all the resources the bank can bring to bear, to keep you out of foreclosure. Yes, that is the job description. And because the loss-mitigator knows the local market, you get a real look at your property value and what’s happening to the market in your area. And if things are dire all around, this person will know that selling your home would likely mean losing money for the bank. Banks and other lenders do not like to lose money and keeping you in your house often seems to them like a much better idea.

Showing up early in the process is a good start to negotiating with your lender. Make their job easier by bringing all the requested documents and forms they request you complete. Do not scream at this person even though you feel like it. And stay credible by telling all, showing you mean to handle everything as well as possible in this tough situation for both of you, follow through when you say you’ll do something, and make sure every fact you give is accurate.

This approach got the lender to work with you in the first place, and may very well will give them  reason to negotiate a workable deal now.