Despite what your popular infomercial of the day has to say, it ain't easy giving bad news. And it's not in my nature to take advantage of it. I wrote a post not too long ago about a transaction that turned real dead, real fast, after the appraisal came back. An adjustable rate came due, yet they couldn't do a thing...
Adjustable Rates were a popular phenom and always will have their place. I didn't make them that original loan but I followed up like a madman to try to make sure I'd make them the next, and hopefully, final loan they'd ever need. This story is like many others though, they were credit challenged and equity poor two years ago, they took a lower rate on adjustable terms to get a lower payment...with the idea of things would turn around. Things didn't turn around. Still falling behind on their mortgage, I had spoken to them 6 months after they entered that transaction...haven't let go of them since.
When the the time came that their rate adjusted (higher, which it almost always will be with these programs), I was there trying to work with them to see if there was a way out. They were finally on-board and an appraisal was done...so was their transaction. Turns out, they had no equity at all and their credit didn't do them any favors. So, even though the phone call sucked to make, and I heard tears on the other end as we spoke, I had to give them the best advice I knew how to give them.
Many of you, across the states, may be in the same boat. You have no equity (you owe what your house is worth and maybe even more than what your house is worth) and your credit isn't anything to write home to Mom about, despite the fact that was the program you entered trying to correct things in your financial life. If this is you, in any way, let me give you an alternative means of trying to situate the situation.
* Call the Company Who Currently Holds Your Mortgage! Trust me on this, they are not in the business of owning houses, especially ones there is not equity in. If your rate is starting to adjust and you realize you have no equity to refinance out of it into a fixed rate situation and won't realistically be able to afford the payments, call them. Call them now! If you are still reading this, you should of already dialed their number. The worst thing you can do when dealing with creditors is to lack on the communication thing. Explain your situation, professionally and persistently and work out something that works for both of you. That is, in my estimation, the best way in this situation to make things work. If they are a smart lending entity and you are a consumer of your word, things can and will be worked out.
Banks hate balances that exceed what their collateral is worth, lenders dislike when they aren't being paid. Both feel the same about the matter, use it to your advantage! There is breathing room...just remember to breath and to communicate. Do both with integrity and there will be plenty of air for us all...
Jason.... I would have to say that this was one of your better blogs ever written. I agree with all comments. Excellent post and Excellent advice.
Again, as many of us have stated, we need to write more about this, to educate the consumer. So many either don't know or just think it can't happen. Again, great advice.
Randy - In my mind, it's all about communication...whether it be good or bad news. Thanks.
Jeremy - Thanks for weighing in, I would love to have appraisers weigh in more heavily on these and other topics here on AR.
Stacie - Agreed, even lenders have a diplomatic bone or two in their bodies:-)
Kakra & Tom - Thank you and I hope this helps in some facet with anybody in a similiar situation you encounter.
Rich - It's practical and timely advice which the consumer needs but oft-times is replaced by jargon and terms they don't understand. Thanks for stopping by, it is always nice to have a bit of soul....:-)
Jeff - Much appreciated amigo. Education is so very key and it is up to us individually and collectively to help break down the barriers and open the doors...
Great job, Jason.
Solid advice and empathy.
5 and a flag here too!
Is this the Jason Sardi appreciation society meeting? LOL I guess I'm flagging and rating a big fat 5 too.
Jason,
Excellent post! You really put together a great piece for consumers, I would do business with you! :)
Jason,
I keep hearing these stories about the consumer not understanding what they are getting into..they just want to see the low rate..but do not realize it usually is only for a short period then it could jump to a ridiculous point...good job to inform the consumer to really understand not to just look at the rate but the terms too. good to post in localism.
Excellent post! Communication with the lender is always the best advice - your response, however, will depend greatly on who your current lender is and who you speak with at the company.
I have seen many lenders take hard stances against the client when there is no logical reason for doing so. Some of them will not even try to work things out until you are already late on the mortgage! Can you say bad customer service?
Keep 'em coming, Jason.
Jason
This is a great post - gave it a 5 - should be a feature. What excellent consumer information. How many times do consumers know they can know longer handle the loan payments and instead of contacting the lender, just stop paying the mortgage. Many times is because they just don't know what to do. I bet you helped many today.
Sandra
Mike - Thanks, I think empathy is ultra-important.
Chris - Lol, you're too much:-)
Suzanne - Ditto!
Neal - There's a lot of it out there for sure, our job is to educate, educate, educate.
Steven - I hear you there. In my opinion, those lenders who refuse to work with a consumer out of the shoot are practicing bad business.
Marlene - Thank you for you're insight!
Shawn - It is so simple, yet so often not done.
Sandra - I hope, I can only hope.
Desiree - I've seen this happen way too often, all we can do is offer our insight and help...it is up to the individuals whether they want to take it or leave it.
Janet - Agreed Janet, I really do wish we would have more of our curriculum in high school geared towards credit & mortgage understanding. I think that could make a great impact.
Rey - Thanks Rey, it is tough...nature of the beast though.
Hey Jason,
I did just what you said, and when my client called their lender, they were told they are just a servicer of loans, but they would refer them to their mortgage dept who will be glad to Refi them, in a nut shell after two days of working on it, they got No where, I do think you are right though, but I am so tired of these banks hiring flunkies to do work for them...
Thanks,
Tom Weiss
communication is always key in our business
good post
Tom - I am going to be on a conference call with my clients and their current mortgage holder tomorrow, they accepted my invite to help even though I couldn't help them directly per se. Whatever the outcome, I'll post an update of what happens.
Dominick - True, true.
Jason, not even one of those broker terms 'you guys' like to use to confuse people like me ? :^).
EXCELLENT ADVICE FOR THE PUBLIC... JUST EXCELLENT.
As always William, thanks for your insight and for stopping by.
Rob - Was this simple enough:-)?
Monica. - Thank you so much. I have a conference call with them and their current mortgage holder Monday morning. I will let everyone know how it turns out.
Fear holds so many people from making that call and it really can help. I always tell my clients what is the worst that can happen, they say NO? Then you've wasted 10 minutes of your time, but if they say yes! You have just saved $20,000 or more, is that worth 10 minutes?