Mistakes that Cause Foreclosure
One of the most frustrating things in providing foreclosure assistance to homeowners who are behind on payments and want to keep their homes is dealing with people who won’t act in their own best interest.
I recently had two very different results with two homeowners who were trying to stop foreclosure. Both had very similar circumstances, the financial figures they gave me over the phone were comparable, and they were in default on mortgages with the same lender- a lender at which I happen to have very good contacts.
One homeowner quickly returned the package, and we were able to stop the foreclosure sale date immediately- which was only 7 days away.
The other homeowner who had called seeking foreclosure assistance did not. I called him a few days later, and he said that “The mortgage company finally called me,” so he decided to work with them directly. He told me the results- a repayment plan, with his monthly mortgage payments going up 35% for nearly a year.
It was clear to me that this was not a plan that he was going to be able to complete, so I probed a little. He said that after being ignored by his lender for so long, their eleventh-hour call seemed like a “breakthrough.” I suppose he should have emphasized “break.”
For the other borrower with very similar figures, we not only were able to stop foreclosure, but we reduced his interest rate by 35%, making his future mortgage payments lower and much more affordable.
However, it wasn’t easy. This borrower was EXTREMELY difficult to work with once our contract was signed, and he was consistently slow in following directions. And, to complicate matters, he specifically ignored some very important instructions I’d given him to ensure that he would have a good chance of long-term success.
As a direct result of his decision to ignore my advice, his new, lower loan payments were soon behind again. I stepped in and rectified the situation, but I was not at all pleased that I had to perform additional work to bail his butt out again, when the problem could have been avoided if he had only listened.
So while I was able to provide foreclosure assistance and we successully stopped foreclosure for him twice, it’s things like this that keep me up at night.
Why do some homeowners contact me to provide foreclosure assistance, but then refuse to follow the advice that I give them?
Questions like these have spurred me to do a tremendous amount of research into human behavior and decision-making processes. One of the best books I’ve found in my quest is, “Mistakes Were Made (but not by me),” by Tavris and Aronson.
I’m only 50 pages into it, and while I’m hoping that they do offer suggestions and solutions before it’s over, the studies they’ve mentioned and the observations they’ve made have already impacted the way I think about how I provide foreclosure assistance and the way in which I guide and direct my clients.
My firm belief has always been that the foreclosure process can be a very positive turning point in the financial life of a homeowner.
That philosophy is a major reason why our recidivism rate is a fraction of the industry average (a recent study shows that 50% of last year’s modifications are back in default again).
While the majority of my clients don’t realize it in the beginning, if you focus on the long-term outcome from day one, it is truly possible to maximize your chances of keeping your home for the long term.
P.S. While the client I mentioned above is still in his home and current on payments, the gentleman who decided to “work with” the lender was published in the foreclosure advertisements again this week.
If you’re thinking that “working with the lender” yourself might have you playing at a disadvantage, you’d be right. To get effective foreclosure assistance that’s focused on YOUR best outcome- not your lender’s- go here.
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