Mortgage in Default & Looking to Refinance?

I fielded a question today that I know is on a lot of people's mind. The question was, we're behind on our mortgage payments and received a notice of default. Any chance we can refinance into an affordable and fixed mortgage?

All is NOT lost!

If the homeowner would like to keep their home (and has at least some steady income), they need to contact their mortgage company ASAP and apply for a mortgage "modification". A typical, credit based refinance is unlikely due to the recent delinquencies. However, the current mortgage company would way rather offer a modification to their customer than proceed with an expensive foreclosure on the home. When contacting the bank for a "mod", be sure to have the following information handy;

• Current household income (typically they want to know they "net" or "take home" but clarify which numbers they want).
• Current household expenses including food, gas for the cars, utilities, clothing, other credit obligations; everything!
• The hardship - be ready to give them a couple of sentences that encapsulate what caused the problem and whether or not the problem still exists. IE; unemployed for 6 months but now employed again at 80% of your old salary. Be prepared to put your hardship info into a letter that is a little more explanatory
• Be prepared to submit via fax or mail things like pay stubs, banks statements, W-2's and a financial worksheet (a list of all your bills subtracted from your take home pay)

If on the other hand, it no longer seems feasible to be in the home and the homeowner would like (or needs) to get out of their home gracefully (and without being evicted by the sheriff 90-120 days after first notice of default), they should consult with a real estate professional and/or a bankruptcy or financial attorney about options and time lines.

The most common mistakes I see are;

• Moving out too soon
• Moving out and doing nothing else (forcing the bank to full legal foreclosure instead of allowing/facilitating a voluntary sale or transfer of the property)

There are lots of programs out there right now to help with situations like these and I've worked with quite a few homeowners to successfully resolve issues in whatever way meets their situation the best. To privately ask more questions, don't hesitate to write; rebecca@myplacetocallhome.com