Mortgage Lender’s’ Responsibility To Be Responsive To A Struggling Homeowner

Last updated on: May 24, 2022

Homeowners trying to avoid foreclosure may often wonder how to approach their mortgage lender to try and negotiate and try to keep their homes, or at least avoid foreclosure and its negative consequences.  Mortgage lenders may not always respond favorably, or may be slow to respond to homeowners, especially if they are not yet delinquent on the mortgages – meaning they have not missed any payments.  Feeling ignored by a non-responsive mortgage lender, a homeowner may feel as though foreclosure is inevitable.

Struggling homeowners may be pleased to know that there are some laws that protect them in this process, and require certain things from mortgage lenders.  Initially, when a homeowner begins to miss mortgage payments, and at least before four payments are missed, mortgage lenders are required to assess which forms of loss mitigation may be available to the homeowner.  Mortgage lenders are also required to provide qualifying homeowners with a written explanation of the loss mitigation options available to them within a certain amount of time. Loss mitigation refers to the means through which a mortgage lender works with a homeowner to avoid foreclosure.  It is referred to as loss mitigation because the process is supposed to reduce the loss a mortgage lender faces by foreclosing on a property.

Loss mitigation methods include loan modifications, short sales, or deed in lieu of foreclosure.  The loss mitigation options may not always keep the homeowner in their home, but they may help the homeowner avoid the foreclosure while still getting out from under the burden of a mortgage he or she can no longer afford.

In order to keep contact open with the homeowner, the mortgage lender should assign the homeowner a contact person that can help the homeowner understand the process, and be reasonably responsive to the homeowner including returning messages.  If the mortgage lender is found to be knowingly and materially in violation of the law in terms of providing loss mitigation options to homeowners, it may be fined to ensure compliance.

In some cases, even after the foreclosure process has begun, the homeowner may still be eligible for loss mitigation options.  In these cases, if the homeowner sends the mortgage lender information showing his or her eligibility, the mortgage lender may be required to cancel or put the foreclosure process on hold.

There are certain provisions in some of the loss mitigation options offered that may leave a homeowner on the hook for a lot of money in fees and the balance of the mortgage even if the home is sold.  Homeowners should therefore be careful to have any agreements with the mortgage lender that purport to settle the homeowners’ debts are reviewed by their own attorneys before they sign.

Contact An Experienced Foreclosure Attorney

If you are facing foreclosure, it is important to seek an experienced foreclosure defense attorney to protect your interests.  An attorney can help in the period right before the foreclosure process begins, and during the actual process.  Contact the North Miami foreclosure attorneys at Charlip Law Group, L.C. for a consultation on your case.

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