Mortgage Mystery Unraveled: Late Payments? Escape Financial Ruin

Welcome, homeowners and investors, to an illuminating discussion that could significantly impact your financial trajectory. Whether you’re a homeowner navigating unforeseen challenges or an investor making informed decisions, delving into the intricate world of mortgages is paramount. In this comprehensive blog & video, we’re peeling back the layers of mortgage ownership intricacies and shedding light on the often-misunderstood roles of various entities within the mortgage industry. If you are facing foreclosure or helping someone in this circumstance this should help you know some first steps to take. What should you do first? Who should you talk to? Are there government support options? How can you keep your house or sell it fast as-is? What are missconceptions of working with investors?

Mortgage Mystery Unraveled: Late Payments? Escape Financial Ruin!

Key Points In This Article:

  • The company that collets your mortgage payment doesn’t typically own the debt on your house. They just Service the payments so they don’t decide how to help you, they are told.
  • Who to Contact: You should contact your mortgage Servicer for options and HUD is a government program that can help guide you on understanding options
  • All of the options traditionally offered by mortgage servicers
  • Investors provide other options and they may not be suggested by your mortgage service provider

The myth of Mortgage Servicers & Guarantors:

Did you know that your mortgage servicer most likely does not own the debt on your loan? This means that when you make a payment to the bank for your house you are likely paying a bank that is just managing the debt payments for the actual investor. Most Conventional loans are owned by entities like Fannie Mae or Freddie Mac.

Another entity that is important to understand are loan Guarantors. These are entities like FHA, USDA, VA and are organized by entities like HUD. Guarantors don’t own the debt but they insure the debt for the investors, in the example above Fannie Mae or Freddie Mac. They establish borrower criteria and based on credit check and qualifications they will ensure the investors in the event of a default in payments. This doesn’t mean that you as a borrower are protected from Foreclosure, it simply means the investor is protected. If you are facing foreclosure you may get a notice that one of these organizations has purchased your mortgage, this is because they are an insurance company that assumed the debt upon default.

Who Should I Contact and What are the Critical Milestones?

As soon as you know you are going to be late on payments you should reach out to your mortgage service provider to work out a plan. If you are looking for support prior to calling your mortgage service provider HUD offers the HOPE Hotline to help you plan your conversation with your mortgage service provider and get the proper documentation in place. You can reach them at 1-888-995-HOPE(4673).

Here are the key milestones to be aware of:

  • 30 Days- You should have already received a notice from the bank informing you of the delinquent payment
  • 36 Days- The bank will attempt to make live contact and inform you of the delinquent payment
  • 45 Days- The bank will assign a person to your case and they will be contacting you to try to help you through a plan
  • 121 Days- Foreclosure attorneys may begin submitting paperwork for a foreclosure.

J&A Home Buyers has helped many people facing the same situations you are facing now. We are based in Katy, TX and service the greater Houston area and surrounding cities. If you have questions on what you should do next one of our team of licensed realtors can walk you through options. Contact Us today!

What Plans Do Mortgage Service Providers Offer Me?

Depending on your circumstances you may qualify for a different plans to help you keep your home or sell your home and escape foreclosure. These are a summary of most that you will discuss with your mortgage service provider:

  • Reinstatement Plan: In this situation you may have just missed a few payments because a client didn’t pay you the correct amount or were late. You now have the money and you can contact them to pay the late fees and missing balance.
  • Forbearance Plan: We saw this during the Covid 19 pandemic. This often occurs during natural disasters where people just can’t make their payments. The bank will may opt for this plan if you are in a similar situation and work on a plan to pause or postpone some payments.
  • Repayment Plan: In this scenario you may now be able to make the payments but not all at once. If you qualify for this, they will work with you to make a plan to get caught up to speed by paying “$X” per month.
  • Loan Modification Plan: In some cases you may have a significant change in income due to divorce, death or unforeseen circumstance. A repayment plan may not be an option. Depending on how long you have owned the property, how much equity you have they may work to modify the terms of the loan by extending the time frame or lowering interest. The bank will have limits to what they can do so this option may not always work.
  • Short Sale: In this scenario you may owe more on the house than the house is worth on the market currently. You can request a short sale and work with the bank to sell the house for a lower value and escape foreclosure. You should seek professional help if you would like to pursue this path.
  • Deed in Lieu: If you have some equity in your home your mortgage service company may offer to take the deed from you in return they will not foreclose on you. This usually only occurs when you have some equity in the house. If you have equity you should reach out to J&A Home Buyers to see if you can sell your home to them or get it listed on the market for a higher price and potentially make some money in the process.

Note that all of these plans involve you paying your debt but there may be great options to get you on your feet.

What I Didn’t Know About Working With an Investor!

Just because you discuss selling your house with an investor to escape foreclosure doesn’t mean that you have to move out of the home. J&A Home Buyers buys houses direct from the seller but we often have options to rent the house back from us after we sell whether it be a period of time or for a few years. We have even worked out plans that allowed the seller to sell to us rent the house for a few years then they had an option to buy the house back at a later date.

If you are wanting to sell and leave the home we have multiple options for this too. In some cases we have sellers that ran into some pretty expensive repairs they couldn’t afford so they had to choose between missing payments on the mortgage or repairing the house. J&A Home Buyers is uniquely positioned because we buy our houses with cash which means we don’t have lenders that will not permit us to purchase these properties. When you work with an investor like J&A Home Buyers your contract will still close because they have experience handling these types of repairs.

Secure Your Financial Future

J&A Home Buyers is an active home buyer but we also have multiple realtors on our team which means we are positioned to give you an unbiased opinion on the value of your home. We can show you the pros and cons with both options and help you understand the amount of work you may need to do to go through both options.

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