Are you behind on your mortgage payments? Call your lender.
Sounds like obvious advice, but apparently it isn’t, based on research from mortgage financier Freddie Mac, which looked into why late-paying borrowers let themselves slip nearer and nearer to losing their homes without trying to work out Plan B with the firms that service the loans.
The answer: About two-thirds of the borrowers who were behind had no idea they could even strike such a deal, according to Freddie Mac. (See Kenneth R. Harney’s column on Page 2.)
But in all likelihood they could, because Freddie requires the companies that service its loans to try to work out a couple of possible options: forbearance, which temporarily delays or reduces payments, or loan modification, which can restructure payment terms for a certain period. (Fannie Mae has similar policies, and between them, they have a finger in the great majority of mortgages in this country.)
The Freddie Mac survey found that 75 percent of the delinquent borrowers say they recall being contacted by the loan servicers, which are companies that collect the monthly payments on behalf of the lenders or investors.
But apparently the call (or letter) doesn’t elicit a response, because in half of all foreclosure cases, the delinquent borrowers never contact their loan servicers, Freddie said. Among the reasons for their reticence the homeowners cited in the study:
– About one-fourth said there was no reason to talk to the servicers, or they believed that the servicers couldn’t help them;
– 17 percent said they could handle the payments without any help;
– 7 percent said they didn’t call because they didn’t have enough money to make the payment.
Other reasons they named for not responding were “fear,” “embarrassment,” or not knowing whom to call.
Plenty of people are in this boat. New data from the Mortgage Bankers Association shows that of the 40 million outstanding mortgages it monitors, about 1.8 million of them are at least one month behind in payments. As dreadful as those numbers sound, they’re actually slightly better than they were a year ago, the trade group says.
Help for first-time buyers
Several housing groups have collaborated to introduce a program that offers cash grants and other support to help low-income families buy homes in Chicago neighborhoods.
The Illinois Housing Development Authority has authorized $30 million in below-market, fixed-rate mortgages; the Illinois Association of Realtors and the Chicago Federal Home Loan Bank will provide down-payment and closing-cost grants; and the Mortgage Guarantee Insurance Corp. will provide free mortgage-insurance coverage to protect the home buyers from foreclosure in the event of job loss.
The new HomePower Mortgage Assistance Program is open to first-time buyers (or those who haven’t owned a home for three years) in seven neighborhoods: North Lawndale, Humboldt Park, Albany Park, Englewood, Back of the Yards, Roseland and Pullman.
Participants’ household income can’t exceed 80 percent of the Cook County median, which would be $48,000 for a family of four, though that amount would be prorated for family size. The buyers would contribute 1 percent of the purchase price or $1,000, whichever is higher.
For more information, call Partnership for Homeownership (an affiliate of the Illinois Realtors) 800-370-6697.
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Hear Mary Umberger on WBBM Newsradio 780 at 6:21 p.m. and 10:22 p.m. each Thursday and Friday and 7:20 a.m. each Saturday and Sunday.
mumberger@tribune.com
