Group of Mortgage Lenders Proactive in its Efforts to Halt Foreclosures

With large numbers of homeowners falling behind on their mortgage payments, home loan providers in Florida and across the country are seeking new, creative ways to keep delinquent customers out of foreclosure.

One of the newest approaches is the “Mod Squad,” a roving 50-person team of problem-solvers who work for Texas-based EMC Mortgage, a subsidiary of Wall Street investment bank Bear Stearns.

Named after a hit TV series from the late 1960s, the Mod Squad consists of pros in mortgage modification - custom solutions for borrowers who no longer can afford their mortgages at current rates and terms.

The object is to search for changes in the Florida home loan requirements that will permit the borrowers to remain in their houses, pay down their home loans and avoid foreclosure.

“Foreclosing doesn’t benefit anyone - not the borrower, not the lender, not the bond holder,” EMC President and CEO John Vella said.

On the other hand, changing the terms of the Florida mortgage - lowering monthly payments for a period, deferring unpaid principal and interest, or changing the rate - may allow delinquent borrowers to get past (or work through) their lingering financial issues.

What’s unusual about the Mod Squad is that rather than waiting for owners to contact EMC, the team is reaching out to owners individually, working with local debt consolidation and credit counseling groups and holding loan modification education meetings for those in cities where delinquencies are on the rise.

Florida home loan modification represents just one approach that servicers can use to stem foreclosures. Other techniques include:

• Repayment plans where unpaid balances are reduced over time through small, regular add-ons to borrowers’ Florida mortgage payments.
• Setting up forbearance agreements whereby principal and interest payments are reduced or even suspended for a period of time, enabling the borrowers to get their finances under control. Then the regular payments resume, along with reimbursements of balances in arrears.

The surprising thing is that foreclosure-assistance programs are more commonly available than many credit-strapped homeowners may be aware. In fact, Freddie Mac, Fannie Mae and FHA loan servicing companies to offer plans to delinquent customers who have a reasonable chance of avoiding foreclosure.

Such techniques could be an answer for the struggling bad credit Florida mortgage borrowers who simply got in over their heads and mistimed the end of the boom. Consider them today.

SOURCE: Detroit Free Press