Avoiding a Foreclosure with 2nd Mortgages

Foreclosures are being reported in record numbers in most states. Banks and lending institutes are having a tough time keeping up with the rising numbers of loan defaults, so we thought we would toss some friendly advice. Take a line of credit or 2n mortgage out now while your credit scores are good. If you lose your job or hit some adjustable rate hurdles, it will be virtually impossible to qualify for a refinance or 2nd mortgage. If something happens, you will be glad you had the cash reserves available.

Curing a home foreclosure is a little like curing cancer -- the sooner you catch it, the better your chance of survival.

Early on in the default process, consumers can still come back from the brink because they haven't missed more than one or two monthly payments and their lenders haven't spent too much trying to get them back in line. But as the foreclosure process moves along, the size of the delinquent debt owed and the bank legal costs that customers are usually charged mount. Borrowers who try to ignore their financial problems -- and their lenders' phone calls -- will likely lose their homes.

"As soon as you know you're going to miss your first mortgage payment, that's when we need to be notified. We can explain to the consumer what to expect throughout the process," says John Lawrence, manager of borrower counseling services with Wells Fargo & Co.'s mortgage division. "Say they've lost their job or some other type of hardship has gone on. We can give them time to help get their lives back in order.

"The longer that you go -- and if you're going into a foreclosure process, there are other fees and costs involved in that -- it does make it more difficult to ultimately get the problem solved."

Mortgage lenders are always looking to help!

Solving foreclosures is what companies want to do these days, too, according to lending experts. Fannie Mae, Freddie Mac and the mortgage servicers responsible for administering borrower loans have all attempted to boost loan "workouts" or "cures" and reduce the number of homes that end up in the dreaded "REO," or "Real Estate Owned," category.

Information can be referenced at Bank Rate


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