Bay Area Real Estate Finance

As a mortgage professional, one of the strangest things that has happened during this housing crisis is the process of handling those in default. This latest story shows a couple in Boston who stopped paying their mortgage so that they could be “eligible” for help. Unfortunately, they were eligible, but never received that help. In response to their pending foreclosure, they have now filed suit against WaMu.

After reading on WaMu’s website that it would assist distressed borrowers with loan modifications, Lori Pestana called and was told they could not qualify until their payments were 50 days late. To become eligible, they stopped paying and applied for help on Oct. 9, 2007.

When negotiating short sales or loan modifications, sometimes the CS rep says that they will not even consider it unless you have either missed payments or are already in some kind of default. Now, I would never advise one to purposely stop paying their mortgage - but the message sent by lenders is a bit confusing. I mean, everyone wants help. But if you try to purposely “game” the system, this is what can come back to bite you.    It would be nice if lenders took a more proactive approach and modified these loans to avoid having borrowers default - but I think given the current situation, there is just not enough man power to handle all the troubled loans out there.

Bottom line, no matter what you hear or read, don’t purposely not pay your mortgage and not expect a foreclosure to happen.  Sure, you might be eligible for help - but, that is just an eligibility requirement, not your ticket to a loan modification.

For the full story, find it here at the Boston Globe