Foreclosure Dilemma – Mortgage Loan

Foreclosure Dilemma – Mortgage Loan

In a time that seems so long ago, when you applied for a mortgage, it was assumed you would go to your local bank — the institution where you kept your savings and checking accounts – to also obtain your home loan. I can’t exactly put my finger on the time period where this changed but we are now in a more modern era and the process is usually quite different.

The rule in mortgage loans is once the borrower fails to pay his payments, the bank have the right to sell the property in order to be able to recover its money. That’s why they have to foreclose the property. Foreclosing the property means you loss the ownership and the rights to it. So what should one do when your property is foreclosed?

Then, after knowing all the basics, you shop around for lending companies about what benefits they can offer. It is best to compare not just three or four but more than six if possible. You need a wider choice and more information to be able to make a reasonable and sound decision. It is only in comparing one company to another that you will get an idea of the lending market.

Lets look at the mortgage banker first. When you do business with a mortgage banker you are dealing directly with the company making your loan. Often the term direct lender is used to describe a mortgage banker. The mortgage banker may not be a mortgage servicer, meaning they are not ultimately going to be the company where you make your mortgage payments, but it is their underwriting decision to determine if your loan meets the guidelines of approvability. Although a mortgage banker is typically limited to the products they will offer to borrowers, many mortgage bankers maintain relationships with “wholesale” lenders where they can broker loans should a borrower’s request or borrowing profile not meet their own mortgage loan offerings. In today’s mortgage market, mortgage banker underwriters generally make their decisions based on the guidelines set by agencies (FHA, VA, Fannie Mae, Freddie Mac). The trade association affiliated with mortgage bankers is the Mortgage Bankers Association of America.

Next we will look at the Mortgage Broker A mortgage broker serves the same needs as a mortgage banker but in a different manner. The mortgage broker is not a lender, does not make the ultimate decision to approve or decline a mortgage application but has the luxury of drawing from a large pool of lenders for borrowers to find the right match and obtain mortgage loan approval.

To say that using a mortgage broker creates a middle man effect (broker to lender to borrower), and to then assume this effect creates more cost to the borrower is not entirely fair. Mortgage Brokers do not deal in the retail world of loans. Most direct lenders, lenders that you can access on your own, have a wholesale department with the sole purpose of servicing the loans sent in by mortgage brokers. These departments are commonly referred to as wholesale lenders and they offer pricing that is not available to the public and allow brokers to be competitive on a retail level with mortgage bankers. I think it is important to point out that on occasion, a wholesale lender will price unusually low to beef up their pipeline of loan originations and a broker can be in position to take advantage of this for you whereas a mortgage banker wouldn’t.

After making a lot of inquiries, talking to experts and writing a long list of qualities of the lending companies, you are now ready to make an important decision. Once you have chosen the right lending company to get a mortgage loan, trust yourself that you have made the correct decision.

Some lenders also allow their borrowers to a repayment plan wherein the missed payments are spread out over a longer term. Ignoring the foreclosure problem doesn’t solve anything at all. So face the problem head on and do not lose hope for lenders are always willing to help by providing other options for you.

Harris Smith offers advice on home equity line of credit and obtaining credit