Okay, the problem here is that sometimes one department tells you to "wait" so that the modification department would believe that you really must be in trouble if you are not making payment, so that you do not need to make payment and make them think that you do not have any money...
This is false. The foreclosure department and the modification department are the same mortgage company
. It is inconceivable that they would not know what each is thinking. I have seen this done a lot. In reality, the financial company wants you to miss payments if they believe that you likely will be fighting them on foreclosure. Once you miss even one payment, they can foreclose by contract
. So what happens often is that individuals are actually encouraged to miss payments "to convince the modification department" and then once they do, they are foreclosed upon.
Some parties have sued banks over this with mixed results - it is very hard to prove that this was a set up since everything is subjective and many negotiations are verbal.
Try not to miss payments. You generally have the following options:Foreclosure
An foreclosure may mean that they can go after you for deficiency - you know this already. This is not a good option.Foreclosure - Uncontested
A voluntary foreclosure means that you agree to walk away. Typically, the debtor then requests a written waiver against the mortgagor filing for deficiency before the foreclosure is executed - therefore ensuring that they are safe from further litigation
. Also known as deed in lieu of foreclosure. Short Sale
The debtor sells the property with the mortgagor's permission to a third party for below cost, but remains liable for any amount outstanding. Typically less damaging to one's credit than foreclosure, but still not very favorable.Bankruptcy
Originally seen as the last resort option, this is becoming increasingly a choice for many Americans. A Chapter 13 proceeding will allow the debtor to force a reinstatement of the mortgage by catching up on delinquent payments over time.Negotiation
What you are doing now. Continue to negotiate and try for a modification, but try not to miss payments and if you do, get them to agree in writing not to foreclose for missed payments within the time that they are considering modification.
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