If you are facing a repossession, there may be options to negotiate a workout program with your bank. We normally refer this as loan restructuring. Though you may have already signed the loan offer letter, but when you are having problem with your monthly instalment, try to speak to your bank. At times, the banks are willing to restructure the loan for you. Having to repossess your home is the last thing the bank would do to recover any losses. Help is available if you are willing to workout a reasonable repayment plan with your bank, while this can sometimes be difficult, you may be able to save your home. They really do not want your house back. Let’s cover some options that may be available to you if you are facing a repossession.
Repossession is a term used to denote a financial institution taking back an object that was either used as collateral or rented or leased. Repossession is a “self-help” type of action in which the party having right of ownership of the property in question takes the property back from the party having right of possession without invoking court proceedings. The property may then be sold by either the financial institution or third party sellers. The extent to which repossession is authorized, and how it may be executed, greatly varies in different jurisdictions – Wikipedia
The continuing flow of creditors and collections department called you can be over whelming, while it may seem hopeless, you may have options. Starting with the most important, your home, the others may have to wait and be fixed later.
Banks usually will offer several options to a homeowner that is in default on their contractual obligations of a mortgage payment. They would much rather workout a program that is best suited for all parties involved then to come and take your house. Banks are in the business of lender money, not managing properties. This is true even more today, with repossession at record highs, banks have been overloaded with homes that they must not manage and maintain until they are able to sell them to someone else. Having too many from non-performing loan properties in their portfolio may potentially turn into toxic assets.
The time that you have to negotiate a deal, is often very limited. In most cases, a borrower that is in default 90 or more days is just about out of time. This period varies from banks so make sure that you have checked your banks. I once encountered a case where a property was being auction after six months default. It is really depending on banks leniency whether to proceed with repossession. Banks can and will take legal action to repossess your home if you are not talking to them.
Here are some possible solutions that you can offer to the lender to avoid repossession. While not all will be satisfactory to the banks, you can at least make the offer and let them tell you.
Banks may be willing to take a reduced payment for a specific period, this will allow you to remain in the home and catch up the default amount over time. Some lenders will not allow you to do this, but it never hurts to try.
Some banks may allow you to defer a payment or two, they tack the payments on the end of the loan and allow you time to catch up and stay current. This option is only just now beginning to become available as banks are doing whatever they can to help avoid the repossession process.
Get Help for Other Debts
While this may seems to be irrelevant, but the chances of you to default on your mortgage payments, may also default on your credit card as well. There is no point for you to fill up a hole in front of you while ignoring the other holes next to you. If you have many debts especially from credit cards, you can always get help from AKPK. Please take note that AKPK do not deal with mortgages.
AKPK – A financial counselling that offers counselling and advice on managing your finances wisely
While this article only covers a few options that may be available, check with your banker and try to work something out, it may keep you from losing your home in the process. Keep in mind that a property repossession will cost you money, even if you just walk away. The impact on your credit is substantial and will hinder your borrowing power for years to come.
Perhaps you should read 8 Common Mistakes Made By Property Investors to avoid repossession!