When William Weinbroer of Parma Heights, Ohio, broke his ankle while on vacation, he ended up missing work for four months. The locomotive engineer and his wife, Denise, thought they could make ends meet with his disability income.
They were wrong.
The disability payments didn’t cover all their bills, and soon they were a month behind on their mortgage.
Even knowing they couldn’t pay their mortgage, the couple didn’t call their lender. It wasn’t until a second month’s payment was about to be late that they contacted the company servicing the loan.
“I was just too embarrassed and ashamed,” said Denise Weinbroer.
The Weinbroers are typical of many borrowers who fall behind on their mortgage payments. They fail to call their lender or worse, ignore their lender’s efforts to reach them.
In fact, 75 percent of delinquent borrowers who were contacted by their loan servicers didn’t follow up to discuss options, according to a newly released survey by Freddie Mac and Roper Public Affairs and Media. Roper is a market research firm and Freddie Mac buys mortgages from lenders and packages them as securities to sell to investors.
The survey is one of the first comprehensive looks by Freddie Mac at why late-paying borrowers would risk losing their homes rather than contacting their mortgage servicers. Here’s what Freddie Mac and Roper found:
* Twenty-eight percent of survey respondents said there was no reason to talk to their servicers, or that their servicers could not help them.
* Seven percent said they didn’t call because they didn’t have enough money to make the payment.
* Other reasons for not calling included embarrassment (6 percent), fear (5 percent), or not knowing whom to call (5 percent).
An overwhelming majority of survey respondents didn’t know that there are actually a variety of options that could help them avoid losing their homes.
About 30 percent to 40 percent of people never returned calls from their mortgager holders until it got to the point of a foreclosure, said Ingrid Beckles, Freddie Mac’s vice president of default asset management.
“Just because you don’t think there is hope doesn’t mean there isn’t,” she said.
Borrowers do have options, Beckles said.
For example, you might be a candidate for forbearance, in which a lender will temporarily allow you to pay less than the full amount of your mortgage payment. You may even pay nothing at all during the forbearance period. Many of the victims of Hurricane Katrina were granted forbearances.
But this is an option not just for homeowners who have been victims of a disaster.
Mortgage companies may consider forbearance if you can show that you’ll be getting funds from a bonus, a tax refund, or some other source that will let you bring the mortgage current at a specific time in the future. They may allow a forbearance if a drop in your income is only temporary, such as in the Weinbroers’ case.
You could negotiate a repayment plan. Typically a lender will give you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period, you have paid back the delinquent amount.
A 2004 Freddie Mac study found that repayment plans could lower the probability of home loss by 80 percent among all borrowers and by 68 percent among low-to-moderate income borrowers.
For more detailed information about what options you may have if you do fall behind on your mortgage go to Freddie Mac’s Web site, www.freddiemac.com. In the site’s search engine, type “avoiding foreclosure.”
Denise Weinbroer visited the Web site after she found out that Freddie Mac owns her loan. That’s also when she discovered that she and her husband had options for avoiding foreclosure.
Working with Freddie Mac and their loan servicer, Fifth Third Bank, the Weinbroers were able to get a forbearance and a repayment plan.
“They worked very hard to work around our income at this time,”
Denise Weinbroer said. “They said, ‘What can you comfortably pay?’ They didn’t say, ‘This is what we need.’ They were absolutely fantastic. I kept apologizing, but the lady I talked to didn’t make me feel bad. She didn’t belittle me.”
In another option, your lender might allow a loan modification in which the original terms of your mortgage are changed to help you get out of the arrears. For instance, the term of your loan could be extended so that you have to pay less each month.
Maybe your lender won’t be so accommodating. Perhaps you are so far behind that you can’t catch up. But you know what? You will never know if you don’t pick up the telephone and call somebody.
“Don’t hesitate to call because the longer you hesitate the worse the situation will get,” Weinbroer cautions. “Don’t let fear and embarrassment take over and stop you. It almost stopped me. Any effort you put forward to resolve a delinquency is more than worth it.”
Here’s what else the Weinbroers realized: “The woman who helped me at Freddie Mac said they didn’t want my house. They said, ‘We want you in it.’”
Washington Post Writers Group
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