Mortgage Forum

Mike

agreeing to reduce a mortgage balance and payment without requiring the homeowner to refinance? I have been hearing that there are companies out there that are helping homeowners by negotiating the loan balance and payment reduction with the lender on their behalf, is this possible?? How does this work?

rachael24

If anyone can answer these questions, it would be greatly appreciated...I am curious myself

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Recent college graduate with a credit consolidation concentration.

gtull1

Yes, it is possible. hard to do with a mortgage company though. Both parties to the agreement can modify the agreement at any time. A lot of credit card lenders are willing to do this just to collect anything at all. When presented with the choice of settling the debt for pennies on the dollar, or getting nothing at all when the obligee becomes insolvent, they choose the pennies.

With a mortgage company, it's usually a different situation. Unlike credit card companies, the mortgagor has something solid to hold on to (the house/ property). If you file for bankruptcy, the lender will have first rights to the property, and they can usually recover the majority of the loan balance through the resulting sale.

However, no mortgage company wants to receive the house through a court procedure. It costs them money for lawyers, real estate agents, repairs to the property, etc. In skilled hands, it is possible to negotiate with the lender for a settlement, but it's much trickier with a mortgage company.

P.S. Beware of "non-profit" companies offering to settle your debts for pennies on the dollar! You will get screwed in the process!!