How Did My Arrears Get To Be So High?
The majority of homeowners or borrowers always think they owe the bank less arrears than they actually do. In addition to any interest and principal you may owe there are taxes and insurance to be included for most homeowners. Most homeowners escrow for taxes and insurance. This is where the banks collect taxes and insurance payments on a monthly basis. When you stop making your mortgage payments the banks will almost always come out of pocket to pay these expenses. The reason for this is that the bank could lose its priority with its mortgage lien if there was a tax judgment and if the insurance was no longer being paid the bank would be under a tremendous amount of financial risk with a major investment.
In some instances a bank will ask for a contribution towards the arrears. This may happen if your
escrow account was very low and the bank had to put a lot of money out for taxes or insurance. Other times it may just be an investor guideline that the bank or servicer must follow.
Under HAMP modifications there is usually a paragraph saying a homeowner owes a certain amount to the escrow account and that it is not included in the modification payment. They are told it can be paid in a lump sum or over a certain period of time. However, whenever we have spoken to a bank we are always told that this amount has been included in the modification payment.
The Loan Modification To Go Toolkit will guide you step by step through the process of obtaining a successful loan modification. Learn more about our guide and take the first step to saving your home.
| April 28th, 2013 | Posted in Loan Modification |