Negotiate a Settlement With Your Lender
Lenders may be willing to negotiate a settlement of your debt. This often means taking a percentage of what is owed in exchange for the retirement of the debt.
For some, it’s a great option to pull money from retirement, business, investors, or family and buy out their mortgage for a fraction of what is owed. If necessary, the property can then be mortgaged again with a new lender or sold for a profit.
For a lender, there’s no emotion involved in the decision to settle. It simply has to make sense after doing a cost/benefit analysis. A lender is likely to do this in a declining market or when they feel like they may not be able to recoup their investment. They also factor in what it will cost them if they have to pursue or fight other courses of action, such as foreclosure, bankruptcy, or law suits. In fact, many times, offers for settlement are best for the borrower when combined with these others actions, or the threat of these actions.
Obviously, this option is good for someone who has access to the money needed to settle and not good for someone who does not have access to the money to settle. It’s important to note that settlement usually does not involve payment plans. Banks and lenders are in the business of amortizing debt and it makes no sense for them to accept payments as part of a settlement (in their estimation, if you can afford to make payments for a short time, you should be able to make payment for a long time, which is equivalent to a mortgage). Therefore, it’s typically a lump sum or nothing.
With this option, credit may be affected, but if there’s enough leverage, it may also become part of the settlement agreement to remove any damaging credit issues associated with your relationship with the lender.
Again, if this is a good option for you, then it is often best when combined with other actions designed to force the lender’s hand. Involving an attorney who has a lot of experience negotiating with lenders is advisable. We are very experienced at negotiating with lenders. We have achieved many settlements and would like to help you do the same. Call us to review your situation. We will give you honest, candid advise as to what your options may be.
To set up a free consultation to see if this is an option for you, click here.