How to Talk to Your Loan Servicer

If you are under water on your house, and you may have problems like keeping up with your payments, you may need to contact the organization or company that is servicing the loan. It can be a bit scary dealing with the process, but if you do a little preparation ahead of time, and make an effort to keep track of what's going on, talking to the loan servicer should not be a problem.

Before you have any conversation with your loan servicer, the one thing you must do is prepare for it. Take the time to record your income and expenses, and calculate the equity in your home. To calculate the equity, estimate the market value and subtract the balance of your first and any second mortgage or home equity loan. You shouldn't subtract the maximum amount of any home equity line of credit, only subtract the amount of that line of credit that you have actually used.

Then, before you even talk to the loan servicing agent, write down ahead of time the answers to the following questions if that situation applies to you:

- Missed Payments: What happened to make you miss your mortgage payment or payments? Do you have any documents to back up your explanation for falling behind? How have you tried to resolve the problem?

- Can't Make Future Payments: Is your problem temporary, long-term, or permanent? What changes in your situation do you see in the short term, and in the long term? What other financial issues may be stopping you from getting back on track with your mortgage?

- Need to Make Serious Changes: What would you like to see happen? Do you want to keep the home? What type of payment arrangement would be feasible for you?

Foreclosure Process
If the situation has gotten to the point where foreclosure is a possibility, or if the foreclosure process has already started, you should do the following:

- Keep notes of all your communications with the servicer, including date and time of contact, the nature of the contact (face-to-face, by phone, email, fax or postal mail), the name of the representative, and the outcome.

- Follow up any oral requests you make with a letter to the servicer. Send your letter by certified mail, “return receipt requested,” so you can document what the servicer received. Keep copies of your letter and any enclosures.

- Meet all deadlines the servicer gives you.

- If he foreclosure process has already started, stay in your home, Tou may not qualify for certain types of assistance if you move out. Renting your home will change it from a primary residence to an investment property. Most likely, it will disqualify you for any additional “workout” assistance from the servicer. If you choose this route, be sure the rental income is enough to help you get and keep your loan current.

The bottom line is to be prepared, take notes, and make sure that you document any formal requests or agreement that you have with the loan servicing company or representative. This is important to help you protect your rights during foreclosure or any other legal process you may face, and it will make it easy for anyone you may hire to help you through this process.