Foreclosure -- When the Bank Doesnít Want Your House
When faced with the threat of foreclosure it is very easy to assume that your bank or lender simply wants to foreclose on your home and it isnít worth the fight to keep the home. This defeatist attitude will not help you keep your home, and the reality is that the bank does not want you to think like this! The bank really doesnít want your home, and a bank never wants to foreclose. Ever. Having this information can help people that are in the process of being foreclosed on develop the right attitude and keep their homes instead of losing the homes that they have worked so hard for.
The fact of the matter is that foreclosures are a pain in the side of banking or financial institutions. They do not want to mess with the court proceedings, with the auctions, and with the local laws in your state or county. They simply want the money that they lent you when you purchased the home, paid in full with interest. If they foreclose on the home they arenít getting that. Sure, they are getting the home back, but that is not what they set out to do. Foreclosure costs the bank money and they arenít in the business of spending money, they are in the business of making money. So, if you work with your bank you can stop foreclosure a good deal of the time because they are just as adverse to the process as homeowners are. The bank will often work to keep the home with the owner harder than the owner is willing to work to keep their home.
While many of us feel contempt toward the bank while going through a foreclosure or when we are threatened with foreclosure, this neednít be the attitude. Your bank wants to work with you to arrange for repayment, so start taking their calls and responding to their mailings. In the long run both you and the bank will be better off. The bank is so willing to work with most people that fall behind on their mortgages that they will often allow them to repay their debts before making current payments, theyíll help owners refinance so that they can more easily afford their monthly mortgage payments, and theyíll even waive late fees that can add up and make the situation even more overwhelming for those trying to get on top of their debts.
Most of us donít think about it, but foreclosure isnít good for the bank, either. It takes time to foreclose on a house, and during this time the bank will not be making any money off the money that was borrowed from them by the buyer of the home. The home will be sitting, sometimes empty and uncared for and the bank will often have to repair the home to make it suitable for sale or to keep up with deed restrictions. All of this costs the bank money that they did not intend to spend on your home.
Even when the foreclosure process comes to an end, the losing of money is not over for the bank. Many foreclosed homes are sold at auction, and while most of us assume that the bank makes back all of their money at auction, they often do not. The first buyer is usually required to pay the difference, but this is a debt that will commonly go unpaid for years because the foreclosed on owner simply cannot afford to pay back the money. So, the bank is still short the money that should have been paid on the principal, not to mention the interest that would have been paid over 13 or 30 years for the original mortgage.
Many people that are about to be foreclosed on will file for chapter seven bankruptcy. While this provides the owner with the respite that is needed from over due bills and collection agencies, this is not what the bank wants you to do. In a chapter seven bankruptcy all of the debt is usually taken away, meaning that the owner will be allowed to keep the home, but the unpaid debts will never be paid. The bank is expected to just deal with the loss and go on. This is another reason that a bank or lender will usually try really hard to work with the owing party, because they would rather wait for the money than not get it at all.
As you can see, the bank simply wants their money. They donít like to foreclose on homes because it means that they wonít be getting their money right now, and they certainly wonít be getting the interest on the money that was borrowed from them, that they were planning on. Working with individuals that owe money gives the bank a better chance of recovering the funds that they are owed than taking a house.
It is important for people to realize that the bank simply does not want your home. They want to work with you so that you can keep you home and they can get their money that is due to them, with interest. Because the bank is watching out for themselves and they want their money, this gives the individual in debt quite a bit of wiggle room to work out payment arrangements and keep the foreclosure process from going any further. With this knowledge you can change your attitude toward the bank or lender and pick up the phone and respond to mailings so that you can get the situation straightened out. If you make a reasonable attempt to pay off the debt you will realize that the owner actually has the upper hand because the bank is willing to avoid foreclosure just as much or more than the owner! Foreclosure simply costs everyone too much time and money, and this does not just apply to the owner, it applies to the bank as well!