You have to know where the file is at with the bank.Is it in the foreclosure department,short sale department,customer service,collections,or loss mitigation.
If the loan is owned by a small bank they tend to do workouts differently than the large ones.Options will depend on if it is Fannie Mae or Freddie Mac backed or it's a conventional loan.
The process of lease optioning back to him is not allowed anymore and these are strategies investors use to use along with assignments and other things.
The banks after short sales have grown in the last few years have systematized everything instead of flying by the seat of their pants on each file which is how we did them 3 to 5 years ago.
It used to be a person in the loss mit department that would handle all the short sale files as the others didn't really know how to do them.As files grew the banks started up whole departments and hired file originators who were laid off from the loan origination side and moved to the loan default side.
The banks have riders on all these types of strategies now where you would be committing fraud if you employed them.Once they enact a rule with addendums you have to find a new way to do deals and change strategies.
If this person has recovered then their best best is to go after a loan modification especially if they want to hold onto the property.
I am seeing permanent loan mods where the lender will put back payments into the loan.
Example
Loan is 140,000
With back payments,penalties,interest,attorneys fees etc. now 150,000 is owed.
Interest rate was 5% but now has adjusted to 8%
They will adjust rate down to 2% for first 3 years,then 3% for 3 years, and so on and when they hit 5% keep that rate for the remainder of the new structures loan.
The borrower might have to bring a few K to pay reinstatement fees and as not all back escrows and payments can be put into the new loan amount.
The lender would rather do this than foreclose and take a big loss.The 3 month trial plans are easy to qualify for but the permanent restructures I mentioned are harder to get approved.
If they deny the borrower for the first loan mod then they can ask for another.Many servicers can offer 2 to 3 different types of loan mod plans depending on the situation.
Why would a servicer do this?? They make money servicing the loan AND the insurance company if not all options are documented and performed will deny a payout claim.
The lender on the loan takes a hit then and sues the servicer for not following the servicing agreement.
Hope this helps.This is basic but I don't want to write a book about the details.
