Three Failures That Lead To Foreclosure

In an effort to better understand clients’ behavior in foreclosure, I asked my staff to draw a sample of our clients’ files and study common patterns. The staff drew a sample of 142 files representing the major metropolitan areas served by my firm. Hardship letters, intake interview and supporting documents were included in addition to financial documents to verify patterns involved.

After conducting the study, my staff found three distinctive patterns that can be grouped under failures. They found that majority of the clients fail to prepare, fail to understand and fail to answer. Each failure is associated with different variables which range from time to paper work.

The first failure, fail to prepare, summarizes the disorganization of clients regarding their responsibilities. When clients fail to properly organize their due payments and paper work, clients are in fact digging themselves in debt ditches. Keeping responsibilities organized helps borrowers avoid becoming distressed. Simple mnemonic aids can help and ought to be used to help form a list of priorities.

The second failure, fail to understand, is grouping of miscommunication between clients and lenders. On average, borrowers receive at least one form of communication from their lenders per month. Ironically, most clients observe only the bolded items. Clients even fail to take note of the additional information provided in subsequent communicate from their lenders. This additional communications usually come in the mail, or email if borrowers requested.

Failure to answer is the third and final common pattern noted by the staffs. Clients fail to answer the demands of their lenders. This includes failure to make payments, failure to sign documents and failure to provide the right answers when asked. Every time borrowers contact their lenders, borrowers will be asked a number of questions and given a number of instructions to help them. By studying the supporting documents, my office staffs found that clients’ replies answered different questions than those asked by their lenders. This pattern is very destructive, especially when borrowers facing foreclosure are filing out required paperwork.

After looking at the staffs’ study, I asked them to suggest some methods to alter failures into success. They came up with a four step model to resolve the problem. First, borrowers must organize their paper work according to scaled needs to wants. This means that needs supersede wants; for example, mortgage bill must be considered prior to other minor payments. Second, paperwork must be collected with associated paperwork. My staffs noticed that a good number of clients had their paperwork mixed up. Thus, mortgage paperwork was included with credit card ones. Third, clients ought to have a written summary of every bill. Simple highlighting of important information will do, but clients must read every piece of paperwork received. Fourth, when answering lenders questions, clients need to answer in steps. This translates into clients answering in a systematic pattern which can limit borrowers’ liability.

By applying this four step model, most borrowers can avoid foreclosure. This model is meant to deal with borrowers’ internal portion of the foreclosure process. There are many other portions to the foreclosure process including lenders’ policy and social causes (such as rise of unemployment). Borrowers seeking foreclosure relief ought to apply this model in dealing with their lenders. I also like to add that legal counseling can and will better distressed borrowers’ chances of retaining their property when facing foreclosure. Finally, foreclosure is only a product a group of failures; by fixing failures, distressed borrowers can avoid foreclosure.