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STEPS 4-5: Tell Your Story

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STEP 4: Tell Your Story

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Settlement conference stages 4-5

STEP 4:TELL YOUR STORY

The reasons you ended up in foreclosure are probably long and complicated, and each borrower’s situation is slightly different. The Settlement Conference is a chance for you to share your story with the Court and the Bank. By preparing to tell your story before the Settlement Conference, it is more likely you will tell your story in a way that everyone can understand. They need to know why you are in foreclosure, and what you have done to resolve your situation. The clearer you are to the Court and the Bank, the easier it will be to resolve the foreclosure. You should write out answers to the following questions

  1. What are the reasons for falling behind on your mortgage?
  2. What have you done to try to keep your home?
  3. Were there any terms of your loan that were different than what you were promised?
    You should also be able to talk about basic information about your loan, such as the following:
  1. The current monthly payments are $_____. The current interest rate is: ______% and my interest rate (circle one) changes/does not change. I last made a payment on my loan in _______________ (list month and year).
  2. Have you attempted to work with your Bank to find a solution already? If so, make a list below of all the people you have contacted, and the times you have sent in documents before the Settlement Conference.

STEP 5:ATTEND THE SETTLEMENT CONFERENCE AND WORK TOWARDS A LOAN MODIFICATION

NOTE TAKING PAGES: Bring this with you to all the Settlement Conferences you go to, and take notes during the conference.

Before you leave, try to summarize your understanding of what happened at the Settlement Conference, and what will happen next. Ask the Court to confi rm you are correct.

WORKING TOWARDS A LOAN MODIFICATION

If your loan can be modified there are several ways your Bank will likely go about it. The Bank may do any of the following:

  1. Lower your interest rate
  2. Convert an Adjustable Rate Mortgage to a Fixed Rate Mortgage
  3. Extend the term of the loan
  4. Forgive a portion of your principal balance

Regardless of which way the Bank considers, they typically will modify a loan by doing a “capitalization”. Capitalization occurs when items owed on a loan (e.g. past due interest, taxes, late charges, legal costs, etc.) are added to the unpaid principal balance of the loan and are treated as part of a new principal balance. In adding them to the unpaid principal balance, the Bank will cause the overall amount that is owed to the Bank on that loan to increase. The upside to a capitalization is that because all current outstanding charges have been rolled into the unpaid principal balance, the Borrower is now seen as current on their mortgage payments. By doing a capitalization, the homeowner does not have to make up all missed payments at one time.

Any agreement you reach should clearly state how much you owe, what your interest rate will be going forward, what each charge is for, what your monthly payment will be, how long you will be making that payment, and what will happen if either side violates the agreement. Ask for a written explanation of any and all charges that are part of this loan modifi cation, and ask that attorney’s fees and late fees be reduced or waived.

Date of Settlement conference
× Date of Settlement Conference

Additional Resources
Settlement Conference Forms Guide Glossary