Barbarians at the gate!
Picture this: You are presented with a demand letter from your bank or insurance company advising you are in default of your mortgage and the process of your home’s foreclosure has begun. You know this day would come, as you have fallen behind in your payments and once you fail to make consistent payments the fat lady is really about to sing! Stress is a killer. For anyone who is about to lose their home, perhaps the only asset they have left, and is worrying what to do next this situation can cause severe anxiety. This very unfortunate situation can come about for a number of reasons, including job loss, divorce, illness or just plain dismal financial planning.
By now you would have met with your mortgagor to go over the options open to you, as you need to take drastic steps to save your home. The first step you can take is considering to either rent the whole house or taking boarders in. Although this may be a scary prospect, this is no time to be proud! You need money to help pay the debt; every penny counts and the clock is ticking. If you have children, call a family meeting and explain to them what is about to happen and you need help, chances are the house was refinanced in order to pay for their education; perhaps it is time they help you out.
You may consider allowing your adult children to buy your house with the condition of allowing you a room. In this case, at least you have a roof over your head and the home stays in the family. It’s not the ideal situation, but it’s better than being without a home. Some banks will try to work with you, as it’s better having some money coming in than having the house sit there, where it might be vandalized or deteriorate badly, further eroding the asset.
If this fails, your other option is to sell the home yourself; at least you may end up with enough money to start over again. On the other hand, if the bank sells, they are basically only concerned in getting what’s owing to them. You have no say. They would say they sold it for the best offer they received. Persons vying for your home through the bank know it’s a fire sale, and they can low ball the bank, getting themselves a real bargain.
So if you don’t want the bank to sell your home, it’s advisable to start the process yourself and get the best price before your home is sold from beneath you. Banks and mortgage companies can do more to ease this situation; some of them charge almost twice what the competitor does, at four percent, while charging you eight percent. It may be difficult to move to another bank if your track record is not that great and you have been slow in making payments. The competing banks cherry pick the best loans and offer them a rate under five percent. If you are lucky, you will be able to get a private lender to give you a mortgage at a good rate.
Before the barbarians appear at your door, please heed my advice and be proactive in implementing your next steps in order to dig yourself out of this financial crisis you find yourself in.
Best of luck.
- William Wong is a two-term president of the Bahamas Chamber of Commerce and Employers’ Confederation, and two-term president of the Bahamas Real Estate Association. William Wong is a partner at Darville-Wong Realty. E-mail: [email protected].