One of the most important parts of your service will be to adequately assess your client’s situation. You must determine what the client’s current situation is before you can offer a solution to their problem.

Your assessment must be correct in order to make appropriate recommendations. Mortgage lenders will not have any confidence in your recommendations and will be unwilling to negotiate with you if your assessment is not correct.

The first step in your assessment is to determine how delinquent the client is with their mortgage payments. You can use the lender’s correspondence as a starting point. The lender will have sent the client correspondence demanding payment, which should include the monetary amount of the delinquency. You will want to double check this figure, since it is possible the lender or client made an error. It is also possible that another payment may have come due since the last correspondence with the lender.

You can determine the amount in arrears by using the client’s payment book. Determine the client’s monthly mortgage payment plus late charges, because the client will be assessed these fees (normally 4% to 5% of the mortgage amount) as a result of their delinquency. Determine how many months the client is behind. Multiply the payment (with late charges) by the months the client is behind, which should equal the amount in arrears, plus or minus late fees and miscellaneous fees or costs.

Lender Inspections

Some of the costs, other than accrued late charges, could be inspection fees. Inspections are required by banks, investors, or government regulation. The purpose is to ensure the property is occupied, in good condition, and/or to provide notice to mortgagor of the lender’s attempts to contact them. The mortgagor thinks that the lender has come to their door. Actually the lender usually hires another party (independent contractor) to provide the specialized service.

Normally the inspection is required to be performed once the loan is 60 days behind. Drive by inspections are done without the mortgagor ever knowing, unless the inspection is a LSR (lender service report) with contact. The inspector has to make an attempt to contact the mortgagor and leave a note to contact their lender immediately. If this is your client, they will call you and be stressed that someone came to their door when you are apparently working on their case. Let them know the inspection is out of your control and is routine and that they should not contact the lender because you are working on the case. You may want to inform your client ahead of time that this may occur while you are working on the case. This way, they are prepared for any unforeseen appearance by an inspector.

Payment + Late Charge x Number of Months Delinquent = $ Delinquency

For instance, let us assume the client’s mortgage payment is $700 a month and they are six months behind. Their payment book lists a late payment as $735, if a payment is made after the 15th of the month. The $735 late payment x 6 months delinquency = $4,410 in arrears. If the lenders demand letters do not list the amount of the default, you will have to trust the client’s figures. The mortgage company will let you know what the actual amount of the default is, if the client is not correct.