The home-equity line of credit fueled thousands of extreme kitchen makeovers during the real estate boom. But the housing bust and the credit crisis stopped the HELOC party with a vengeance: Tens of thousands of homeowners had their lines cut or frozen, and most lenders stopped issuing new ones altogether.
When Marcia Blackwell and her husband Tom founded Blackwell's Organic Gelato in 2005, they did what many small business owners do: They funded their efforts with a home equity line of credit. The interest rate was then about half that of a traditional business loan, even one backed by the Small Business Administration, and the money was available fast.
A new video posted on YouTube on Wednesday shows borrowers how taking the time to gather a few financial documents before calling a mortgage servicer can speed the process of determining eligibility and applying for loan modification under the Making Home Affordable program or Freddie Mac’s other workout initiatives.
“America’s servicers are handling an extraordinary volume of calls from distressed borrowers seeking an Home Affordable Modification under the President’s program,” said Ingrid Beckles, senior vice president of default asset management at Freddie Mac. “By taking a few moments to gather these documents borrowers can help their servicer understand their financial situation and reduce the need for repeat calls.”
The 2-minute video, “Stop Foreclosure: Documents Your Lender Needs to Help You,” walks late-paying borrowers through which documents they should have on hand when they call a servicer to discuss loan modification. According to the video the key documents borrowers should have when calling their servicer include:
Most recent monthly mortgage statement;
Pay stubs or other documents showing their household’s monthly pre-tax income;
Most recent tax return;
Second loan or home equity line of credit statements;
Account balances and minimum monthly payments on credit cards, car loans, student loans or other debt;
A short, concise description of the financial hardship that is causing or leading to a mortgage delinquency.
“Stop Foreclosure: Documents Your Lender Needs to Help You” can also been viewed on Freddie Mac’s YouTube channel, here it is:
