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Advice on How to Counsel Homeowners in Financial Distress

Advice on How to Counsel Homeowners in Distress
by Tod Snodgrass (short term funding specialist)
 
An important thing to keep in mind is that houses don’t get into distress, homeowners do. A home in pre-foreclosure is usually a symptom of a potentially much larger cause. People typically do not get into financial trouble overnight. It is often a process that becomes worse over time. Here are some tips on how to help them out.
 
  1. Build a good relationship with the homeowner. Be empathetic. Ask them questions, such as: What happened to cause you to get into your current pre-foreclosure situation? What other financial problems are you experiencing at this time? What are your plans on a go-forward basis
  2.  Maintain regular contact with the distressed homeowner. Try to have a specific agenda or topic you want to cover in each contact (background, finances, where they might want to move to, when they need to leave, how much money they need, etc.). Cumulative engagements help build relationships.
  3. Be ready for a new crisis to pop up in their situation. If they aren’t paying the first mortgage, they are probably struggling to keep up with their taxes and insurance as well. The inherent fragile nature of distressed homeowners’ finances usually causes them to experience additional money (and emotional) challenges during the time you are trying to work with them. With your help, this should hopefully enable them to resolve their financial situation and any other problems they may be experiencing.
  4.  Helpful concepts to keep in mind as you work through the homeowner’s financial distress  scenario:
    • Point out that home ownership is not for everyone.
      It may be fine when both husband and wife are healthy and working. But when a death, divorce,  illness, layoff or injury occurs, then our historical views of the benefits and value of    homeownership can prove to be false and can cause damage.
    • Leaving a foreclosed house behind can be the beginning of a fresh start.
      Often we make borrowing decisions based on best-case scenario assumptions. We really want to believe that things will continue to go well. But when things start to go bad, sometimes it is better to cut your losses and start over somewhere else, with a clean slate.
    •  Help the homeowner understand that bad things sometimes happen to good people.
  5. Be proactive. It is important to openly engage distressed homeowners who are usually overwhelmed by the events befalling them and thus are paralyzed in terms of what to do to get them out of the bad situation they are in. Find creative ways to communicate and engage the homeowner in order to resolve their financial crisis.
  6. Comprehensive is better. It is very helpful to view the homeowner’s finances through a holistic lens and then fashion creative solutions. For example, in a pre-foreclosure crisis, their housing debt usually surfaces first because it is normally the single largest bill people face each month. Failure to pay the mortgage can result in dire consequences. However, most homeowners are facing multiple layers of risks and problems. Bottom line: Get the homeowner to open up about ALL their overdue bills, etc. A full knowledge of all of their issues is key to getting to the bottom of what ails them financially, followed by available financial cures we can potentially offer.
  7.  Recognize there are no easy or quick solutions. Like staying healthy or losing weight, it is not information but rather the discipline and willingness to apply the information that ultimately yields the desired results. For your part, it requires support, time and the proper motivation to take on and successfully resolve the complicated financial issues that a homeowner in a pre-foreclosure situation is facing. Fortunately, we can hopefully offer the homeowner a way out of their pre-foreclosure or other money problems. Thus your job, in the final analysis, is to diagnose their financial problems and offer a cure to what ails them that results in a win-win situation for all concerned.
or call: 310-408-7015