Conversation with the devil

[Account Closed]

Ok he wasn’t the devil, actually a nice guy. But they say there’s a fine line between insanity and genius and this guy personified that. Basically I had lunch today with a mortgage modification expert along with my a partner and a lawyer friend who knew this guy. Almost all of it was above my head. Besides he spoke a mile a minute. Basically he is a consultant to law firms. Sensing our heads spinning our lawyer friend said he’s seen him give seminars to lawyers and most have the same look. Anyway I did come away with a few things that I wanted to run by those more knowledgeable than me. Basically he was saying that sometimes people got behind for one reason or another but now have the money to pay. But banks being banks have guidelines. If mortgages are accelerated (actually the lawyer mentioned that term) they will not stop the foreclosure process unless UPB is paid in full. (These seemed to be on higher end properties). Then, since they are in foreclosure, no bank will touch them. So the loans get sold in pools to the big players way above us. As he has access to the files he knows who has the wherewithal to pay and can cherry pick, so again from what I understood, pay the UPB and originate another loan for the buyer. He said some like Caliber won’t do it as they had long term plans (didn’t understand that) but banks would. (Also bears mentioning that the buyers need to come up with some money and pay points and other fees). I’m not really doing justice to what this guy was saying. I’ve never heard of mortgage acceleration. Is that common? I know banks have their guidelines and don’t budge from them. It seems like a backdoor way to get notes before it even gets sold off to the big players. Any thoughts on this?

[Adam Adams]

It's a clause in most mortgages that once the loan has defaulted, you can accelerate the loan to make the full balance due now instead of over the full term. It can be a payment default, it can be some other clause like failure to pay taxes and insurance, or renting out that house you bought under the premise that you would live in it. 

I have used it before. Mainly with deadbeat borrowers who just won't get it together and I'm tired of messing with them. You'd be surprised at how many borrowers on the low end feel like their IRS refunds are the answer to everything and you see lots of borrowers catching up in Feb and Mar.