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Posted On: 04/22/2009

Q:My wife and I currently work in a company that is hemorrhaging money at the seams and may soon close down. We bought a new home last year and now I'm faced with the prospect of not finding a job or one that pays enough to make my mortgage payment, food, cars. We have a 15-month-old baby girl and I swear I am coming unglued at the moment with thoughts of suicide!

A: You have a daughter and a wife. You're a human being and you have value, value that goes far beyond your credit rating or income. You plainly have an education and holding a job for 15 years is a credit.

You should immediately speak with a counselor, cleric, friend, relative or a co-worker. There are free help lines in many communities. Do this now, this minute.

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It's likely that more than 3 million foreclosure filings will go out this year, but people will continue. There are any number of cases where people ran into tough times and came back. Today the entire nation is facing hard times, but we will continue - and so will you.

Q: I'm a real-estate broker. Recently I submitted a buyer's counter-offer on a short sale. In other words, a property was offered for sale and my client came back with a lower price.

After waiting three weeks I went to the seller's broker. He called the lender and was told they're not considering offers below 90 percent of their appraisal. Why did it take three weeks to give us this info?

A: You have a seller who wants to sell but does not want to fully repay an existing mortgage. For instance, let's say that the owner owes $300,000 but is willing to sell the property for $275,000.

You and your client come in and say, aha, we'll offer $250,000. That's your counter-offer.

Now let's think about the loan owner, the party that actually has title to the mortgage. The lender provided a $300,000 mortgage for the property. They expect their $300,000 back. You're offering less. A bunch less. They have no reason to be thrilled by the willingness of the seller to cause them a loss or your willingness to have them lose even more.

But, the owner of the mortgage today might not be the loan's owner tomorrow. Or in an hour. Most probably the loan was originated by a local lender or loan broker and then sold to someone on Wall Street. Once sold, the loan was likely packaged with several thousand other loans to create a residential mortgage-backed security or maybe a collateralized debt obligations.

The party you see as the "lender" is most probably a "servicer" who acts on behalf of the loan's owners. The ability of a servicer to modify a loan, if any, is determined by something called a "pooling and servicing agreement," or PSA.

Since ownership of the security can be divided among many parties it's possible that the loan, unlike, say, a Chevy truck parked down the street, does not actually have a single owner. Instead, the interests of the owners are represented by a trustee who provides instructions to the servicer who spoke with the seller's broker.

So, is it any wonder that your offer sat for three weeks? Or that today's response may change by Tuesday? Or tonight?

Q: Should I contact my lender if I lose my job?

A: Not automatically. What counts with the lender is making full and timely payments each and every month.

You may have lost your job but if you can still make the mortgage payments you're fine with the lender. Whether those payments come from your salary, savings, income from a spouse or a loan from family and friends is not a concern for the lender.

Alternatively, if you've lost your job and can't make your payments then the situation is different. You have to look at household income, savings and new income sources to see what can be done. If missing up-coming payments is unavoidable then call the lender and ask what programs are available to help. Do this now, before missing a payment, something that will reduce your credit standing. For assistance, speak with an attorney, your state attorney general's office (they may have direct contacts with the lender) or a community housing organization.

Peter G. Miller is the author of The Common-Sense Mortgage and a veteran real estate columnist. Have a question? Please write to peter@ctwfeatures.com.

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