Q&A: Foreclosure Workout "Trickeration"

Q: I was behind on my mortgage and did all the right things, contacted my lender, gave them all the information they requested and cooperated with arrangements for a workout. When they finally set an amount for a repayment plan not only was the monthly payment 1½ times my regular payment but they also required an initial payment of $3,000 (I am behind by 8K). Why would they demand I agree to an arrangement that obviously my current income cannot support? This makes no sense to me.

A: The sad answer is that it is what my urban friend in Indianapolis calls “trickeration”. Trickeration is a nasty little concept where I appear, on the surface to, to being looking out for your best interests, working with you with you in a spirit of mutual respect and cooperation, while in reality I am “tricking’ you into some kind of agreement or arrangement which not only totally benefits me but I get you to agree so you can’t later say I didn’t work with you. Nor can you say it was my fault because you agreed.

Lenders/Servicers will be angry at this answer, it is nonetheless the truth. Many of the workouts which they propose and/or implement either:

1. were not based on the financial reality of the borrower at the time they were implemented, or
2. the lender/servicer demonstrated a lack of good faith and was not genuinely committed to a sustainable workout, or
3. frequently there is a deliberate attempt to set the borrower up to fail in the workout SO THE LENDER CAN THEN MOVE FORWARD WITH FORECLOSURE. Unsustainable workouts are frequently just another step in the ritual leading up to foreclosure, and/or
4. may simply be a smokescreen so the lender can assure the mortgage insurer (the ultimate risk holder) that, YES, we do have a workout in place on this loan. YES, we did our best to avoid foreclosure. Too bad you, the sucker, can’t keep up with the arrangement which you were forced to agree to.

Workouts which do not have a snowball’s chance are common practice. There is no point of you signing one IF you recognize that it is not feasible. Recommendation: try to speak with a supervisor about the terms being proposed. You will be better prepared to argue for a REALISTIC workout if you have done your homework, know what loss mitigation options are available and then cooperate fully and sincerely to reach a sustainable solution to your delinquency. Best of luck.

© Copyright Home Ownership Matters, LLC, 2009 “Answer Book in a Foreclosure Climate” by Mildred Wilkins.

(Please E-mail Heather at homeownershipmatters@gmail.com with any questions, comments or concerns you might have. We appreciate all feedback and comments, and especially your questions!)