Fear over mortgage foreclosure can be overwhelming for a homeowner. Several government agencies have provided foreclosure help for homeowners at this difficult time. Unfortunately, the mortgage crisis has also resulted in many scams bilking worried homeowners out of even more money. Here’s what to know.
How to Avoid Foreclosure
The Federal Trade Commission recommends a homeowner contact his or her lender as soon as mortgage payments start to become difficult. “You may be able to negotiate a new repayment schedule,” they advise. “Remember that lenders generally don’t want to foreclose; it costs them money.”
Other options to avoid foreclosure are reinstatement and forbearance. Overwhelmed homeowners who want professional advice can use the services of housing counseling agencies at little or no cost. These agencies can walk homeowners through various options to try and save their mortgages.
Legitimate Foreclosure Assistance Services
The U.S. Department of Housing and Urban Development has a list of approved housing counseling agencies that provide foreclosure help. Many of these agencies offer no-cost or low-cost services. They are able to advise homeowners on:
- Foreclosures
- Defaults
- Credit Issues
- Reverse Mortgages
- Renting
- Buying a Home
The Federal Reserve Board strongly recommends homeowners only use the services of HUD sponsored agencies when obtaining foreclosure help. “If you are approached by foreclosure counselors--by mail, phone, or in person--make sure the counseling agency is HUD-approved before you do business with them,” the Board adds.
The Homeownership Preservation Foundation: Advice for Homeowners
The Homeownership Preservation Foundation has credit counselors who provide free, bilingual, foreclosure assistance to help homeowners avoid foreclosure. Their services are available 24 hours a day, seven days a week, nation-wide at 1-888-995-HOPE. Each homeowner with mortgage or foreclosure problems who phones will receive a personalized, specific action plan for his or her situation. The HPF is part of HOPE NOW, an alliance of mortgage market participants and mortgage providers who provide foreclosure help.
How to Avoid Foreclosure Scams
Foreclosure assistance scams may give poor advice, such as filing for an unnecessary bankruptcy, may bilk homeowners out of money (including mortgage payments) or may trick homeowners into signing over their homes. If a foreclosure assistance firm does any of the following things, watch out:
- Guarantees to stop foreclosure
- Requires a fee before any service
- Accepts payments only by wire transfer or cashier’s check
- Offers to fill out paperwork on the homeowner’s behalf
- Insists homeowner sign paperwork before homeowner reads and understands what he or she is signing
- Advises homeowner not to contact mortgage provider, lawyer or any housing or credit counselor
If a foreclosure assistance firm advises a homeowner to take any of the following actions, watch out:
- Lease home and buy it back over time
- Make mortgage payments to foreclosure rescue firm instead of mortgage provider
- Transfer property deed or title to foreclosure rescue firm
- Sell house for cash to foreclosure rescue firm at a fixed price not set by housing market at time of sale
Immediately find a legitimate agency specializing in foreclosure help instead. If a homeowner has already lost money or a home to a fraudulent foreclosure assistance firm, the homeowner should contact the local Better Business Bureau, the Attorney General of the state and the Federal Trade Commission.
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