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Entry bubble Avoid Mortgage Foreclosure: Doing Nothing is the Worst

By: Nicole | June 06, 2008 | Category: General

After spending the last few days at a consumer protection conference, I’ve returned feeling energized and determined. I am always humbled by the dedication of state and local consumer professionals. They work tirelessly against the scams and frauds that threaten consumers everyday.

HousesI was saddened though by one particular panel discussion, the one about home mortgage foreclosures. The rate of mortgage foreclosure across the country is increasing at an alarming speed, and almost 70% of homeowners facing foreclosure don’t seek assistance. That’s something we should all work to change.

If you are unable to make a mortgage payment, you should act right away. The U.S. Department of Housing and Urban Development (HUD) offers tips for homeowners in trouble, and the Federal Reserve has put together a list of foreclosure prevention resources.

Don’t ignore phone calls and letters from your lender. Be honest about your financial situation, and see if you can figure out a repayment plan that works. Lenders don’t want to take your house, and they have options to help you.

If you don’t have any luck with your lender, contact a HUD-approved housing counselor. Non-profits, like HOPE NOW, can also help you.

Avoid foreclosure prevention companies. Even if they are legit businesses, they will charge you a hefty fee to help. Worse yet, they could be scam artists who will ask you to sign over the deed to your house. You’ll still be in debt, and you’ll lose your home.

Don’t be embarrassed, and don’t believe that your situation is hopeless. Counselors and consumer protection offices have helped many people keep their homes, even in the most difficult situations. If you can’t make that next mortgage payment, please ask for help.

| View Comments [6] | envelope E-mail This Entry | Tags: avoid   difficulty   foreclosure   home   housing   lender   lending   money   mortgage   nicole   payment   prevent   trouble  

Comments (6):

blue comment bubble Posted by mc on June 06, 2008 at 02:19 PM EDT

Although I do agree that people should not ignore the problem with foreclosure, I will tell you from experience that companies are not as helpful as you lead on. My family tried several alternatives, always jumping on any information that we were able to uncover. But in the end, if your mortgage company is not willing to work with you, then it will end in foreclosure. Our mortgage company took nearly 3 months to decide if it would accept a short-sale, only to say that it wasn't interested. All the while we piled up late fees, overlimit fees which then affect every account we owned as we tried to stay above water - it all stockpiled into a mess we couldn't dig out of. We exhausted all of our resources and bankruptcy & foreclosure became our only options. So, again I agree you can't ignore the problem, but there needs to be more done to help people that want to rectify the situation, and unfortunately the resources are not there.

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blue comment bubble Posted by Nicole on June 06, 2008 at 03:19 PM EDT

Hi, mc. Thank you for sharing your story. I am very sorry to hear about the ordeal you endured. I know that mortgage companies are not always willing to help (and short sells are not always popular with them). I tried to list other resources in my post because sometimes lenders will respond to a third party like a consumer protection office. Of course, sometimes even a third party can't resolve the situation successfully. If a homeowner doesn't seek help at all, then there is no hope of a good outcome. There are many state and federal laws pending that will help homeowners faced with foreclosure, so others might have better luck. It is very sad that these new laws will not help folks who have already been hurt by the crisis.

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blue comment bubble Posted by i never had one on June 12, 2008 at 11:35 AM EDT

i'm a brand new for the first time preparing to mortagage a home so i'm all eyes and ears to the downfalls and mishaps that lead to such a crisis.

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blue comment bubble Posted by mikes on July 03, 2008 at 02:10 PM EDT

Lender Police at http://www.lenderpolice.com seems to have taken care of the mortgage lender loan fraud problem for Borrowers, Closing Agents, Mortgage Lenders, and Real Estate Agents.

Always use Lender Police after you apply for a mortgage loan. They’ll tell you if your lender is giving you a good deal or not in one of two ways. You can purchase a good faith estimate review for $99 that will tell you if the interest rate, points, fees, and rebates you’re being charged is appropriate for your situation. The loan document review for $199 verifies that the loan documents that you’re signing are for the same loan that you were quoted and your lender didn’t slip in any extra points, fees, pre-payment penalties, or is receiving a lender rebate for selling you a higher interest rate than you qualify for.

A mortgage loan evaluation from Lender Police is the only way to guarantee you lender isn’t trying to rip you off.

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blue comment bubble Posted by Landofhope&glory on July 16, 2008 at 02:55 PM EDT

Discovered this web page by chance, dismayed by mc comments, my heart goes out to them. I live in England but I think my son wil be joining mc's situation before obtaining a mortgage

The story as he tells me is that when he enquired about this new development property in Florida, they showed him an artists impression, which he liked and asked the price, $307,000 they provided him with a "Good Faith Estimate" detailing all costs (He still has this), he could afford the deposit and was happy with the monthly mortgage amount (the rate was just 1%).

He signed the sale papers and provided proof of earnings, he then asked them to arrange the mortgage, however he was then told that they could not offer the mortgage until the house was built.

The house is now completed and he applied for the morgage, only to find that the rate has risen to 7% which means he will not be able to afford the repayments.

His reasoning is that had he known before signing the sale that the Good Faith Estimate figures would be subject to change or that he could not obtain a mortgage prior to the property being finished he would not have entered into the sale.

They have e-mailed him offering 3 choices:
1) Take out a mortgage at the current rate and close the deal (He would not be able to afford the monthly repayments which would be about 3 times their original estimate)
2) Do not close which would void the contract and they would issue a new contract at the new price of $353,000
3) Going into default and losing his deposit of $61,500

I imagine that these sales people know their jobs, but I think it is unfair to retain all of his deposit under the circumstances but if that's American law then he will have to abide by it.

I welcome any comments

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blue comment bubble Posted by Nicole on July 21, 2008 at 03:52 PM EDT

Dear Landofhope,
Thanks for writing. I believe that your son's story is not that unusual. Good faith estimates can certainly be used in misleading ways. Because laws governing mortgages vary by state, I would suggest that your son contact the closest Florida consumer protection office. Copy and paste this URL into your browser to find the appropriate Florida office: http://www.consumeraction.gov/florida.shtml.

Your son might also consider looking for a different mortgage provider. He might be able to find a better interest rate with someone else and is under no obligation to use the mortgage provider who gave him the original good faith estimate.

I hope he is able to resolve this without losing his deposit!

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