As the mortgage crisis continues to grip South Florida, many people who are delinquent in their mortgage payments and facing foreclosure become desperate. The Associated Press recently reported that Florida, California, Arizona and Nevada comprise 46 percent of the nation’s homes in foreclosures. The media have repeatedly focused on South Florida as an area where residential real estate values have been hit hardest.
The reasons people find themselves facing foreclosure are varied. Some overextended by spending more than they could realistically afford. Others made prudent home financing decisions, but since have been laid off and are unable to make once-reasonable monthly mortgage payments. Others have experienced illness, divorce or another personal challenge that unexpectedly tapped their financial reserves.
Despite recent improvements in the economy, including some projections that the U.S. economy will turn the corner in the second half of 2009 and show gradual signs of recovery throughout 2010, in mid-July Federal Reserve Chairman Ben Bernanke raised concerns about rising foreclosures in the coming months.
This continued economic uncertainly is sure to keep the real estate markets roiling, and, unfortunately, there are far too many unscrupulous people waiting to take advantage of those struggling to make ends meet. These companies promise they can help save homes, take outrageous up-front fees from desperate homeowners, often keep the fees, take no additional action and let the homes fall into foreclosure. By the time the homeowners discover the fraud, it is too late.
If you are facing foreclosure, here are some tips to help you avoid becoming a victim of one of these scams. If you know someone who may be facing foreclosure, reach out and share these tips with them, too.
Contact your lender or mortgage servicer first.
Speak with the loss mitigation department for mortgage modification options and other alternatives to foreclosure.
Avoid upfront fees.
Fees should be paid only after counseling or modification services are completed. Again, first, talk to your lender or a lawyer before contracting with any third-party company.
Read and understand every document you sign.
Do not rely on an oral explanation of a document and make sure that you understand what the document actually says. Otherwise, a document may obligate you to terms you don’t want or may transfer ownership of your home to someone else.
Never sign documents with blank spaces that can be filled in later, or a document that contains errors or false statements, even if someone promises to correct them. If a document is too complex to understand, seek advice from a lawyer or a legitimate, trusted financial counselor.
Avoid lease-back and rent-to-buy schemes.
The scammer asks you to transfer your home’s title to the scammer who will, supposedly, obtain new and better financing while allowing you to remain in the home as a renter and eventually buy it back. The agreement may require high upfront and monthly payments that you cannot afford, and you could lose your money and face eviction. The scammers may have no intention of ever selling the home back to you – they simply want your home and your money.
Beware of “foreclosure rescue.”
A scam artist may offer to act as an intermediary between you and your lender to negotiate a repayment plan or loan modification and may “guarantee” to save your home from foreclosure.
The scammer may ask you to make mortgage payments to him directly, along with significant upfront fees and tell you they will forward the payments to your lender. In reality, the scammer pockets your money. They may also tell you to stop making payments or stop communicating with your lender. Do not follow that advice!
In addition to following these tips, remember that there are non-profit agencies and local and federal government agencies that provide free foreclosure counseling and other services. These organizations can help:
Florida Attorneys Saving Homes (FASH) is a collaborative effort of The Florida Bar, The Florida Bar Foundation, Florida Legal Services and the Real Property Probate and Trust Law Section. Pro-bono (free) lawyers negotiate with lenders on behalf of qualified homeowners with the goal of creating a loan that allows the homeowner to remain in the home. For more information, contact www.FloridaBar.org or call 1-866-607-2187.
U.S. Department of Housing and Urban Development (HUD)
HUD-approved non-profit housing counseling agencies can provide free information and assistance to avoid foreclosure. You may be eligible for a special loan modification or refinance to reduce your monthly payments and help you keep your home. Contact HUD at 1-800-569-4287 or 1-877-483-1515.
Contact the Homeowner’s HOPE Hotline to reach a non-profit, HUD-approved counselor through HOPE NOW, a cooperative effort of mortgage counselors and lenders to assist homeowners. Call 1-888-995-HOPE.
Finally, if you believe you have been a victim of a foreclosure or mortgage refinancing scam, please report it, because you may help prevent others from becoming victims too. Call the Florida Attorney General’s Mortgage Fraud Task Force hotline at 1-866-9-NO-SCAM or file a complaint online at www.MyFloridaLegal.com.
Facing foreclosure is an emotionally-charged situation fraught with fear, anxiety and stress. Take the time to think through your options, contact your mortgage servicer or lender, ensure you are working with reputable people, seek legal counsel if needed, or turn to no-cost service agencies to resolve foreclosure issues before they result in the loss of your home.
Rob West is the training and communications director for Kingdom Advisors, a non-profit Life that equips and disciples Christian financial advisors to integrate their faith and profession. Please send questions and comments to [email protected].
The information in this article is for information purposes only and does not constitute advice. You should not rely on any information in this article to make (or refrain from making) any decision or take (or refrain from taking) any action.