Among the most challenging tasks I have is counseling people in danger of losing their homes. Their stories are heartrending. Often, by the time they come to my office, they are far along in the foreclosure process, perhaps too far for me to be able to do much for them. Some of them have fallen victim to mortgage assistance schemes in which unscrupulous persons charge large fees to help obtain loan modifications they cannot deliver. Today, clients came in whose home had already been sold at a sheriff’s sale. A few months ago they paid $3,000 to a “mortgage investigation” firm who promised them that the foreclosure process would be halted while their “investigation” was ongoing. Not true. The foreclosure process does not stop unless the lender agrees to or unless an attorney takes legal action on behalf of the debtor. The clients learned the hard way through a bank notice stuck to their door announcing the bank as the new owner. After a sheriff’s sale, the likelihood of a bank undoing all the legal process it has paid for and returning ownership to the borrower at a modified interest rate is about the same as Wall Street executives giving up their bonuses.
If you are behind with your mortgage payments, please follow these suggestions:
- ACT! Seek professional assistance. You are unlikely to catch up on your own and ignoring the problem will only make things worse and limit your options when you finally do seek help.
- If you are not yet in foreclosure, you may take some time to interview different credit counselors and select one with a bona fide track record of helping homeowners. Take a look at www.naca.com, the website for the Neighborhood Assistance Corporation of America. NACA is accredited by the federal Dept. of Housing and Urban Development and they DO NOT CHARGE for their counseling services.
- RUN AWAY from anyone who guarantees you they can get your lender to modify your loan. RUN FASTER if they promise you a specific interest rate.
- Read all the documents given to you by a credit or mortgage counseling agency. Will they intervene with the lender on your behalf? And do they have the connections to get the lender’s attention? Or are they only promising to help you “do-it-yourself?” Do they give you a time frame in which they will respond? Be wary of a lack of commitment. While they are dragging their feet, you are losing precious time.
- If you are served with a complaint in foreclosure, see an attorney immediately. At that point, credit counselors cannot take legal action for you and therefore are not as effective at slowing the foreclosure process. Only an attorney can answer the complaint and, by doing so, gain you precious time. An attorney is also more likely to get attention for you from the lender through the lender’s attorney.
- Be realistic. While lenders are modifying loans at lower interest rates, lenders are unlikely to agree to a modification if your income does not support even the lower mortgage payments. You may have to consider taking the time gained through prompt response to the foreclosure to sell your home and find more affordable housing.
In mortgage foreclosure, time is not on your side. Act early, educate yourself with regard to your options and the process, and choose professionals with established credentials and a track record of helping people.