Facing Foreclosure – How Do I Protect Myself?
The foreclosure process is complicated and can be challenging and time consuming. Most homeowners, armed with a little knowledge, can work out a beneficial agreement with their lender. But be prepared for the scammers you are sure to meet along the way.
Get it In Writing Don’t rely on unwritten promises. If it isn’t in writing, it doesn’t mean anything. At my first job my boss lived the siren “get it in writing, get it upfront”. I don’t think there is any faster way to cut through the BS of a huckster than to get it in writing and get it upfront.
Don’t Sign #1 Never, never ever sign anything unless you understand what every word and phrase mean. Your attorney or HUD approved counselor may say it’s ok but it is your name going on the agreement and you are the only one who will have to live with the consequence. Take your time, read and re-read it slowly and completely. You can revise the agreement if you need to. Sign only when and if you agree with everything in the document.
Don’t Sign #2 If the page is blank or has blank lines to be filled in later, DO NOT SIGN! You would be surprised how effective scam artist are getting people to sign incomplete documents. “ok, sign here, here and here. I’ll have my assistant fill in all the blanks back at the office, no sense wasting your time now with the trivial details…”
Get A Copy You should have a copy of any document you signed, anything you submitted to a lender, really any document that is part of your loan agreement. Don’t rely on others to keep your records. Lenders are always losing documents. The document they lost may be the one you need to complete your modification or challenge your mortgage. Keep copies of everything.
Don’t Upgrade Your Problem With A Bad Refinance You already can’t afford your home. Don’t make matters worse by accepting a refinance offer that you know you can not live with. I had a young couple in my office telling me they went through a loss mitigation program with their lender. The upside, the lender agreed to give them 3 months no payments while she found a better job. The downside was the loan terms also modified and the mortgage would now have an increased interest rate. For three months forbearance the couple had agreed to pay significantly more per month. There was no way they could pay more per month. While they had the lender ready to negotiate, they should have negotiated for a livable deal, not a short term solution. Large balloon payments and high interest rates often make a refinance offer worse than your current situation.
Transfer Ownership Do Not transfer ownership to a “rescue” or “angel” third party. Your rights of ownership and of occupancy change the moment you sign such an agreement. The process is simple. The “foreclosure specialist” learns of your pending foreclosure from public records. He announces he has special relationships with your lender and can get you out of foreclosure. He will negotiate a better deal for you and save your home. The process is simple, you sign the house to him, he uses his substantial holdings, great credit and special relationships to negotiate you a great deal. First, he needs your authority to act in your behalf so you sign the house over to him. You now send your monthly payments to him rather than the mortgage company. He will stay in contact with you briefly, giving promising updates. Behind the scenes he has actually used your money to refinance his house and then sells his house to a third party. He disappears from the scene with his money and you get quickly, easily and legally evicted by the new home owners.
How Do I Spot A Scam Scams arrive on your front door, on the phone or in your mail. A legitimate foreclosure specialist doesn’t find you, you must find them. They have a history you can see, a local track record showing they are in business for the long term.
A scam artist will provide you with a great verbal sell. They describe how massive and dangerous the lender is and how small, hopeless and unprepared little old you are. They want you to feel incapable of dealing with the situation and gratefully reliant on any option they can offer you.
A scammer will tell you to cease all communication with your lender. They want you out of the communication loop. Isolate and conquer is the motto.
And a scam artist will offer you some wonderful options. They will make the process “quick and easy”. They will stop foreclosure with “just one phone call”. Many will offer to “buy your house” or “get you instant debt relief and CASH!” You know better. Nothing about foreclosure is quick or easy. No one phone call is going to stop foreclosure. And no one is going to give you cash and get you out of debt. It’s all pipe dreams and snake oil.
An effective scammer sizes you up quickly and creates bonds of familiarity. He sees a cross on your wall, he’s a Christian too. Spots your college logo on your coffee cup, he graduated from the same school. Your loan is with Wells Fargo, well his mortgage background now includes years as a Wells Fargo mortgage manager. You get the picture – a scam artist becomes whatever you need him to be.
A scam artist is long on testimonials but short on documentation and time. He has a long list of people he has helped (but none you can verify) and a longer list of people who need his help. Sign up today or he will move on to someone who appreciates him. They will get his amazing service and you will be left behind, you stuck in the mud.
You do not have to face foreclosure alone. There are organizations out there than can help you through this crisis. HUD offers some wonderful planning and assistance options. These are free. And most if not all the services you can pay a foreclosure specialist can be done yourself. Visit us at helpahome.org and we can help get you going in the right direction. Or go to foreclosurebarricade.com for a great guide to preventing foreclosure. Armed with a little knowledge I am confident most homeowners can achieve comparable if not better results than a specialist. And without paying and arm and a leg!
About the Author
Jenner Harrison donates his time and talents to helpahome.org, a group dedicated to helping families and individuals emerge from recession driven debt. His background in finance and real estate benefit those facing unecesary foreclosure, bankruptcy and in need of effective debt management. Note: I don’t know your individual situation and am not qualified to recommend any specific strategy for you. What works in one case may not for another. I highly recommend qualifed, legal & financial counseling. And remember, if an offer is too good to be true, it is.
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