Homeowners facing foreclosure are often financially stressed and emotionally overwhelmed, and this can lead to mistakes that make them worse off. If you or someone you know is facing foreclosure, avoid these common mistakes:
- Doing Nothing
THE WORST THING YOU CAN DO IF FACING FORECLOSURE IS NOTHING!
Lenders cannot foreclose until 120 days after your first missed payment. That means you have about four months to avoid foreclosure or minimize your losses. The sooner you act, the more options you’ll have.
- Falling Victim to Foreclosure Avoidance Scams
Foreclosure avoidance scams are a huge problem. Watch out for these red flags:
- High or Upfront Fees
You do not need to pay someone to understand your options. Housing counselors approved by the U.S. Department of Housing and Urban Development (“HUD-approved housing counselors”) will help you for free. If someone wants to charge you for their services, be very skeptical!
- Guarantying Results
No one can guaranty a result when it comes to foreclosure. Most options require your lender to agree. If someone says they can guaranty you will get a loan modification or some other foreclosure avoidance option, this person is probably not legitimate.
- Signing Over Your Deed to a Third Party
This is a scam to get your house!
Remember, signing over your deed will not wipe out your loan. But it will cause you to lose any legal right to your house.
- Making Mortgage Payments to Anyone Other Than Your Lender
Anyone who suggests this will probably take your money and run. Always pay your lender directly.
- Anyone Who Tells You to Stop Talking to Your Lender
You will have to talk to your lender directly to work out any of the foreclosure avoidance options you decide to pursue. Not communicating with the bank will only make things worse, so this is very bad advice.
- Anyone Who Tells You to Stop Paying Your Mortgage
This will only make the problem worse. You do not want to be further behind on your payments.
- Unsolicited Contacts from Other States
Foreclosure law is different from state-to-state, so if someone from Florida is offering to help with your Colorado foreclosure, be very skeptical. A Florida lawyer or housing counselor probably doesn’t know anything about Colorado foreclosure law.
- Remember, If It Sounds Too Good to be True, It Probably Is!
If something doesn’t sound right, don’t hesitate to contact a HUD-approved housing counselor or a lawyer.
So what should you do if you’re facing foreclosure?
- ACT RIGHT AWAY!!!
The sooner you act, the more options you will have.
- Contact a HUD-Approved Housing Counselor.
HUD-approved housing counselors can help you understand what your options are and what might work best for your particular situation.
In Boulder County – contact Boulder County Housing and Human Services to talk to a housing counselor.
Outside of Boulder County – contact HUD to find housing counselors near you.
For veterans with VA Home Loans, contact Veteran Services for foreclosure-avoidance assistance.
VA Loan Guaranty Office: 1-800-827-3702
VA Regional Loan Center for Colorado: 1-888-349-7541
- Contact Your Lender Right Away.
Contact your lender as soon as possible after missing a payment, or even before missing a payment if possible. This will show them that you are serious about finding a mutually-acceptable solution.
If you are having problems with your lender (e.g., they aren’t communicating with you, you feel like you’re getting the run-around, etc.), talk to a HUD-approved housing counselor, contact a lawyer, and/or file a complaint with the Consumer Financial Protection Bureau.
CFPB Website: www.consumerfinance.gov/complaint
CFPB Consumer Help Line: (855) 411-2372