Avoiding Foreclosure and Foreclosure Rescue Scams
Gather records relating to your home:
- Purchase and sale agreement
- Mortgage application
- Closing documents
- Property tax bills
- Property insurance information
- Letters you receive from and copies of letters you mail to the bank
- Contact your mortgage servicer at the first sign of trouble
- Speak with your bank’s delinquent loan or loss mitigation specialist
- Explain your situation
- Ask for a mortgage workout package
- Keep a phone log that shows the date and time of your call, who you spoke to, the person’s phone number, and what was said
- Follow up your phone call with a letter and keep a copy for yourself
- Send all letters by certified mail and keep the receipt
Know your options
There are many ways the bank can help you if you fall behind on your mortgage. Which one you choose/need and what the bank allows will depend on your individual situation.
Reinstatement: You give the bank all of the back payments you owe and start making your regular monthly payment. With a partial reinstatement you pay at least one-half of the back-payments first and agree to a repayment plan for the rest of what you owe.
Repayment Plan: You make the regular mortgage payment plus an additional amount toward the back-payments until you are caught up (usually no longer than 12 months). If the bank sets up a repayment plan for you, make sure it is reasonable. Do not agree to a plan that will not work for you.
Forbearance: The bank agrees that for a limited period of time it will accept a lower monthly payment or no monthly payment. At the end of the forbearance agreement you must bring the account current.
Modification: The bank agrees to change one or more terms of the mortgage. Possible changes include: reducing the interest rate; extending the term of the mortgage; and adding the arrears to the unpaid principal balance of your loan.
Short Sale: The bank may let you sell the home even if you owe more than the property is worth and agree to accept the lesser amount as payment in full. You must have a buyer and a signed purchase and sale agreement. Anyone else who has a lien on the property and the private mortgage insurer, if there is one, must also agree to the short sale.
Refinance: You take out a new mortgage to pay off the old mortgage. Sometimes it makes sense to refinance. You should contact a legitimate lender and proceed carefully. Beware of large fees and high interest rates.
Deed in Lieu: You cannot afford to keep the home and you give the house back to the bank. Do not ask for a deed in lieu when you have equity in the property or when a short sale is possible. The bank will not accept a deed in lieu if there are other mortgages or liens on the property.
Bankruptcy- Such as Chapter 13: This is a type of “reorganization” used by individuals to pay all or a portion of their debts over a period of years using their current income. The most important thing about a chapter 13 case is that it may allow you to keep your home if you can make the payments which the bankruptcy law requires to be made to your creditors.
Consider talking to a lawyer:
- If you cannot reach a solution with your bank
- If you disagree with the amount the bank says you owe
- If you wish to consider filing bankruptcy
Foreclosures are public
- Foreclosure notices appear in newspapers and court records
- Some people may try to take advantage of you by offering a “quick fix”
- Carefully review offers to refinance or consolidate your credit card debts with your mortgage as this may make matters worse
- Scrutinize “deals” with high interest rates and large fees
- It may not be wise to agree to sell your home to someone who claims they will lease it back to you
- Talk to a lawyer before you sign anything!!
*The above statements are merely suggestions and are not intended as legal advice. You should contact an attorney for legal advice regarding your particular situation.
As always, The Long Island Law Firm of VAUGHN & WEBER, PLLC is here to assist you. We are conveniently located in the heart of Nassau County, Long Island, at 393 Jericho Turnpike, Suite #208, Mineola, NY 11501. Contact us at (516) 858-2620 to arrange a FREE foreclosure defense consultation with one of our foreclosure attorneys. We are your foreclosure defense lawyers!
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