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Are
you Facing a Foreclosure? |
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The
Threat of Foreclosure
The
ugly threat of foreclosure is an unfortunate
possibility to many homeowners. Unavoidable
financial problems can affect a homeowner's
ability to make the mortgage payments such
as divorce, losing a job, death in the family
or expensive medical bills thus resulting
in the lender seeking legal action to repossess
your home via foreclosure.
Many
people do not realize that if your home is
foreclosed on, not only do you lose your home,
but you still may have to pay the bank an
additional amount. In many cases, the home
is worth less than the amount owed to the
lender. When this occurs, you will owe and
the lender will most certainly pursue a deficiency
judgment, which is the difference between
the amount owed to the lender and how much
the bank sold the home for.
For
example, if your house is sold during foreclosure
for $179,000 and your loan balance with the
lending company is $239,000, a deficiency
judgment of $50,000 is still owed to the lender.
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How
to prevent a Foreclosure
The
best thing you can do if you find yourself
getting into financial problems is to get
a your finances under control before you get
a notice of foreclosure. It is never too late
to reduce spending and get on a budget.
Here
are some ways to repair your finances:
Stop
using credit cards. Pay for purchases
with cash. You'll find that it's a lot
harder to spend your cash because it is
more valuable to you.
Pay
your bills on time! Even if you've
had serious delinquencies in the past,
start a new habit of paying your bills
on time.
Pay
off your debt. Never pay the
minimum on your credit card balances because
you will never get them paid off. Start
paying off all your credit cards and loans
from the smallest balance to the largest
balance. When a credit card balance gets
paid off, cut the card up!
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If
you receive a Notice of Foreclosure, immediately
contact your bank and speak with someone
in their Loss Mitigation Department.
Explain your situation to them and be upfront
about the financial problems you are having.
If you are meeting with them in person,
you may want to bring backup with you. For
example, copies of high medical bills and
collector's notices will show them the pressure
you were up against because of a health
emergency.
Contact
an approved HUD
government housing counseling agency
in your state. It will provide free information
and a list of organizations ready to bail
you out when threatened with foreclosure.
Avoid
Foreclosure Scams
In
recent times, many Americans are facing
foreclosure. Unfortunately, there are a
number of fraudulent foreclosure-related
companies ready to take advantage of these
homeowners at this vulnerable time.
These
fraudulent companies may call themselves
"foreclosure consultants" or "foreclosure
specialists." If a company claims they
can stop your foreclosure immediately if
you sign a document appointing them to act
on your behalf, you may be signing over
the title to your property and becoming
a renter in your own home! Never sign a
legal document without reading and understanding
all the terms and getting professional advice
from an attorney, a real estate professional,
HUD-approved
housing counselor.
These
scammers will find you as soon as the Foreclosure
procedure starts. When your lender files
your foreclosure notice with the public
trustee in your town, an announcement is
made in your local newspaper. Soon, you
will begin to receive phone calls and mail
from foreclosure scam artists.
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There
are several scams they use to try to swindle
you:
- Phony
Counseling Agencies:
Their fees are outrageous and you can do
all the services they offer you such as
call the lender and complete some paperwork.
These counselors may also negotiate a repayment
plan with your lender or organize a pre-foreclosure
house sale on your behalf. However, these
are things the homeowner can do themselves
at no cost.
- Internet
and Phone Scams:
Some scammers impersonating lenders convince
you to apply for a low-interest mortgage
loan on the phone or Internet. They then
steal your Social Security and bank account
numbers. This scam will put you in double
the trouble because you are still going
through Foreclosure and now your facing
Identity Theft.
- Lender
Scams: A lender may claim to rescue
you from this situation by refinancing your
loan with lower mortgage payments. In the
beginning, the mortgage payments are considerably
low because you are paying the interest
only. At the end of the term, you suddenly
realize that the total amount you borrowed
is still due in a lump sum balloon payment.
If you can't make the entire balloon payment,
you may lose your home to the lender.
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Fake
Buyer:
A person who calls himself a "buyer"
stops at your door and convinces you to
sell your property to him for an amount
far less than market value and promises
to pay off your mortgage. The "buyer"
will advise you to transfer the deed of
the property to him, move out of the house
and stop communications with your mortgage
lender. The "buyer" will then
lease your home to a third party and start
collecting rent. Unfortunately, this con-artist
will make no effort to pay the mortg
age payments, thereby allowing the lender
to foreclose on your property. Remember
that signing a deed over to a third party
does not relieve you from your mortgage
obligations.
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Get
Free Foreclosure help from HUD
The
U.S. Department of Housing and Urban Development
(HUD) funds free or very low cost housing
counseling nationwide. Housing counselors
can help you understand the law and your
options, organize your finances and represent
you in negotiations with your lender. Find
a HUD-approved
housing counselor near you or call (800)
569-4287 or (800) 877-8339.
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