The Boston Globe published this article a couple of days ago. I think it’s a solid starting point for people who are contemplating the purchase of a home, but have reservations given the state of the housing market. Though the mortgage crisis has created opportunities for buyers, it has also made people gravely aware of the consequences one risks if they get wrapped up in a bad situation.This article gives the potential homebuyer clear-cut advice to know where to begin and how to be proactive against future mortgage woes.
Non-profit organizations I’ve mentioned before, such as Urban League and Beyond Housing, offer pre-purchase counseling, which can offer more perspective into the housing market as it relates to local neighborhoods.
Since St. Louis Beacon ran this article last week about the legal process in Missouri foreclosures, I wanted to expand on those resources and also provide some information about the process in Illinois.
In Illinois
Because the foreclosure process has to go through the court system, Illinois foreclosures usually take about a year. Land of Lincoln Legal Services recommended I look at the guide on www.illinoislegalaid.org. It explains the Illinois foreclosure process very clearly. You can read it here. There are links to some non-profit legal organizations at the bottom of the page, too.
This is another guide published by Illinois Legal Aid that gives more detailed answers to those being sued for mortgage foreclosure.
In Missouri:
After Texas, Missouri has the fastest foreclosure process in the United States. I’ve read articles that say it happens in 60 days and others that say 21. To clarify, I spoke with Dan Claggett of Legal Services of Eastern Missouri. Here’s a breakdown of what he told me:
When a homeowner misses 3 mortgage payments, the lender sends them a notice of default with a foreclosure date listed.
The lender has to publish the sale of the home at least 20 times before the sale date. So if a lender wants to move rapidly, they could publish a notice per day for 20 days leading up to the sale and the home could be sold on that 21st day. Bare minimum, the process can occur in 21 days from the time the lender mails the foreclosure notice.
What is more troubling is that the lender only has to send that one letter, and they need only drop it in the mail 20 days before the sale date. That doesn’t mean the homeowner receives it before then. If the mail is delayed for any reason, the borrower could be looking at a sale date within a week or two of when they get that letter.
Claggett adds that it becomes much harder to work out a plan with the lender if they’ve already mailed the foreclosure notice due to the money they’ve spent on legal counsel and publishing.
Here is a 2 minute video of Dan Claggett discussing the Missouri foreclosure process on KETC’s Facing the Mortgage Crisis live special:
This article from MSN real estate is a good place to start finding out about the different mortgage scams going on. Here are some key points I took away from it:
The top 3 mortgage scams
1. Equity stripping/bailout- In this situation, the scammer buys someone’s house from them before it is foreclosed upon. They offer to rent the house to the person until they can afford to buy it back, which leads to the homeowner signing the deed over to the scammer, who has no intention of selling the house back–instead they make it impossible for the homeowner to keep up with rent, evict them, sell it off and pocket the profits.
What you can do:
- Be suspicious of anyone promising to “save your credit” or buy your home “as is”. If it sounds too good to be true, it likely is.
-Don’t modify or sign away the deed to your home without consulting a lawyer you trust.
-If selling your home, be sure that you are released from all liability for your mortgage. Know your rights specific to your state.
2. Phantom Help-A homeowner falls behind on their mortgage and is facing foreclosure. A person or company offers to help save the home, and the homeowner pays them up front for their “services”, which are little more than making phone calls and filling out forms the person really could have handled themselves. Homeowners pay a lot up front for “big results”, but before they know it (especially in Missouri), they’re out thousands of dollars and the home is lost.
What you can do:
-Call your lender immediately and discuss the situation with the loss mitigation department.
-Find a FREE housing counselor from one of the many resources listed on KETC’s site. You should NEVER pay someone for foreclosure help.
-Be suspicious of door-to-door advertising, flyers and of terms like “foreclosure service” or “mortgage consultant”. These services usually come with a price tag and a big loss.
3. Bait and switch-In this type of scam, the homeowner is tricked into signing over the deed to their house without even realizing it. Scammers pretend to be housing counselors or real estate brokers. They act the part and have very official looking documents for the homeowner to sign and initial to save their home. However, those official documents, written in a language that might confuse even the savviest homeowner, actually turn the house over to a 3rd party. Even if a person doesn’t sign the document giving the home away, scammers are known to successfully forge the person’s signature.
What you can do:
-Read everything carefully with a trusted lawyer present.
-Don’t sign anything with blank spaces. The scammer could add information in later.
-Get everything in writing. Don’t make verbal agreements.
-Do not get pressured into signing anything.
-Again, if it seems too good to be true, it likely is.
An important thing to remember is that anyone can be victimized. We’ve all been scammed at some point in our lives and it’s embarrassing because, in hindsight, you should have known better. For me, it was the time I gave $40 to a stranger because he had me convinced he lived across the street from me and needed money for a locksmith. He even knew which apartment I lived in (scary) and said he’d slip the money back through my mail slot. Of course you know how that story ends. Am I that stupid? No. Am I that trusting? When someone is that convincing (down to knowing the names of my neighbors), yes.
These mortgage scam victims aren’t getting into trouble because they don’t know any better. Con-artists make a living by getting people to trust them, and in a desparate situation it’s easy to trust someone who looks like they have a clue.
Whatever the circumstances, if you’ve been scammed it’s important that you talk to someone about it. Call your bank, your lender, or a HUD-certified housing counselor. Not only could you help your own situation, you could educate someone else before it’s too late for them.
You can find even more information on this page of tips to avoid becoming a victim of mortgage fraud, recently published by the FBI.
After reading St. Louis Beacon’s latest mortgage crisis article, I surfed around the St. Louis Fed site to look into their foreclosure resources. Both the Fed and NeighborWorks refer homeowners to (888)-995-HOPE, a foreclosure help line run by the Homeownership Preservation Foundation.
Linda Ingram mentioned last week to me that she sometimes sends clients to this HOPE line, and has a lot of faith in the service. When I looked them up, I found a blog post near the top of the search results that criticized them for not helping people who aren’t actually in foreclosure. I’d like to set the record straight that this is not true.
I called (888)-995-HOPE this afternoon and was immediately connected to someone who wanted to put me in touch with the next available housing counselor. I asked if there was help available to me if I wasn’t in foreclosure yet. What if I’d lost my job or my rate adjusted and I feared I’d fall behind in the next month or two? “It’s always good to be proactive and we’ve got plenty of people who can help you,” she told me.
Another service offered through them that I’ve not seen anywhere else is the option to chat online with a housing counselor. Though I believe it’s most effective to visit a counselor in person, this could still be a useful service–especially to those who can’t take time off work for an appointment. You can use the online chat feature to simply ask a few questions or to do an all-out counseling session.
I think this could also benefit night owls such as myself. Personally, I do the most worrying (and occasionally some problem solving) between 1:00 and 3:00 a.m., usually because I forgot to make the car payment or I can’t figure out why my credit card interest rate keeps going up. I can’t exactly call these places on the phone so late, so I’d likely take full advantage of the option to get online and ask a professional what to do. The online foreclosure chat is a new concept to me, but it may be yet another valuable free resource.
To learn more about the HOPE line or the online chat feature, visit www.995hope.org.
For example, a link titled “You May Be Paying Too Much for Your Mortgage” offers four scenarios that could prompt a borrower with a good credit history to refinance or shop around for a better deal on a loan. A section on bank-related complaints includes directions for filing complaints against financial institutions and answers to commonly asked questions about credit and loans.
The online help center can be accessed through the Fed’s website. Click on the top box on the right side of the homepage, and you will be directed to the site that includes a roundup of mortgage industry-related news and research published by Fed economists.
Homeowners worried about foreclosure will find links to local housing counselors and agencies approved by the Department of Housing and Urban Development, as well as suggestions for seeking help.
Help for neighborhoods
The St. Louis Federal Reserve Bank is hosting a symposium Sept. 24-25 for communities dealing with the negative impact of the foreclosure crisis.
The session titled “Strengthening Neighborhoods in Weak Markets” is aimed at helping policymakers, municipal officials, lenders and community agencies stem the tide of boarded-up houses and declining property values. The public is welcome to attend, but reservations are required. For information, call Cynthia Davis at 314-444-8761, or email communitydevelopment@stls.frb.org This e-mail address is being protected from spam bots, you need JavaScript enabled to view it .
Living St. Louis Producer Ruth Ezell continues telling the story of the mortgage crisis in St. Louis. Carlos Brooks used to own the Grand View Market on North Market Street. He received an equity loan and shortly after, he fell ill and went into the nursing home. During that period, burglars ransacked his property. Brooks filed for bankruptcy and sold everything he owned for a fraction of its value without seeking legal advice. The FBI says that there are various different types of mortgage scams out there and to be aware of unsolicited offers of assistance.
1. Don’t ignore the problem– The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem– Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender–The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open mail will not be an excuse in foreclosure court.
4. Know your mortgage rights– Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options– Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the Internet at www.fha.gov.
6. Contact a non-profit housing counselor– The U.S. Department of Housing and Urban Development 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 if you need this assistance.
7. Prioritize your spending– After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.
8. Use your assets– Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies–Many for-profit companies will contact you promising to negotiate a loan work out with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD approved housing counselor will provide for free if you contact them. You don’t need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead.
Don’t lose your house to foreclosure recovery scams!–If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well 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 HUD approved housing counselor or trusted real estate professional.
To find out more about HUD approved counseling agencies and their services, please visit www.hud.gov or call toll free (800) 569-4287 on weekdays between 8:00 a.m. and 4:00 p.m. The same number can give you an automated referral to the three housing counseling agencies located closest to you.
I took a lot away from this morning’s appointment with Linda Ingram at Beyond Housing. They too are a nonprofit in St. Louis that offers free housing counseling and a variety of other resources for homeowners.
The more I meet with people, the more I’m learning what I should be asking that I may not have known to touch on before, and it’s a real resource to go from place to place because I feel like I’m having one continuous conversation about the mortgage crisis. This was especially beneficial today.
One thing that didn’t sit well with me was hearing from a housing counselor that lenders don’t always want to work out a plan with the homeowner. Maybe it was naive on my part to believe it could be that easy to just call and work it out. In any case, I’ve tried in these profiles to stress the importance of seeking help, and it worried me to the point of losing sleep last night that maybe it’s not as effective as it seems. The good news is I was wrong.
Linda Ingram told me that, like Catholic Charities, they too have ways of working with stubborn lenders. She and her housing staff find it effective to go beyond communicating with lenders and servicers. When the lender won’t work something out, they contact the lender’s attorney.
For borrowers with a foreclosure sale date, it can be as simple as calling the attorney and saying “I want to save my house. Can you help?” Ingram also emphasizes that, if a homeowner tries to fight the foreclosure on their own, communicate with the loss mitigation department, not collections.
Ingram also urges everyone to get involved in their homeowner education program. The three week program includes classes in financial literacy, Q&A’s with area lenders, how to perform basic home repairs, and other “must know” details about home buying and ownership. “It’s well worth the time and can keep you out of a lot of future trouble,” she says.
For those attending housing counseling sessions, they can expect to put together a “workout packet”. Pay stubs, tax returns and expenses are put together with a letter explaining why the homeowner has fallen behind and what they are doing (or plan to do) to fix it. This is submitted to the mortgage company with the intention of postponing the foreclosure sale.
After the first counseling session, Beyond Housing sends the homeowner a summary of what they discussed and an action plan for the homeowner to follow. The goal is to work out a 5 year plan in which the client comes out with better credit and a managable lifestyle. “Any client here is a client for life,” says Ingram. “Once a person receives counseling, they can call or come by with any concern they might have.”
Ingram’s last word of caution is to be wary of scam artists trying to profit off your housing troubles. “Everyone in the world will send you letters or call about some refinancing offer or way to stop foreclosure,” she says. Some of her clients have been tricked into paying $1400+ to “work out a foreclosure solution” only to be told they needed to pay even more to find out what that solution was. The safest route someone can take is to see a nonprofit agency whose highly trained counselors offer their expertise for free.
To set up an appointment with Linda or one of Beyond Housing’s counselors, call (314) 533-0600. You can learn even more about what Beyond Housing offers by visiting their Web site: www.beyondhousing.org
Short video of Linda Ingram describing what homeowners should bring with them to a counseling session:
Here’s a new 5 minute video submitted by community member Chris Gatewood featuring Bennice Jones King, alderwoman for St. Louis’ 21 ward. In it she comments on what the government can do to help St. Louis with the mortgage crisis.
I’m a big fan of these short videos because it helps me understand exactly what someone means in a way I might not have picked up on in a newspaper or if I’d read it on the Internet. I’m hoping a lot more people will submit their ideas to the site. Maybe I’ll put my own up if I can get over being so camera shy.
But this is my plug for you to send something in, because I believe personalizing this crisis is one of the best ways to really understanding it and working through it.
If you have something to say, send us your video and we’ll put it on our site. You can upload it to KETC’s YouTube group or e-mail it to us at mortgage@ketc.org. Maybe you have a question, a tip or some thoughts on things that you want to get out there. It’s a great way to start the conversation and you never know who it might help.
Posted by Angela Smith 
Posted by Angela Smith 
Posted by Angela Smith 
