Prevent Loan Scams

For Homeowners

Foreclosure Assistance

It is important for homeowners to know that services to avoid foreclosure can be FREE.  In fact, homeowners should never pay for help with a loan modification.  There are many reputable organizations that provide free assistance to homeowners facing foreclosure.  The information below may help you determine how best to get help and deal with your foreclosure-related problem.


What do I do if I am behind on mortgage payments or fear that I may be in the future?

If you are behind on your mortgage payments or fear that you may be in the future, you may wish to contact the Homeowners' HOPE Hotline (1-888-995-HOPE) or a nonprofit HUD-certified housing counseling agency  that provides free foreclosure prevention counseling.  A trained counselor through the Homeowners' HOPE Hotline or a HUD-certified agency may be able to help you negotiate with your lender/servicer to help you stay in your home.  You may also contact your lender/servicer's loss mitigation unit directly.

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Should I pay a foreclosure consultant to help me negotiate with my lender or loan servicer?

No.  Free HUD-certified housing counselors can help you negotiate with your lender or loan servicer.  Many for-profit firms advertising loan modification services provide homeowners with little or no assistance after collecting large upfront fees.

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When I contact my lender or loan servicer, what options are available?

Your lender may be willing to consider many options to either help you save your home or to reduce the damage done to your finances and your credit by the loss of your home.  Loan modifications are the most frequently used tool to keep homeowners in their homes.  You may be eligible for a loan modification under President Obama's Making Home Affordable (MHA) program.  If you are not eligible for the MHA, lenders and servicers may still be willing to negotiate a loan modification with you.  Common features of loan modifications include interest rate reduction, and extension of the life of the loan, for example, from 30 to 40 years.  If you are suffering from burdensome loan terms but are not quite at the brink of foreclosure, you may also benefit from the refinance portion of Making Home Affordable.  In addition, in some circumstances, lenders and loan servicers may be willing to allow you to sell your house in a short sale or to surrender the keys to your house in exchange for relocation assistance if you are unable to qualify for a loan modification and cannot afford to pay your mortgage.  No matter which of these options you are discussing, the assistance of  the Homeowners' HOPE Hotline (1-888-995-HOPE) or a foreclosure prevention counselor from a HUD-certified housing counseling agency, as well as a reputable legal aid or pro bono attorney, can be invaluable in helping to decide what is best for you and in negotiating with your lender or servicer.

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What is the Making Home Affordable Program?

Announced in March 2009, the Making Home Affordable program is President Obama's two pronged attempt to prevent foreclosures.  Making Home Affordable includes both a loan modification and a refinance program.  The loan modification program, which is geared towards homeowners who are at a greater risk of foreclosure, is designed to result in loan modifications that lower borrowers' payments to a maximum of 31% of their gross income.  Decreased payments may be achieved through lowering interest rates, principal forbearance, principal reductions, and the extension of the life of the loan, often from 30 to 40 years.  The federal government provides financial incentives to lenders and loan servicers in order to encourage them to modify mortgages.  The refinance program enables homeowners whose mortgages are owned by either Fannie Mae or Freddie Mac to refinance their mortgages even if the outstanding value of their loan is between 80% and 125% of the value of their home.  Typically, a loan to value ratio of less than 80% is necessary for a homeowner to qualify to refinance their mortgage.

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Who do I contact if I need immediate legal assistance with my foreclosure?

Homeowners in need of legal representation with regard to foreclosure issues may be able to find reputable assistance through a nonprofit legal aid organization funded by the Legal Services Corporation, their state bar association's lawyer referral service, or a pro bono program of the state bar or other non-profit organization.

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