The Foreclosure Nightmare
What the majority of people desire the most is their cozy homes along with the
company of their families. It takes years to build a dream home and load it with
family's memories, however it takes only a few missed house payments to undo
that dream. Foreclosure is a living nightmare of every homeowner.
Here are a few essential steps necessary to prevent foreclosure along with ways to prevent becoming a foreclosure scam victim. (For associated reading, see
the book"The Foreclosure Survival Guide: Keep Your House or Walk Away With Money in Your Pocket")
The dreadful threat of losing their home lurks within the minds of numerous homeowners. Occasionally unanticipated financial problems, such as losing a job, divorce, excessive medical bills, or a death within the family--can have an affect a homeowner's capability to make their house payments. Foreclosure happens when you get behind in your house payments, thus leaving your lender with no choice but to foreclose on your home.
In some situations, the house is worth considerably less than what is owed to your lender which could make things complicated, as it may allow your lender to come after your for a deficiency judgment, the disparity between the amount you owed the lender and the property sale price. If this occurs, you will not only lose your home, you might also be required to come up with additional funds to pay your lender.
For example, if your home is worth $190,000 at such time a foreclosure takes place and you owe $230,000 to the lender, a $40,000 deficiency judgment to your lender could totally wipe you out.
And the worst part, deficiency judgments and foreclosures typically leave a negative influence upon your credit score. A foreclosure can stays upon your credit report seven to ten years, thus implying to lenders in the future that you're a bad-credit-risk. Thus making it harder for you to obtain another mortgage--or in fact any other type of loan down the road. (For related insight, read
the book" Improve Your Credit Score In 5 Easy Steps! No Matter How Much Debt You Have .")
Ways to Prevent Foreclosure
The instant you receive a notice of foreclosure, the first thing you should do is talk with the lender's Loss Mitigation Department and tell them about your monetary situation. Take personal financial statements and documents along and explain to them your short supply of income and increased living expenses.
Talk with a community housing counseling agency approved by your local government. It can give you free information about a list of organizations prepared to assist you as your lender is threatening foreclosure.
Having said that, some of the better ways to stay away from foreclosure action before you ever receive a notice of default. It's never too early to begin keeping an eye upon extravagant monthly outgo and start adhering to a tighter household budget.
The additional savings you acquire from a less extravagant lifestyle will let you begin an emergency house payment fund which you can tap if you run into problems in the future. A minimum saving account of six or eight months' income should provide you with a practical amount of reserve until you your financial situation improves. (To learn more, here "Emergency Fund 101: How to Save Money for Unexpected Expenses.")
If the need occurs, take the advise of a loss mitigation consultant or local provider of foreclosure services, Be sure and make plenty of inquiries and obtain references.
Never Ending Foreclosure Scams
It's Unfortunate, but there are plenty of foreclosure-related fraudulent companies ready to pounce on you and to prey upon your unfortunate financial situation. The ominous foreclosure risk makes you a target of these predators. These are bogus companies which may label themselves as "foreclosure specialists. or "foreclosure consultants". Before you opt to use any of these types of companies, be sure and take a careful look at their business reputations and credentials by checking on them using sources like the U.S. Department of Housing and Urban Development (HUD).
Exactly how do these scam foreclosure operators find you? That's rather simple. The moment your lender files a notice of default with the trustee, your local community is then alerted through the foreclosure listings in your local publications. it doesn't take long for, mail, phone calls, and people at your door from these companies begin bugging you.
There are numerous methods these fake companies use to swindle homeowners. Let's take a closer look at the tricks you should be aware of just in case there's a default:
1. Equity Stripping.
Using an equity-stripping con, an unscrupulous real estate lender will approach you with a proposal to give you a new mortgage loan; this operator is typically aware of your unfortunate financial situation. They pushes you to inflate your existing income on the loan application as a way to get the new loan approved. You agree to the loan as you sorely need the money, although you aren't sure you can make the monthly payments. The instant you can no longer make the payments on the mortgage, the lender will dash in to start foreclosure on your home and relieve you of all the hard-earned equity you have in your property.
2. Equity Skimming.
In this situation, a person who says he's a buyer comes to your door and induces you into selling your home to him (typically for less money than the market value) and gives a promise he'll pay off your existing loan. The buyer is most likely to ask you to transfer over the deed to him, stop any interaction with your lender and move from the house . The buyer rents out your home to a third person and begins collecting monthly rent. Unfortunately, the buyer never pays any mortgage payments, thereby leaving the lender with no option other than foreclose on your home. This skimming aspect becomes a big deal when you have a sufficient equity amount in your home; the scammer will then flip the home to pay the loan off and then make his profit by retaining the equity. Just keep in mind: Signing over a deed to another party doesn't free you from your house payment obligations.
3. Phony Counseling Agencies.
You will discover a large quantity of phony mortgage counseling agencies that provide their services, for a despicable fee of course. And the only service they perform is making a few low-cost phone calls and fill in some paperwork. These agencies may even negotiate some sort of plan for repayment with your present lender or arrange a pre-foreclosure sale for your behalf. But, the activity these companies carry out can all be effortlessly be done by a homeowner without any additional expense. The primary aim of these type of agencies is to deceive and prevent you from getting any real help. So be sure you verify that this type agency is on the up-and-up before using its assistance, and don't ever pay any money up front for any foreclosure services.
4. Fake Loan Transaction.
In a fake loan transaction, the lender shows you to a loan refinancing document that alleges to bring your in arrears loan current. But, the document may hand over your home's title to the name of the lender for a very limited portion of its total value. Most often, the terms of the loan will also include huge fees, interest-only or balloon payments, prepayment penalties, along with immediate rate adjustments. Therefore, it is wise to have every legal document looked over by your attorney prior to signing them. (For Check out
the book"So you Want to Refinance". for related reading)
5. Lender Scams.
As you become on the edge of losing your, a lender may assert they can rescue you from your situation by refinancing and getting you lower house payments. In the start, your new mortgage payments will be considerably lower as you are simply paying only the interest. However at the tail end of the loan term, you suddenly become aware that the entire amount of money you initially borrowed is still owing as a balloon payment as a lump sum at that. At this point If you unable to come up entire balance or refinance your loan, the lender may take your home.
6. Phone and Internet Scams.
Some con lenders will persuade you into applying for a low-rate-of-interest mortgage loan over the phone or on the Internet. Then they proceed to obtain essential information about your bank account and social Security numbers. In this type of scam, your loan is accepted immediately, after which you begin faxing documents along with payments by wire transfer to the fake company without ever meeting the lender agent. Unfortunately, this kind of scam will get you in double trouble, as your personal information has now been stolen or even sold, while your house is still facing foreclosure. (Learn more to avoid this scenario
in the book, ( "Identity Theft: They're Stealing Information About You!".)
7. Loan Flipping.
In this scam, a lender may offer you a refinance loan and coax you into taking a little extra cash. If you fall into this trap and agree to refinanced your loan, as quickly as you make a few payments, the lender is going to try and convince you to again refinance the loan and take out more cash for things such as or home renovations or vacations. You agree this attractive offer, accept the cash and refinance the previous loan. The reality is, this extra money may be as much as the additional costs and fees the lender charges for the refinance loan.
Using this scam, the lender may never even attempt to explain the increases in the loans added on points and fees for refinancing, resulting in higher rates of interest or even a prepayment penalty each time you obtain a new loan. The bottom line is: repetitive refinancing of your loans could put you deeper in debt and could ultimately lead to you losing your home to foreclosure. (Read the book,
"How to Get Out of Debt, Stay Out of Debt, and Live Prosperously".)
Foreclosure is a serious problem and, if not immediately handled, you can evicted from your house along with a scathed credit score. To keep your home out of foreclosure, learn everything you can about the foreclosure process and locate the proper mortgage counseling service companies that can help you bail out of this
predicament. The minute you stop paying attention to this situation is when the phony foreclosure companies will begin exploiting you.