The foreclosure process is complicated. On top of that, homeowners are often unaware of options they may have to protect their homes or to minimize the effect of foreclosure on their credit scores. How do you navigate through all of this?
Aside from contacting real estate agents or foreclosure attorneys, an alternative is to seek the advice of a mortgage foreclosure consultant. But you need to careful. There are many so-called foreclosure consultants who are nothing but scam artists and only want to profit from your misery!
What's a Foreclosure Consultant?
Basically, a mortgage foreclosure consultant is any person who offers to help you resolve your foreclosure problem by doing any of the following:
- Stopping or postponing a foreclosure sale
- Getting your mortgage payments lowered or postponed for a short period of time (called a forbearance)
- Obtaining an extension of time for you to reinstate your mortgage, that is, pay off your past due payments to make your mortgage current
- Obtaining a waiver of an acceleration clause in your mortgage. This gives the bank the right to demand immediate payment in full after you default on the mortgage
- Helping you get a loan or an advance of funds
- Helping you avoid serious hits to your credit rating
The Spawn of Scams
Unfortunately, the 2009-2010 foreclosure crisis paved the way for predators who use harassment and deception to prey on homeowners facing foreclosure. These scam artists make it difficult for homeowners to distinguish them from legitimate consultants.
Victims of these scams often pay hundreds or thousands of dollars for services they could have done for themselves for free. Often, they pay for services they never actually receive.
Legitimate Help is Out There
You can find a legitimate foreclosure consultant by contacting government agencies, nonprofit organizations and certain private entities. A wide range of services are available over the phone, in person and online.
Keep in mind, the cost differs depending on the consultant and the level of services you want. There may be no cost all, but normally your cost will be based on your ability pay, or the consultant will have flat-rate fees based on the services you actually receive.
Advantages of Using a Consultant
A legitimate foreclosure consultant will work with you and, when necessary, your lender to:
- Review your financial situation, determine what options are available to you, and negotiate with your lender
- Advise you on various workout arrangements that your lender will consider and that make sense to you and your family
- Call the lender with you or on your behalf to discuss a workout plan
- Help protect you from future credit problems before you get too far behind on mortgage payments
- Give you information on services and programs in your local area that provide financial, legal, medical or other assistance
A good consultant will help you create a budget and financial plan that ensures your monthly expenses are met and shows you how much money is available to make mortgage payments. This way, you and your lender can determine if your home can be saved.
Disadvantages of Using a Consultant
A major problem is that most states don't regulate or control the foreclosure consulting business. It leads to many consultants who don't have your best interests in mind. So, be wary!
There are signs to help you figure out if you're dealing with a legitimate consultant or a scam artist. You're probably dealing with a scam artist if:
- Initial contact is made by the consultant, such as by an unsolicited phone call, letter, or e-mail
- You're told to stop all communications with the lender
- The consultant demands payment before doing any work
- The fees seem high for the services offered
- You're asked to sign a wage assignment, a lien on any of your property, or a security agreement for payment
- A third party is paying the consultant and you're not told about it upfront
- You're asked to provide or turn over an interest in your property
- A power of attorney for anything other than the power to inspect documents is requested
- You're not given the right to cancel the contract or agreement for the consultant's services
Contact your state attorney general's office, your local Better Business Bureau, your state department of real estate or the Federal Trade Commission if you think you're being scammed or you're suspicious about a consultant who contacted you.
The prospect of losing your home is stressful enough. The added pressure of understanding the foreclosure process and your options makes it only natural for you to look for help. Just make sure you find someone who can truly help you.
Questions for Your Attorney
- Do foreclosure consultants have to be licensed in my state? How can I find out if one is licensed?
- A consultant I hired charged me thousands of dollars and hasn't done anything to help me save my home. Can you help me recover the money I paid him?
- Can I take a tax deduction for fees I paid to a foreclosure consultant?