Homeowner help: HUD-certified advisers, more refinancing available

By J.N. Sbranti
jnsbranti@modbee.com

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Whether their home loan is through Countrywide, another mortgage company or bank, homeowners can get free counseling to help them avoid foreclosure.

An $8.4 billion legal settlement was agreed to this week to benefit those with certain types of Countrywide mortgages. But housing counselors say many other lenders, too, have started offering options that may enable people to keep their homes.

"There are more lenders who are backing off and trying not to foreclose now," said Martha Lucey, president of ByDesign Financial Solutions.

Modesto Bee - Foreclosure property on Waynesboro Drive in Ceres, Friday, September 26, 2008. (Debbie Noda/The Modesto Bee)

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Beware of Fraud

Not everyone who offers to help homeowners avoid foreclosure is legitimate. Con artists try to profit off people's pain by offering financing or foreclosure rescue deals that end up hurting homeowners. The Office of the Comptroller of the Currency, which was created by Congress to ensure national banks are safe and serving the needs of customers, gives these tips to avoid foreclosure rescue scams:
- Fake foreclosure counselors -- Watch out for anyone who says he or she is a "foreclosure consultant" or "mortgage consultant," or who markets himself as a "foreclosure service" or "foreclosure rescue agency." If someone offers to negotiate with your lender or delay foreclosure for a fee, carefully check his or her credentials, reputation and experience. Real housing counselors certified by the U.S. Department of Housing and Urban Development don't charge for their services.
- Lease-back or repurchase scams -- Be very suspicious if someone offers to pay your mortgage and rent your home back to you. This scheme often involves signing over the deed to your home to the con artist. The con artist may promise to sell your home back to you, but this may be very difficult under the contract terms. Signing over the deed gives the con artist the power to evict you, raise your rent, sell the house or steal your home equity. You still will be responsible for your mortgage, so if the con artist stops paying it, your lender would have the right to foreclose on your home and damage your credit record.
- Refinance fraud -- Look out for people posing as mortgage brokers or lenders and offering to refinance your loan so you can afford the payments. Con artists may trick you into signing over the ownership of your home by saying that you are signing documents for a new loan. Signing over the deed to your home exposes you to the dangers described above. Even if you are a victim of fraud, you could still lose your home.
- Bankruptcy schemes -- Several scams attempt to abuse the bankruptcy laws. Example: A con artist may ask you to give a partial interest in your home to one or more people. Each holder of a partial interest can then file bankruptcy, one after another. The bankruptcy court will issue a "stay" order each time to stop foreclosure temporarily, but that does not excuse you from making payments or repaying the full loan amount.

ByDesign is nonprofit agency that provides free foreclosure prevention and housing counseling in Stanislaus, San Joaquin and Merced counties. Its counselors offer unbiased advice and are certified by the U.S. Department of Housing and Urban Development.

Homeowners concerned about keeping up with their mortgage payments can get free advice from ByDesign and other HUD-certified counselors in private meetings, by phone, over the Internet and at assorted workshops throughout the Northern San Joaquin Valley.

Besides requesting lenders modify their mortgages, homeowners also might be eligible for some new refinancing programs.

Last week, the Bush Administration unveiled the HOPE for Homeowners program, which offers to refinance mortgages with loans insured by HUD's Federal Housing Administration. More information about that deal is available at www.hud.gov/hopeforhomeowners.

Homeowners, however, must beware of anyone offering help in exchange for money or those claiming they can shelter homeowners from foreclosure through legal maneuvers.

"If you go to the flea market in Modesto, you'll see guys at a table in a tent saying they'll help you," warned Eduardo Morales, a HUD-certified counselor with El Concilio, which serves Spanish-speakers in the Northern San Joaquin Valley.

Morales said homeowners should trust only counselors who offer advice that is not connected to selling a product or a service. He encouraged homeowners to call their lenders directly to discuss foreclosure prevention options.

"But don't contact your lender's customer service people. Ask to talk to someone in what Countrywide calls the home retention department or what other lenders might call loss mitigation. People in those departments are the ones who can help you (modify a loan)," Morales explained.

He said HUD-certified counselors have special phone numbers to call that enable them to reach the bank representatives who are authorized to do loan modifications.

Nonprofit housing counselors are funded through various government sources and donations.

The Citi Foundation, for instance, recently awarded ByDesign Financial Solutions a $40,000 grant to fund 200 default counseling sessions for homeowners in Stanislaus, Merced and Fresno counties.

ByDesign has been adding counselors to its staff to advise homeowners. It has offices in Modesto and Stockton. Lucey said homeowners usually can get in to see a counselor within two weeks of calling the organization at 800-750-2227.

ByDesign also offers free two-hour workshops on alternatives to foreclosure. The next workshops are scheduled Oct. 28 and Nov. 18, both at 5:30 p.m. in ByDesign's Stockton office, 2291 W. March Lane, Suite A110.

ByDesign also offers online seminars, called webinars. The next webinars are scheduled Thursday, Nov. 5 and Nov. 13, all starting at 5:30 p.m. ByDesign Solutions.org has more information.

To schedule counseling sessions in English or Spanish with Morales, call 338-5713.

Community forums and foreclosure prevention workshops are scheduled this month by No Homeowner Left Behind -- Central Valley, which is made up of volunteers from assorted public and private agencies.

Here are the upcoming forums: