Home Foreclosure Workshop Video

June 12 - July 9th, 2010

This foreclosure forum addressed tax and credit considerations, mortgage and consumer fraud, and foreclosure alternatives including loan modifications, short sales, Deed in Lieu, and mediation.

Watch Residential Foreclosure Forum Video

Previous Foreclosure Forum Videos

November 10th, 2008

• What Foreclosure Means To Your Credit
• Foreclosure From The Lender's Point of View
• Foreclosure From The Borrowers Point of View
• Reverse Mortgages
• Mortgage & Consumer Fraud

Foreclosure Registry

City Ordinance No. 48-H requires the registration of properties within 10 days of filing foreclosure action or within 10 days after the mortgagee has notified the borrower of default and the mortgagee finds evidence that the property is vacant. The ordinance also requires properties subject to pending foreclosure action prior to Nov. 1, 2012 to be registered within 60 days. 

The city of St. Petersburg uses the services of the Federal Property Registration Corporation to collect required registration information and a fee of $230. Registrations are valid for one calendar year and annual registration is required. Changes to registered properties should be reported with 10 days of the change. Vacant properties should be posted with the name and 24-hour contact telephone of mortgagee’s local agent.

Export of Active Foreclosure Registry

Before Calling

Before contacting the mortgage company, residents should gather the following information:

• Their loan account number 
• A brief description of their circumstances 
• Recent income documents such as: 
• Pay stubs 
• Benefit statements from Social Security, disability, unemployment, retirement or public assistance 
• If self-employed, their tax returns or a year-to-date profit and loss statement available for reference 
• List of household expenses

Residents should be prepared to explain the following:

• What caused them to miss their mortgage payment(s), accompanied by any documents to back up their explanation for falling behind. 
• How they have tried to resolve the problem.
• Whether the problem is temporary, long-term, or permanent. 
• What changes in their situation do they see in the short term and in the long term. 
• What other financial issues may be stopping them from getting back on track with their mortgage.
• What they would like to see happen.
• Whether or not they want to keep the home.
• What type of payment arrangement would be realistic for them.

Contact the Lender

Call the mortgage lender and ask to speak with the loss mitigation department.

Residents should expect to have more than one telephone conversation with the loan servicer. The loan servicer will usually mail residents a "loan workout" package containing information, forms and instruction and residents should complete the forms and return them to their mortgage servicer quickly if they want to be considered for assistance. The completed package will be reviewed before the servicer talks with a resident about a solution. If residents do not hear back from the loan servicer in a reasonable amount of time after submitting the workout package (generally 7-10 days), they should contact the loan servicer again and continue to follow up.

Best Practices

When dealing with the mortgage lender, residents should:

• Keep notes of all their communications with the loan servicer including: 
• Date and time of contact 
• Nature of the contact (face-to-face, phone, e-mail, fax, or mail) 
• First and last name of the representative 
• The outcome 
• If they make any oral request to their loan servicer, residents should follow up with a letter reiterating the oral request. 
• Send the letter by certified mail, return receipt requested, so it can be documented that the loan servicer received the correspondence. 
• Keep copies of your letter and any enclosures. 
• Meet all deadlines the loan servicer gives them. 
• Stay in their home during the process because they may not qualify for certain types of assistance if they move out.
• Continue to follow up. If residents do not hear back from the loan servicer in a reasonable amount of time after communicating with the company, they should contact it again.

If the problem is temporary, residents should call their lender to discuss these possibilities:

Reinstatement

Lenders are always willing to discuss accepting the total amount owed in a lump sum by a specific date. Forbearance may accompany this option. 

Forbearance

Lenders may allow residents to reduce or suspend payments for a short period of time and then agree to another option to bring the loan current. A forbearance option is often combined with a reinstatement when residents know they will have enough money to bring the account current at a specific time. The money might come from a hiring bonus, investment, insurance settlement, or tax refund. 

Repayment Plan

Residents may be able to get an agreement to resume making their regular monthly payments, plus a portion of the past due payments each month until they are caught up.

If the situation appears long-term or will permanently affect a resident’s ability to bring their account current, residents should call their lender to discuss options:

Mortgage Modification

If residents can make payments on their loan, but don't have enough money to bring their account current or can't afford their current payment, the lender may be able to change the terms of the original loan to make the payments more affordable. Home loans could be permanently changed in one or more of the following ways:

• Adding the missed payments to the existing loan balance 
• Changing the interest rate, including making an adjustable rate into a fixed rate 
• Extending the number of years a resident has to repay the loan

Partial Claim

If the mortgage is FHA insured, lenders might help a resident get a one-time interest-free loan from a mortgage guarantor to bring the account current. Residents may be allowed to wait several years before repaying this loan. Residents qualify for an FHA partial claim if:

• The loan is between 4 and 12 months delinquent
• Residents are able to begin making full mortgage payments again

When the lender files a partial claim, HUD will pay the lender the amount necessary to bring the mortgage current. Residents must sign a promissory note, and a lien will be placed on the property until the promissory note is paid in full.

The promissory note is interest-free and is due when residents pay off the first mortgage or when they sell the property.

If keeping the home is not an option, residents should call their lender to discuss these possibilities:

Sale

Residents who can no longer afford their home will usually have a specific amount of time to find a purchaser and pay off the total amount owed. Residents will be expected to use the services of a real estate professional who can aggressively market the property. 

Pre-Foreclosure Sale or "Short Sale" 

If residents can't sell the property for the full amount of the loan, the lender may accept less than the amount owed. Residents may qualify if: 

• The loan is at least 2 months delinquent 
• Residents (or their real estate professional) can sell the house within 3 to 5 months 
• A new appraisal (obtained by the lender) shows that the value of the home meets HUD program guidelines 

Assumption

A qualified buyer may be allowed to take over the mortgage, even if the original loan documents state that it is non-assumable. 

Deed-in-Lieu of Foreclosure

As a last resort, residents "give back" their property and the debt is forgiven. This will not save the house, but it is less damaging to a credit rating. This option might sound like the easiest way out, but it has limitations: 

• Residents will usually have to try to sell the home for its fair market value for at least 90 days before the lender will consider this option. 
• This option may not be available if there are other liens, such as other creditor judgments, second mortgages, and IRS or state tax liens.

What happens if I miss my mortgage payments?

Foreclosure may occur, but it doesn't have to. You can take action to save your home.

What should I do if I get behind in my mortgage payments?

It is never too late to receive help. By seeking help early, there is a greater chance of success in avoiding foreclosure. As soon as you anticipate problems in paying your mortgage payment, contact your mortgage servicer to explain your current financial situation. Many servicers are willing to work with you if you contact them immediately, because they understand that individuals and families can face temporary job loss, serious illness, or other major life events that can impact their ability to pay their mortgage. Contact your loan servicer's Loss Mitigation Department. Ask if you can participate in a "work out" resolution or obtain a loan modification. Be honest with the loss mitigation staff about your situation so they can help you choose the best option.

What is a "work out" resolution?

Generally, a "work out" resolution involves resuming payments and arranging to pay the past-due amount over a short period of time. Sometimes, lenders will allow a "loan modification" which might lower your interest rate or extend the final due date of your loan - making your monthly payments lower.

Where can I go to find help?

In addition to contacting your mortgage servicer, you can call the HOPE NOW Homeowner's Hotline at 888-995-HOPE (4673) or visit the HOPE NOW website, where they have independent nonprofits that provide HUD-approved counselors. You can call a housing counselor approved by HUD or a local resource in your area. These counselors are experienced in communicating with mortgage servicers and are able to determine where you are in the process and what "work out" options are available to you.

How do I know if I qualify for any alternatives to foreclosure?

Your mortgage servicer and a HUD-approved housing counselor will be able to determine if you qualify for any of the alternatives.

What should I do if I receive letters saying my home is going to be foreclosed upon?

Do not ignore letters or phone calls from your mortgage servicer! If you are having difficulty in making your payments, take action immediately by calling or writing to your mortgage servicer's Loss Mitigation Department to explain your situation. Make sure that you have a copy of your mortgage loan documents in hand prior to contacting your servicer.

Should I continue to live in my home?

Yes, you are in a far better position to save your home by continuing to live in it. If you abandon your property, you may not qualify for assistance.

What should I do if I get a foreclosure notice?

Call your servicer immediately to discuss alternatives to foreclosure.

Should I be aware of anything else?

Beware of scams! Solutions that sound too simple or too good to be true usually are. Unfortunately, there are people who may try to take advantage of your financial difficulty. Once your loan is in the foreclosure process, you may be contacted by those who will tell you that they can "help" you keep your house. Be cautious. Most of the time, these self-proclaimed specialists charge a hefty fee for services that are worthless or that you can perform for yourself just by calling your servicer's Loss Mitigation Department or by calling a HUD approved housing counseling agency. To learn more about avoiding being scammed, call the Florida Attorney General's office at 850 414-3300, or go to the Florida Attorney General’s website. The best way to avoid scams is to work directly with your mortgage company and a HUD approved housing counselor.

Are all offers to "help" scams?

Because of the public nature of foreclosures, anyone can access foreclosure listings on a daily basis. These listings include the owner's name and address and could include other sensitive information. Armed with this data, individuals pitch their scam to take advantage of a desperate owner. Please see section on Tips to Avoid Foreclosure Scams.

How long does a foreclosure take?

If a bank or mortgage company has started foreclosure against you, you will be served court papers by the sheriff or a process server. As soon as you receive court papers, read them and talk with an attorney to get advice, you must respond to these papers within 20 days.
You may receive an Order to Show Cause. This will tell the date and time that a judge will decide whether to foreclose on the house. You can go to the hearing and tell the judge why there should be no foreclosure. If the judge decides that the house should be foreclosed, he/she will set a day and time for the sale. That day will be at least 20 days after the hearing, but probably not more than 35 days later. If you do not file an answer or if you do not show up at the "Show Cause" hearing, a default can be entered against you. This is like automatically losing your case. The next piece of paper you could receive would be the notice to leave your house.

Can I retain my house after it goes to trustee sale?

You may retain ownership of your home (and continue to live in it) up until the time that the confirmation of sale has been filed with the court.

When do I actually have to leave the house?

You should be prepared to vacate the property once the foreclosure sale has been confirmed, which usually takes place 30 days to 60 days after the trustee sale. If you choose not to vacate the property, an eviction notice will be placed on your door informing you of the date you will be evicted by the sheriff. Your personal belongings will be placed outside your home and eventually removed. If you have not made alternative living arrangements, a HUD-approved housing counseling agency can refer you to community services in your area.

Should I consider refinancing?

Being able to refinance your loan depends on several factors. If you are already behind on your mortgage, your credit rating will be adversely affected. This could prevent you from obtaining a new mortgage at a reasonable interest rate. In addition, you may not be able to afford the fees and points that most lenders charge, especially if you have little or no equity in your home. If you do want to refinance, shop around for the best rate and terms possible and be alert for predatory lending practices. Refinance opportunities also exist with FHA Secure through the federal government. Information on FHASecure

Where can I file a complaint if I believe I have been a victim of predatory lending?

Complaints regarding predatory lending can be filed with the Florida Attorney General's office by calling 850-414-3300, or go to the Florida Attorney General’s website.

Would my mortgage company rather foreclose on my home than keep me in it?

On average, a mortgage company sustains a $50,000 loss in the event of a foreclosure. These companies are in the business of providing and servicing mortgages and would prefer not to own or sell homes. If possible, they would prefer to keep you in your home.

Is foreclosure uncommon?

Foreclosure is a challenge faced every year by thousands from all walks of life. You are not alone, but you need to take action to save your dream.

What are the main points I should remember?

• Act now and don't ignore the problem! 
• Contact your mortgage servicer as soon as you realize that you have a problem 
• Open and respond to all mail from your servicer 
• Contact a HUD-approved housing counselor 
• Stay in your home to make sure you qualify for assistance 
• Understand Florida's foreclosure process 
• Understand foreclosure prevention options and alternatives 
• Beware of scams
• Do not sign any document that you don't understand

Tips to Avoid Foreclosure Scams

In order to avoid some of the most common foreclosure scams, residents:

• Should contact their mortgage servicer as soon as they have trouble making payments. 
• Should contact a HUD-approved housing counselor for assistance if they are receiving letters threatening foreclosure and are not yet in a lawsuit. 
• Should contact http://www.floridabar.org/ to find an attorney to represent them if they have a pending lawsuit against them. 
• Should get detailed information about the deadlines they face in resolving their problems. They should pay special attention to the date on which they would lose legal right to ownership of their home. 
• Should be cautious of any claim to stop foreclosure for a fee. Residents should not make a down payment upfront, and should always ask for written information before they make a financial decision. 
• Should never make their mortgage payments to anyone other than their mortgage servicer. If you can't pay, residents should contact their servicer immediately to work out payment arrangements. 
• Should take their time and never sign a contract under pressure. Consult a lawyer or trusted family member before signing. 
• Should get all promises in writing. Many scam artists make lofty verbal promises but never put them in writing. Always make sure oral agreements are included in a written contract; otherwise they are not guaranteed. 
• Check companies' reputations before doing business, by researching their reputations with the Better Business Bureau and the Florida Attorney General to see if other consumers have filed complaints against them. 
• Should never sign away ownership of the home without consulting a lawyer. Be especially suspicious of offers to lease back the home, in order to buy it back over time, and beware of any home-sale contract in which residents are not formally released from liability for the mortgage. Residents should make sure they know the rights they are giving up and that they agree to give them up. 
• Should NOT sign anything with blank lines or spaces, as information could be added later without their knowledge and consent. 
• Should insist on using their own translator if they do not speak English. Never use a "rescuer's" translator. 

Types of Foreclosure Rescue Scams

Phantom Help

The "rescuer" charges outrageous fees for simple phone calls or paperwork that you could easily do, none of which results in saving the home. This predatory scam gives you a false sense of hope and prevents you from seeking qualified help.

Equity Skimming

A "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments, and allows the lender to foreclose. Remember, signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.

The Bailout

In this scam, you are deceived into signing over title with the belief that you will be able to remain in the house as a renter and eventually buy it back over time. The terms of these scams are so burdensome that the buy-back becomes impossible, you lose possession, and the "rescuer" walks off with most or all of the equity.

Phony Counseling Agencies

Some groups that claim to be "counseling agencies" may approach you and offer to perform certain services for a fee. These could be services you could do for yourself for free, such as negotiating a new payment plan with your loan servicer, or pursuing a pre-foreclosure sale.

The Bait-and-Switch

In this scam, you think you are signing documents to bring the mortgage current, but instead you are actually surrendering your ownership. You usually won't realize that you've been scammed until you're evicted.

Types of Credit Repair Scams

Getting a New Social Security Number

Individuals may only have one Social Security number. It is against the law to use a different Social Security number to create a false identity.

Getting a Federal Employer Identification Number (EIN or FEIN)

Proponents of this scam claim that you may obtain a federal tax ID number, as if you are a business, then receive a clean credit record under that tax ID number. It is against the law to use an EIN to set up a false identity. Further, a new credit report under an EIN will not show any credit history. It is unlikely that a creditor would regard a new business with no credit history as a good credit risk.

Challenging Every Negative Entry on a Credit History

Credit agencies may keep accurate records of negative entries on your credit history for up to seven years. They may also keep records of any bankruptcies for up to 10 years. There are certain circumstances where truthful negative information may be reported beyond those time periods. As much as you do not like having negative information on your credit report, your ability to object to inaccurate information is not meant to be a license to harass honest creditors in an effort to remove accurate negative entries.

Be aware that the only ones who can permanently remove the debt from your record are the credit bureau or the creditor.

• No one can erase negative information if it's accurate. Only incorrect information can be removed. Accurate information stays on your record for seven years from the time it's reported (10 years for bankruptcy). Even information about bills you fell behind on but now are paid will remain on your report for these time periods. 
• Credit repair services can't ask for payment until they've kept their promises. Federal law also requires credit repair services to give you an explanation of your legal rights, a detailed written contract, and three days to cancel. This applies to for-profit services, not to nonprofit organizations, financial institutions or the creditors. Be cautious about emails for credit services. Many unsolicited emails are fraudulent and should be deleted. 
• You can correct mistakes on your credit report yourself. If you were recently denied credit because of information in your credit report, you have the right to request a free copy. It doesn't cost anything to question or dispute items in your report. Follow the instructions provided by the credit bureau. Contact all three of the major credit bureaus, as the information each has may differ.
  • Equifax, 800- 685-1111, www.equifax.com  
  • TransUnion, 800-916-8800, www.transunion.com 
  • Experian, 800-682-7654, www.experian.com