Headlines Give False Hope of Foreclosure Relief

Posted February 21, 2012 in Foreclosure Real Estate by Courtney Sherwood

You’re still more likely to lose your house to foreclosure than to get help from your bank if you miss a mortgage payment, despite national headlines that suggest help is on the way.

So far this month:

  • Bloomberg News reported that some banks are paying property owners as much as $30,000 to sell their homes and move out, because that can be cheaper to the bank than foreclosing on the property.
  • The Obama administration announced it would help lower mortgage payments across the country by allowing people who’ve so far been unable to qualify for today’s low interest rates to refinance their homes.
  • Some of the country’s largest mortgage servicers agreed to pay $25 billion to help homeowners in foreclosure.

Headlines like these can give false hope  to financially struggling homeowners, said Florida attorney David Hicks of Alliance Legal Group.

“We often have to tell people, ‘I’m sorry, you’re living in a dream world,’” Hicks said.

Though new programs aimed at preventing foreclosures may assist some people, recent history suggests that help will be slow in coming and that most households will not benefit. A $50 billion federal effort launched three years ago with the goal of reaching 9 million homeowners, for example, so far benefited only 1.7 million households. Some banks have been more likely to foreclosure on borrowers who’ve sought federal help than to modify those borrowers’ mortgages.

That’s left foreclosure experts skeptical that most struggling borrowers will be able to get help in the short run – at least if they act on their own.

David Hicks

“You’re never going to get a handout,” Hicks said. “The bank is not going to call you and offer you anything. The people who are getting the best deals are the people who are fighting back.”

 A lawyer can help you to effectively fight foreclosure or to refinance if you owe more than your house is worth. Yet many homeowners think can able to solve their problems themselves, and often they go about it wrong. They may think bankruptcy is the best way to save a house, when less drastic measures could be more effective. Or they may be afraid to call a lawyer because legal fees are daunting for people who already can’t afford to pay all their bills. A growing number of homeowners are trying to challenge foreclosures in court without an attorney’s help, often by alleging mortgage fraud.

Although fraud is widespread, fixating on it is not the most effective way to get foreclosure relief, Hicks said. “That’s not how it works,” he said. “This whole process is more or less a negotiation.”

A real estate and foreclosure lawyer will understand how to negotiate with banks, and will also have experience navigating federal programs that can be hard to take advantage of otherwise. And while calling for help may be intimidating – especially if you are worried about money – the investment is usually worth it.

“Most attorneys won’t charge you an initial consultation fee – if they do, it will be nominal,” Hicks said. And even a complicated foreclosure case will usually cost far less in legal fees than a monthly mortgage payment.

 

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