Man Faces Federal Charges For Foreclosure Fraud. Don't be scammed. Let me help you.

Politics and blogging is my hobby and what I do because I care about about my country and my community. It doesn't pay the bills; it cost me. What I do for a living is work for a HUD-approved, non-profit housing counseling agency as a housing counselor helping people avoid foreclosure and save their home.  I deal with a lot of people in crisis. Many people I can help. There are a variety of options for avoiding foreclosure.

People facing a possible foreclosure should not try to navigate the crisis alone.  Thee are some options people don't even know about and some solutions are more complex than they first appear.
If in default on your mortgage, seek help. Also, start early.  If you wait until you have a foreclosure sale date, it may be too late to help you. Don't be too prideful to seek help.

Please, please do not pay anyone to help you avoid foreclosure. You see these advertisement for help avoiding foreclosure everywhere: on the back of buses, on cable TV, and print media.  Once you become late on your mortgage you will start getting enticements in the mail and by phone to engage the services of people who tell you they can save your home. Many of these are lawyers.  Tennessee is a "non-judicial" foreclosure state, meaning it does not require judicial action to foreclosure.  There is almost nothing an attorney can do for you.  The attorneys are seeking bankruptcy clients.

Other solicitation are from real estate agents seeking to do a preforeclosure are short sale. Sometimes that is an option but should not be your first option. Most of the solicitation are out and out scams.

One of the saddest thing I see is people who could have saved their home if they had not given money that could have went toward saving their home to a scam artist. Not only did they lose money but they also lost precious time thinking someone was doing something for them, when they were not.

If you are facing foreclosure or falling behind on your mortgage, call me for a phone consultation. I am good at what I do and I have helped hundreds of people save their home. There is no charge for my services.  If after talking to you, I think I can possibly help you, I will schedule you an appointment. My work phone number is 615-850-3453. One of the most generous and helpful programs is ending soon, so don't delay.

Below is story of how a local scam artist scammed people out of million of dollars.  It looks like he is being brought to justice. I hope they throw the book at him and he spends a long time in jail.

NewsChannel5.com | Nashville News, Weather
News Channel 5, by Jennifer Kraus, Consumer Investigator
NASHVILLE, Tenn. -- A former Wilson County man who told struggling homeowners he would help save their homes from foreclosure now faces federal fraud charges.
This comes nearly five years after NewsChannel 5 Investigates first exposed Charles Jones and his company Dont4close.com during the height of the foreclosure crisis.(link)

Top Stories

What is the Full Story about Helen Bailey's Pending Foreclosure?

Occupy Nashville has come to the assistance of 78-year-old Helen Bailey trying to prevent Chase Bank from foreclosing on her home. The story has gained national attention. Over 40,000 people have signed an on-line petition protesting the pending foreclosure including notable civil rights activist Cornel West.

This is a sad story. No one wants to see a 78 year old women be put out on the streets. However, before we jump to the conclusion that Chase should just write off $9000 in debt and let Ms Bailey stay in her home, pause and think about this situation.

What is the full story? 
The newspaper article says Ms Bailey has lived in the home for 28 years. There are some details that may not be relevant, but they very well may be. I don’t think we are getting the full story. There were two recent quit claim deeds filed on the property where other parties gave up an ownership interest in the property. I would be curious why there were two quit claims filed on the property. One quit claim was from Meriel Bailey dated 5/9/2011. The original warranty deed dated April 1999 transferred the property to Kimberly F. Bailey, Helen Bailey, and Meriel Fulton. Also the newspaper says her two daughters recently moved out of the property. Were the parties giving a quit claim her daughters? Did someone give up their ownership interest in the property so Ms Bailey could qualify for a reverse mortgage? Is Ms Bailey the only person on her mortgage? If other parties are on the mortgage they are still responsible for this debt. When one gives up an ownership interest in a property, they do not escape their obligation to pay the debt. I don’t know the facts. I am only asking questions but I think these questions need to be asked. (For property information see here and here.) 

Can Chase forgive $9000?
Ms Bailey is trying to get a reverse mortgage and the reverse mortgage is $9,000 short of the amount needed to pay off the existing mortgage. Occupy is asking Chase to take a short pay-off of $9000. While I do not know that Chase cannot do that, it may very well be that they cannot. Mortgage companies often cannot just write off a debt. When a mortgage company makes a loan, the loan is bundled and sold with similar type loans. The investor in these securitised debt instruments could be Fannie Mae or Freddie Mac or any of about 4000 other investors. Chase is no longer the owner of the debt. The debt instruments which secure the bundled mortgages often contain language that prohibits writing down any of the principle. So even if Chase wanted to write off $9000 they may be prohibited from doing so.


If Chase could write down the debt would it be good policy?
If Chase does a write off of debt for one person so they may get a reverse mortgage then others will have a similar expectation. What is the limit on how much debt a mortgage company should write off in order to accommodate someone in getting a reverse mortgage? Believe me, people will figure out how to make the system work for them. If it becomes Chase policy to write down debt in order for a party to get a reverse mortgage one may see situations in which people purposely modify their circumstances in order to qualify for such a write down. Wives may quit claim their interest in the property to their husband in order to let an older husband get a reverse mortgage and then they may expect the mortgage company to just forgive any shortage necessary to get the reverse mortgage. All of this money that is being written off is someone's money.  Part of it may be the tax payers money and contribute to the $14 trillion deficit.  If you own a share in a mutual fund in an IRA, you may experience a loss in your retirement account when an investor writes off a debt. There are consequences to debt forgiveness programs.

If Chase does write down the debt, can indeed Ms. Bailey get a Reverse Mortgage?
Reverse mortgages are not as automatic as they once were. Reverse mortgage companies have been having a problem with borrowers who would get a reverse mortgage and then still not be able to keep up the home, keep it insured, and pay the taxes. The newspaper story says Ms Bailey only has $700 a month income. In considering Ms. Bailey for a reverse mortgage, the reverse mortgage company would have to be assured that she is financially able to provide for home upkeep, taxes and insurance and still have money to live. I am not so sure she can qualify for a reverse mortgage. Does she have a conditional approval from a reverse mortgage lender?


Why did the daughters abandon their mother?
The Tennessean report says, “She fell behind on her mortgage in April after her two daughters moved out, leaving her with a mortgage just under $1,000 to pay alone.” Why did her two daughters move out? If everything was OK prior to the two daughters moving out, do the two daughters not have the obligation to help their mother? Are either or both of the daughters on the mortgage note? Can the two daughters raise the $9000 shortage? Are the two daughters not more responsible for their mother’s well-being than Chase? What is the story?


Is keeping this home in Ms Bailey’s best interest?
The newspaper story says, “She receives less than $700 a month in Social Security.” Think about that. Even if Chase writes off the $9000 and Ms Bailey is able to get a reverse mortgage, can she stay in her house on $700 a month? The home is a 4-bedroom, three-bath, 2720 square foot house. That is a lot of house to heat and maintain.  If she is only $9000 short on getting a reverse mortgage then my best wild guess is that she owes about $128,000 on the home and it is worth about $176,000. (See value estimates click here.) It is probably in Ms Bailey’s best interest to sell the home and downsize.


Why not let Occupy pay the $9000 shortage?
If 40,000 people think Chase should forgive the $9000 in order for Ms Bailey to stay in her home, then do the math: $9000/40,000= 22.5 cents each. If each of the 40,000 people who signed the petition would send Ms Bailey a quarter her problem would be solved. Maybe Cornel West could send a dollar.

Top Stories

Action Alert: Don't make foreclosure easier in Tennesee.

As a housing counselor working for a HUD-approved non-profit housing counseling agency, I see first hand the problems people face in trying to save their home from foreclosure. Tennessee already has one of the easiest foreclosure systems in the country. But yesterday in the Tennessee House Judiciary Sub-committee bankers tried to make foreclosure even easier in Tennessee.  

Tennessee's "non-judicial review" process for foreclosures ranks near the top for ease and speed of foreclosures.

• No courts. 
• No judges.
• No long drawn-out process.

All a bank has to do is:

1. Serve a single letter of notification to the homeowner. 

2. Publish 3 public notices of foreclosure in the area newspaper.  

3. Sell the property at auction. 

The whole process can take less than 21 days.

The only way to slow down the process is to file bankruptcy. Coincidentally, Tennessee has one of the highest bankruptcy rates in the country. 

Now in the Judiciary Subcommittee, bankers hope to make the process even easier.

Their shorter process would be;

 1. A single letter to the homeowner.  

2. A single public notice in the paper.

(No property description in the public notice.) 

(Errors would legally be allowed to appear in the notice.) 

3. Sell the property at auction. 

There are already documented cases across Tennessee where elderly, separated and divorcing couples had no idea their home was being foreclosed upon until someone read it in the paper and alerted them. 

This radical proposal from the banking industry violates several legal cannons including constructive notice, due process, fundamental fairness and the vagueness doctrines (see below).

This is not a conservative or liberal issue nor a Republican or Democratic issue but an issue of fair notice. Please take time right now to click here and email committee members and tell them what you think.   

Issue Brief SB1299 / HB1920

The Bill Threatens to Break Several Legal Doctrines.
 

Senate Bill 1299/House Bill 1920 will be heard this week.  The bill would decrease the number of publications necessary prior to foreclosing on a property from three to one, decrease relevant information contained in the notice, and the bill states that the law would allow errors in the public notice. Important constitutional and judicial doctrines such as constructive notice, due process, fundamental fairness and the vagueness doctrine are violated by this bill.  

Bill Violates the Legal Doctrine of Constructive Notice.

This bill decreases the number of publications for the public notice from three to one – thus violating a legal canon called constructive notice; the publication of a public notice three times. Courts allow constructive notice as a relief from liability for any claim of ignorance of the action.  Should a debtor willfully avoid notice by not opening their mail or claiming that they never received the notice of foreclosure the maxim of constructive notice provides protection for the bank or other entity; it is allowed by courts as legal proof that notice of the action was provided to the individual and or to the community.

Violates Procedural Due Process, Fundamental Fairness Doctrine and Vagueness Doctrines.  
Procedural due process of the law provides that any government action that unfairly deprives an individual of life, liberty, or property is unconstitutional.  This bill changes the standard description of property used for generations in foreclosure matters whereby one can easily identify through the ad the property being taken.  This bill would require only a “concise” description of the land in question; which means only a reference to the deed book and page in the county register of deeds office that contains the complete legal description of the property – it is not reasonable to believe that most citizens would be able to understand that the legal notice of foreclosure is identifying their property by reading such a technical description in the newspaper thus a procedural violation of due process would exist. 
 

An additional violation of due process set forth by the language of this bill is found in language that states “Any error or defect in the common description of the land shall not in any way void any sale of the land.”  This violates what is called the fundamental fairness doctrine which is synonymous with due process.  

 

The vagueness doctrine is a legal principle which states that law that does not provide a “person of ordinary intelligence a reasonable opportunity to know what is prohibited, proscribed or claimed” is unconstitutionally vague. This bill seems to allow language in legal notices which is intentionally vague and lacking in commonly useful information by changing the level of detail and standard description historically used to identify the property being taken. 

The above information is from the Open Government Project of the Education and Public Policy Center. EPPC has entered in to a project to defend open government in Tennessee called "Public Notice: under threat." Several pieces of legislation threaten to end public notices in Tennessee's newspapers including notices of upcoming elections, zoning changes, rate increases and many others. 

Please visit www.publicnoticetn.com to learn more about the impending threat to publication of public notices in Tennessee, watch the videos and read the issue alerts.

Top Stories

Nashville-Area Foreclosure Rates Up 39% - House And Home News ...

Rod Williams works at the nonprofit Woodbine Community Organization, negotiating with banks on behalf of people about to lose their homes. "I'll tell you the truth: The program has been a failure," Williams said. ...

WSMV.com - News - http://www.wsmv.com/news/

Top Stories

Facing Mortgage Default? Don’t be Scammed!

It is an outrage the number of people who are being scammed by phony mortgage default counseling services. I see it almost every day. Just today, another counselor in my office came to me with a case where the lady had paid a company $2800. She was behind on her mortgage and received a solicitation in the mail. The solicitation contained a form which looked like a government document. The form was a “009-S” and was called a “Payment Reduction Notification,” and said, “RE: HR5140 Economic Stimulus Act of 2008.”

This was totally phony. This company is not associated with the government and they are providing no service of any value. The lady responded to the solicitation and she was told that they could help her save her home. They also offered her legal services to save her house if such services were needed.

One often does need the assistance and guidance of a housing counselor in order to get a workout from one’s mortgage company. There are various factors involved in determining what workout may be available and the homeowner is often ill equipped to negotiate with the mortgage company. You do not need to pay for this service however; it is free. Secondly, Tennessee is a non-judicial foreclosure state and an attorney cannot help you save your home, except in the most extreme and rare of cases.

This lady ended up sending the mortgage company $2800. She has just lost that money and will not get it back. That $2800 could have went a long way toward a workout that would have helped save her home. This lady may or may not be able to file a chapter 13 bankruptcy and keep her house. It is too early to know what options might be available, but she was just ripped off of $2800 and without that money the prospect for avoiding loosing the home is a lot slimmer.

This is not an isolated case. I had one 89-year-old Black widow women who paid a company $800. We got her story on the local news and the “counseling agency” refunded her money. The reason she got her money back is that she had given the firm her bank account number and they took the money out of her bank account. Given the fact that the victim made such a good victim (elderly, Black, widow) and she claimed they took the money from her account without her permission, and that we got the story on TV, I assume the company thought it best to simply refund her money. Most people are not that lucky.

Last week, I served a client who had already filled out an information packet from one of these phony counseling agencies and already made out a check for $1600 to send to a company but luckily, on the advice of a friend, she called me first. We were able to negotiate a workout for her and she saved her home. If she would have sent the company the $1600 she would not have been able to afford a workout and would have most likely lost her home.

These phony mortgage default counseling companies solicit people by phone, by mail, by email, late-night TV infomercials and by knocking on a person’s door. There are several ways they can get the name of potential victims. They can get the names from the websites of the attorneys who handle the foreclosure or once a foreclosure notice is published they can get the information out of the newspaper. Another way is that they can purchase names from the credit bureaus. They establish certain parameters and then purchase the name of everyone who meets that profile. They may, for instance, purchase the name of everyone who is 60 days behind on their mortgage, or everyone who has been 30 behind for the last four months or so.

These companies are preying on desperate people. In addition to these scams there are also other more sophisticated scams, but the most popular scam is the phony counseling agency. Often the victim is the less educated or sophisticated but many intelligent, educated people also end up being victims. No one knows how widespread this is, but it is very widespread. Untold thousands of people are losing their homes when they could have saved them if they had gone to a legitimate housing counseling agency rather than a scam artist.

Legitimate housing counseling agencies are listed at this link: http://www.findaforeclosurecounselor.org/ . If you are in the Nashville area and need help call me, Rod Williams 850-3453. If elsewhere, use the above link and get help from a legitimate housing counselor. Please, help spread the word that legitimate free help is available. Please don’t let your friends or family fall victim to one of these cruel scams.

Top Stories

Rod Williams discusses avoiding mortgage foreclosure

On Thursday November 13, I appeared live on the Tennessean's web cast "Lunch Money." I was interviewed by Tennessean Business Editor Randy McClain and discussed the mortgage crisis and how homeowners can work with their mortgage company to get a work out. I outlined the various work out options. It is a 30 minute web cast. Click here to view the program: Link

Top Stories

Maryland Couple Indicted in Fraud Probe

Scam Allegedly Cheated Lenders And Homeowners

By Ovetta WigginsWashington Post Staff WriterFriday, June 13, 2008; B01

Federal authorities charged a Prince George's County couple yesterday with running a $35 million foreclosure rescue operation that duped lenders and unsuspecting homeowners facing foreclosure, in what prosecutors described as one of the largest mortgage fraud schemes in Maryland history.

Joy Jackson, president of Metropolitan Money Store of Lanham, and her husband, Kurt Fordham, were arrested yesterday in North Carolina, U.S. Attorney Rod J. Rosenstein said at a news conference at U.S. District Court in Greenbelt. Jackson, 40, and Fordham, 38, are charged with conspiracy to commit mail and wire fraud, six counts of money laundering, and 15 counts of mail fraud to obtain money and property from homeowners and lenders. (link)

Commentary:

I hope they get the book thrown at them! The maximum sentence they could get is 30 years in prison and a million dollar fine. These scum bags deserve the maximum sentence. This story was not carried in our local paper, and I have not read of any similar prosecution here in Tennessee. That's too bad. Every scam artist in the country should be living in fear of prosecution. If these stories were more widely published, it may have a deterrent effect.

There is plenty of blame to go around for the mortgage crisis. Investors, mortgage companies, loan officers, appraisers, and borrowers are all at fault. A lot of mortgage companies made loans that should never have been made. Loan officers filled out fraudulent documents, and borrowers signed them unaware of what they were signing. Borrowers did not exercise caution and purchased much more house than they could afford and did not care about the details of their loan products. There were a lot of inflated appraisals. A lot of people committed fraud and many were irresponsible.

Now that we have the housing crisis, a new kind of fraud is occurring. The way the scam worked in this story is that the Money Store would use a "straw buyer" to purchase the home and tell the owners that they could continue living there and then buy it back after a year. Instead the scam artist in this story would borrow as much as possible against the home, stripping any remaining equity out of it, then stop making the payments and let it get foreclosed. The owner never got to buy it back.

I have heard of the same thing happening here. Another fraudulent occurrence is when "investors" buy homes at rock bottom prices from homeowners who are in default. Many times the homeowners would not have had to sell their home; There may have been workout options that would let the homeowner keep their home. Even if the homeowner could not keep the house, they may have been able to get the mortgage company to give them additional time to sell it. They could have then sold it at a reasonable, market price and at least gotten their equity out of it. The homeowners, however, are desperate and don't know there are other options are available.

Another thing occurring is there are a lot of phony counseling services. These false organizations contact homeowners who are in default. They tell the homeowners they are entitled to workout options, which can save their home. The organization then convinces the customer that they know how to negotiate settlements with mortgage companies, and for a fee, they will do so. They may charge $800 to open a case! Then, they do nothing at all for the customer. The next month, they call the customer and say they need another $600. The desperate customer pays the "counselor" the last money they have. This is money which could have gone to the mortgage company as part of a legitimate workout, or at least helped the customer move and find a place to rent.

Do not fall victim to these scam artists! I work for a HUD-approved, non-profit, housing counseling agency. If you live in Tennessee, call me and I will help you for free. If you live in another state, go to the HUD website and find a housing counselor in your area. If you have friends or family that may be facing mortgage default, don't let them be scammed. Help is available.

Top Stories

There are ways Nashvillians can avert foreclosure

Act quickly and you might be able to stay in house (link)
By NAOMI SNYDER Staff Writer The Tennessean, April 6, 2008

The biggest mistake most people make when falling behind on mortgage payments is waiting until it's too late to do anything about it, housing advocates say.

"They're scared and they ignore several letters," said Rod Williams, director of housing services for the Woodbine Community Organization in Nashville. "I get calls from people that are going to foreclosure next week. It's hard to do anything at that point."

"Often (lenders) are willing to take a loss rather than have a foreclosure," Williams said. "The mortgage company really doesn't want to take your house."

Comment: I am interviewed for this article on how to avoid foreclosure.

Please, please, do not lose your home to foreclosure without exploring all the options. If you are in the Nashville area, let me help you. Don't try to deal with your mortgage company without getting help.

Avoiding foreclosure is often possible, but only if you know what you are doing. Get professional assistance. Don't avoid getting help because you are embarrassed. Don't think you don't need help. If you don't know the options available to you, you won't know what to ask for. You should no more face foreclosure without a professional housing counselor than you should go to court without an attorney. Don't give the mortgage company your financial information until a housing counselor has reviewed it.

One of the most important things for avoiding foreclosure is to act early. You have a much better chance of saving your home if you take action early. If you are behind on your house payment, or your adjustable rate mortgage is about to reset and you know you will have difficulty making the higher payment, call me. If you have friends or relatives who may be facing foreclosure, have them give me a call. There is no cost for our services.

Rod Williams, Director of Housing Services, Woodbine Community Organization. 850-3453

Top Stories

Mortgage 'freeze' buys time for some

Many wait too long for adjustable rate help
By CHAS SISK
Staff Writer
The Tennessean
Published: Thursday, 12/06/07

A mortgage freeze to be unveiled by President Bush today may provide only limited relief to thousands of financially strapped homeowners, and may not be enough to cure the foreclosure crisis, advisers who work with troubled borrowers in Middle Tennessee said.

The Bush administration's plan, which would freeze the interest rates on many adjustable-rate mortgages at their lower introductory levels, excludes many who need help the most, including those in foreclosure and those already behind on adjustable-rate monthly payments, officials from several Nashville-area housing organizations said.

The plan, which has the support of major banks, relies on borrowers and lenders to come together to revise terms of loans before adjustable loans accelerate — sometimes to double-digit rates.

Many first-time Middle Tennessee homebuyers in danger of foreclosure don't realize how bad their situations are until they are too far behind on payments, loan counselors said. "They're trying to figure this out themselves … and when (a solution) doesn't occur, that's when they come forward," said Rosalind Robinson, president and founder of Residential Resources Inc., an east Nashville housing counselor. "For this to work, they're going to need to set aside those emotions."

Delaying higher adjustable-rate payments won't always solve the underlying cause — a propensity of homeowners to buy a home they cannot afford, some advisers said. "The mistake that they made is they were able to buy a $120,000 house, but they fell in love with a $180,000 house," said Rod Williams, director of housing services for Woodbine Community Organization, which offers financial counseling. (To read all: Mortgage 'freeze')

My Commentary
This recent announcement of a mortgage rate freeze is a positive development but will probably help few people. What we know about it at this time is that people must apply for the mortgage rate freeze before their adjustable rate mortgage resets and they must not have been late on any house payments. If they qualify, they may have their introductory rate frozen for up to five years. Unless there is a big advertising campaign most people won't even know of the program until after their mortgage resets and they have trouble making their higher house payment. This program will help only a few people, just as will the recently announced FHA Secure program.

I do not advocate a general bail out of homeowners or mortgage companies. The people who took out bad loans and the mortgage companies that made bad loans should surfer the consequences. Small steps to slow the defaults are all we should be doing. For the people who got in a house with no money down and got a teaser rate, if they lose their home, while it is emotionally devastating, in reality they are not really losing anything since they have no equity in the house. For two years they got to live in a house they could not afford. We should not feel too sorry for them. While we need to try to mitigate the effect of the mortgage crisis, we should not reward bad decisions.

However, we should not just ignore this mortgage default crisis either. It could affect the general economy. Also, even if your home is not at risk, you can be harmed by this foreclosure problem. If three houses are foreclosed on your street, the property values could drop. If the houses set empty and get vandalized, prices can drop more. For some people who were going to downsize when they retired and a lot of their wealth was in their home, they will find they are less wealthy than they thought. Also, if a lot of home prices drop, local government will reap less tax revenue from property taxes. There is a public purpose in slowing the rate of default.

A response to the crisis that would help more than anything is additional funding of housing counseling. People do not know their options, and they do not know how to present their case to the mortgage company. Unfortunately, the people at the mortgage company are often uninformed about their own options. When it is a win/win and the mortgage company can me made to understand this, many times the home can be saved or at least foreclosure avoided. About 90% of the people I counsel avoid foreclosure. To avoid the foreclosure however, someone has to know what is doable and how to propose it.

Another thing that would help mitigate the mortgage default crisis is a rescue lending pool. As part of a comprehensive loan modification or forbearance plan, the pool could loan the homeowner additional funds to bring the payment current or to make a couple house payments. Sometimes if a homeowner can be helped with only a couple house payments they could save the home. The pool should be very limited however, and funded by the lending industry. If structured correctly, this could be a plus for all concerned. Stopping a foreclosure is not only helpful to the homeowner, but the lender as well. Government leadership could establish the mechanism to establish the rescue lending pool and convince the industry that this was in the industry’s best interest. The funding pool should be used sparingly and only when part of a plan that will avoid a foreclosure. We have to accept that some of the defaults should occur, but those that can be saved by a three hour counseling session or an infusion of a small loan should be saved.

Top Stories

Don't accept foreclosure without consulting a loss mitigation counselor first

The Tennessean, Saturday, 10/20/07
By ROD WILLIAMS

Believe it or not, mortgage companies do not want to foreclose on your home. They are in the finance business and not the real estate business. If you got behind on your mortgage due to a hardship and now the crisis is over, you can usually keep your home. Even if you did not have a hardship and simply mismanaged your money, you may be able to keep your home, if you can convince the mortgage company you can afford your house.

As a mortgage default and loss mitigation counselor, I am able to help most people I counsel avoid foreclosure and keep their home. If you are facing foreclosure, try to get an appointment with an experienced loss mitigation counselor. Unfortunately, there are not enough loss mitigation counselors to serve the people who need our service and most homeowners must deal with their mortgage company on their own. If you must deal with the problem on your own, here are some things you ought to know:

• Don't just ignore the problem. Many people who fall behind on their house payment simply put off dealing with the problem. As they fall further behind, they quit opening their mail or answering the phone. The sooner you deal with the problem, the more likely you are to find a solution that will help you save your home.

• Prioritize your bills. If you are facing financial difficulty and can't pay all your bills, pay the essential bills first. Pay secured debt before you pay unsecured debt. If you have two mortgages on your home, pay the first mortgage before you pay the second mortgage.

• Know that there are "work-out" options. While an FHA mortgage may offer more work-out options than other type of mortgages, almost all mortgage companies have programs to help you save your home.

• Reach the right person. When you first call customer service at most mortgage companies, you are talking to a person who is basically a bill collector, who does not know the work-out options that are available or does not have authority to offer them. Ask for the "loss mitigation department" or "work-out" department.

• Think before you give "financials." Sometimes your mortgage company may wish to take "financials" over the phone; other times, they may send you a packet to complete. "Financials" is a listing of your income and expenses. The mortgage company is trying to determine if you can afford the house and if they should work with you to help you keep it. How you complete the "financials" is extremely important. Usually, you need to show a positive cash flow, so you may wish to cut nonessential expenses such as cell phones, cable TV, gym and spa memberships and church contributions before you give your financials to the mortgage company. Another way you may increase your cash flow is by decreasing your income tax withholding.

• Don't agree to a plan you can't keep. Sometimes desperate homeowners will agree to a repayment plan, knowing they cannot afford the new payment amount. If you default on a repayment plan, the mortgage company will be reluctant to work with you on other work-out options.

• Consider bankruptcy. Sometimes a bankruptcy is the solution, if you cannot get a work-out plan from your mortgage company that lets you save your home. Talk to a bankruptcy attorney to see if bankruptcy is an option.

• Remember, a house is just shelter. Sometimes it is best to sell the home before it forecloses, surrender the home by offering a deed-in-lieu of foreclosure, or let the foreclosure occur. We develop an emotional attachment to our home and hate the thought of losing it. However, if you got a bad loan, simply can't afford the house you purchased, and have no equity in the home, you are not really losing anything if you do "lose" it. Bad credit can be repaired. Three years after losing your home, you can again purchase a home. But next time you can prepare yourself, educate yourself, and do it the right way. Losing your home is not the end of the world

Top Stories

My Proposal for a Foreclosure Avoidance Program

Here's an idea for how to avoid foreclosures
By ROD WILLIAMS
Published: Monday, 09/17/07
The Tennessean
The state or local government could develop a program that would help many homeowners avoid foreclosure without it being either a bailout of the lenders or a burden on the taxpayers.
(To continue Reading: Here's an Idea for how.... )

This article was published today in the Tennessean. I welcome feedback on this proposal. You may post your comments on this site or email me at Rodwilliams47@yahoo.com.
Also in the same issue of the Tennessean are these three articles of interest: Foreclosure issues affect all of us, by David Tarpley, managing attorney of the consumer/law section, Nashville office, Legal Aid Society of Middle Tennessee and the Cumberlands; Housing industry got away from its policies, by Eddie Latimer who runs Affordable Housing Resources Inc., a nonprofit housing corporation, and is chairman of the Tennessee Housing Development Agency; and The economy pays a price for irresponsible lending, The Tennessean editorial. You can read all of these at this link, see the center of the page. The Tennessean, Opinion.

Top Stories

Who is at Risk of Losing Their Home

As a housing counselor for a HUD-approved Housing Counseling Agency, I see first-hand the growing problem of home foreclosures. Unfortunately we can expect more increases in mortgage defaults for sometime to come. It is estimated as many as one out of five subprime loans issued during 2005-2006 will fail and borrowers will lose $164 billion in wealth due to foreclosures.

I counsel about eight people a week who are on the verge of losing their home. While my experience is not a scientific sampling, I observe three categories of people who are at risk of losing their home and see the categories about evenly split between the three.

(1). Bad things happen to Good people: Illness, lost of job, divorce, and loss of income or unplanned increase in expenses.

(2) Irresponsible homebuyers. Customer took out loans they could not afford. People in this category often could have qualified for a $90,000 house with a good loan, but instead got an adjustable rate mortgage or some other "creative financing" so they could buy a $150,000 house. Many people fail to build any saving, live payday to payday, living beyond their means and little bump in the road puts their home at risk. They feel entitled to a nice home and a new car. While working with one couple on their budget, I asked them why they had taken on such a large care note. The new mother explained to me, “Well, I got pregnant, and we had to have an SUV”.

(3) Predatory lending and poor lending practices are the third cause of people losing their home. I have witnessed inflated appraisals, phony "gift letters", falsified income, and people having their loan product switched the day of closing and then being pressured into closing. I recently had a client who had been "flipped" (refinanced) five times, each time losing equity in her home. After the fifth time she could not be refinanced anymore and her gross annual income was actually less than the total of her annual house payments.

Part of this problem will self-correct, as the market of available sub-prime loans dries up and few new borrowers will find the same easy credit available. However, there is a need for reform. We need new laws against predatory practices. We need vigorous enforcement of existing lending laws and prosecution of offenders. We also need basic financial literacy taught in schools and we need policies that encourage savings. But, more than anything, we need a change in societal attitudes so that people don’t feel ‘entitled’. No one owes you a new SUV and if you can only afford a $90,000 home, you are not entitled to a $150,000 home.
To seek advice on avoiding foreclosure, contact me. Rodwilliams47@yahoo.com

Top Stories