Are You Worried About Purchasing a House?

You follow the news, you’ve heard the nightmare stories. Buying a home — and keeping it — is a enormous leap and one that must be taken carefully.

As intimidating as owning a home may seem, there are HUD-approved housing counseling agencies that offer pre-purchase education. To view a list of agencies that participate in this program and to find a schedule of workshops, visit the Colorado Housing and Finance Authority.

Know Your Options

From the Colorado Foreclosure Hotline

Short-term Repayment Plan
A mortgage company may negotiate a short term repayment plan by asking the borrower to begin paying the full payment due plus a partial payment to get the loan caught up.

Forbearance Agreements
Forbearance agreements allow the borrower to catch-up on the mortgage payments over a longer period of several months. With forbearance agreements, you may be able to postpone payments for a period of time, depending on circumstances.

Refinancing
Refinancing occurs when a borrower applies to re-write the mortgage loan through the current mortgage company or through another program. This process may lower the interest rate, establish a fixed rate, lower the monthly payment, or provide a combination of those outcomes. The purpose of refinancing is to make the mortgage payments more affordable and to prevent future default.

Modification
A modification changes one or more of the original terms of the loan, such as the interest rate, payment amount, maturity date, or the amount of the unpaid principal balance. A modification can cure the default by adding the delinquent amount to the end of the loan or reducing the monthly payment, whichever is more affordable for the borrower.

Partial or Advance Claim
Qualified FHA borrowers may be eligible to obtain an interest-free loan, also called a partial claim, to bring mortgage current. The borrower initiations a promissory note and a lien is placed on the property util the note is paid in full.

Selling the Property
If the borrower has sufficient equity, the best option may be to sell the property prior to foreclosure and net enough from the sale to pay the remaining balance on the loan.

Assumption
Some mortgages can be assumed (taken over) by a third party. When a mortgage is assumable, the property can be transferred with the new owner taking over the payments. If payments were behind when the mortgage was assumed, without a workout agreement, the person assuming the mortgage will be in default and subject to foreclosure. The advantage may be that the assuming party is in a better position to deal with the default.

Short Sale
Short sales must be negotiated with the mortgage company to sel the property for less than the amount necessary to pay the loan. In doing so, the mortgage servicer agrees to accept the proceeds of the sale (or some other agreed upon amount) to be applied toward the debt.

Deed-in-Lieu of Foreclosure
A deed-in-lieu of foreclosure is a borrower?s voluntary conveyance of the title to the mortgage servicer in exchange for discharge of the debt. In accepting the deed, the mortgage servicer is also accepting responsibility for all liens against the property including judgments, junior liens, lease obligations, etc.

Have you been contacted by a loan modification company?

From the Colorado Attorney General’s Office:

Consumers facing foreclosure might be tempted to retain the services of a loan modification company to help them to obtain more favorable terms on their loan. Before doing so, the Office of the Attorney General encourages consumers to bear in mind several facts about Colorado law and the fact that they may be able to accomplish a modification without hiring anyone.

When dealing with a loan modification company remember:

* Before retaining an outside company or firm to attempt to modify your home loan, Colorado consumers are advised they should first obtain free help from the Colorado Foreclosure Hotline at 1-877-601-HOPE (4673). For more information on the hotline, visit their Web site at www.coloradoforeclosurehotline.org.

* It is illegal in Colorado for a loan modification or renegotiation company to charge you an upfront fee if you are more than 30 days behind on your mortgage. Ongoing or monthly service charges also are forbidden under Colorado law. These companies can only charge you once their services are completed.

* Never stop making your monthly payments. Consumers who do so could find themselves in foreclosure.

* Do not ignore communication from your lender. Most lenders have loan modification programs that can help you save your home. In some cases, all a borrower needs to do is call the lender and provide some current financial information.

* Beware of any advice from a loan modification company urging you not to contact your lender.

* If any company promised they will get rid of your debt, they are making a promise they cannot keep.

* Check out any loan modification company you are considering hiring. The Better Business Bureau maintains ratings of businesses. Any company with an “F” rating should be avoided.

To file a complaint against a loan modification company, visit https://www.coloradoattorneygeneral.gov/departments/consumer_protection/file_consumer_complaint.

Do You Understand the Colorado Foreclosure Process?

From the Colorado Foreclosure Hotline

Typically, a borrower must be three or more months delinquent on payments before entering the foreclosure process. This is the pre-foreclosure time period in which a mortgage company and its legal department will send warnings and possibly “intent to foreclose” letters.

After three months of missed payments, the mortgage company will file a Notice of Election and Demand (NED) with the public trustee from the respective county. This notice is sent to the homeowner, marking the beginning of the official foreclosure process. The NED will contain information about the foreclosing attorney, who represents the mortgage company, as well as the public auction sale date set for the property.

Following the NED, a homeowner will receive notice of a Rule 120 hearing with the district county court. This hearing determines a mortgage company’s legal right to initiate the foreclosure process on a delinquent loan. This is also the cure period for the mortgage, during which a homeowner must submit an “intent to cure” notice with the public trustee.

To cure the loan, all sums due must be paid to the public trustee via certified funds no later than noon on the day before the public auction. If no intent to cure or workout is reached before this time, the property will go to sale.

Following the public auction, the homeowner will be evicted from the property. There is no longer a redemption period in the state of Colorado, and the homeowner should prepare to leave the property at the time of the sale.

HOTLINE FOR MORTGAGE HELP

RMPBS will host a Mortgage Crisis/Loan Scam Prevention phone bank on Monday, Oct. 25 from 4-6:30pm, in partnership with the Colorado Foreclosure Hotline and 9News, offering Coloradans critical information from HUD-approved housing counselors on how to avoid loan scams and prevent foreclosure.

Call 877-667-6727 to reach the phone bank on Oct. 25. For assistance before and after our Oct. 25 phone bank, the Colorado Foreclosure Hotline is always available at 877-601-HOPE.

Avoiding Foreclosure: When a Lender Won’t Work With You

From the U.S. Dept. of Housing and Urban Development

You’ve done all your homework, explored workout options, talked to a housing counselor and tried to talk to your lender. But the lender won’t work with you. What do you do now?

For an FHA-insured loan
Your lender has to follow FHA servicing guidelines and regulations for FHA-insured loans. If your lender is not cooperative, contact FHA’s National Servicing Center toll free at (888) 297-8685, or via e-mail (hsg-lossmit@hud.gov). Whether by phone or email, be prepared to provide the full name(s) of all persons listed on the mortgage loan and the full address of the property including city, state and zip. We may be able to help you more quickly if you can also provide your 13-digit FHA case number from the loan settlement statement.

For a VA-insured loan
First, visit the VA Foreclosure Alternatives page. If you need assistance or have additional questions, talk to a Loan Service Representative.

For conventional loans
If you have a conventional loan, call the Colorado Foreclosure Hotline at 1- 877- 601- HOPE or contact a HUD-approved housing counselor at (800) 569-4287. They may be able to help you with your lender.

RMPBS Launches the 2010-11 Facing the Mortgage Crisis Campaign

Rocky Mountain PBS is launching a new Facing the Mortgage Crisis campaign in an effort to protect Colorado homeowners from foreclosure-related scams. This is the second-part of the network’s consumer awareness project that started in June 2009.

Partnering again with the Colorado Foreclosure Hotline, RMPBS will air a series of public service announcements and create online content beginning in October designed to raise awareness about foreclosure-related scams. The purpose of the project is to identify the tactics used by disreputable loan modification scam companies and point vulnerable homeowners toward credible, free resources.

RMPBS also will host two phone banks, the first on Oct. 25, in partnership with 9News so Coloradans can receive critical information from HUD-approved housing counselors about legitimate loan modification options. And “Colorado State of Mind,” the RMPBS weekly news program, will delve further into the issue in November with an expert panel offering much-needed insight and guidance.

In 2009, Rocky Mountain PBS was named one of the top five referral sources for the Hotline as a result of the Facing the Mortgage Crisis campaign.

Rocky Mountain PBS and the Hotline will work closely with the Colorado Attorney General’s office to share with homeowners how they can report scams and where to find trusted help. Last year, the Attorney General shut down more than 30 loan scam companies, the majority of which claimed to do loan modifications for an upfront fee.

The Colorado Foreclosure Hotline team, leveraging a $60,000 NeighborWorks America grant award as part of the national Loan Modification Scam Alert Campaign, also will coordinate an aggressive consumer outreach and education campaign to alert homeowners about the predatory practice. Resources will be available at
the Colorado Foreclosure Hotline site.

Managed by Brothers Redevelopment, the Hotline has served as the primary resource for homeowners facing foreclosure since its 2006 inception. Over the past four years, the Hotline has helped more than 25,000 Coloradans avoid foreclosure.

“Loan modification scams in Colorado are increasing at a rapid pace,” said Hotline manager Stephanie Riggi. “Every day, scam artists prey on vulnerable homeowners in danger of foreclosure. These homeowners are losing thousands of dollars along with their homes — lured by the false promise of a loan modification.”

JP Morgan Chase Global Philanthropy Foundation has generously provided a $10,000 grant to support this proactive, educational initiative.

How to Spot a Loan Scam (from the Loan Modification Scam Alert Campaign)

1. If a company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do little or nothing to help you save your home from foreclosure.

2. A company/person guarantees they can stop a foreclosure or get your loan modified. Nobody can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies will only promise they will try their very best to help you.

3. A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender. The minute you have trouble making your monthly payment, contact your mortgage lender.

4. A company pressures you to sign over the deed to your home or sign any paperwork that you haven’t had a chance to read, and you don’t fully understand. A legitimate housing counselor would never pressure you to sign a document before you had a chance to read and understand it.

5. A company claims to offer “government-approved” or “official government” loan modifications. They may be scam artists posing as legitimate organizations approved by, or affiliated with, the government. Contact your mortgage lender first. Your lender can tell you whether you qualify for any government programs to prevent foreclosure. And, remember, you do not have to pay to benefit from government-backed loan modification programs.

6. A company/person you don’t know asks you to release personal financial information online or over the phone. You should only give this type of information to companies that you know and trust, like your mortgage lender or a HUD-approved counseling agency.

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MakingHomeAffordable.gov

The consumer website, www.MakingHomeAffordable.gov, provides homeowners with detailed information about loan programs, along with self-assessment tools and calculators. These resources allow borrowers to determine whether they might be eligible for a modification or a refinance.

Borrowers also can connect with free counseling resources to answer questions; locate homeowner events; find a checklist of key documents and materials to have ready when calling their servicer; as well as FAQs from borrowers in similar circumstances, and much more.