Foreclosure prevention: Don't get scammed

Where to turn to for help when facing the loss of your home.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Les Christie, staff writer

Mortgage Rates
30 yr fixed 3.80%
15 yr fixed 3.20%
5/1 ARM 3.84%
30 yr refi 3.82%
15 yr refi 3.20%

Find personalized rates:

Rates provided by

NEW YORK ( -- When mortgage borrowers fall behind on payments and run the risk of losing their homes, they sometimes grab the first lifeline tossed their direction. Often that lifeline is a TV or Internet advertisement making grand promises - and has more than one string attached.

"The challenge used to be to encourage people to reach out for help," said Marietta Rodriguez, director of National Home Ownership Programs for the community organizer NeighborWorks America. "That's not the message anymore. Now it's borrower beware."

She's worried because many of the companies advertising their services charge or take up-front fees and then do little or nothing for their clients.

"There are many rescue scams that are after your business," Rodriguez said. "They're guaranteeing something they can't and charging a lot. Even the legitimate for-profit services demand a high pay-out up front."

So, if you are in trouble and need help to fight off foreclosures, you should ask several questions before hiring anyone.

5 questions to ask

1. How much does the service cost? "You should never pay a nickel for foreclosure-prevention counseling," said Austin King, a spokesman for the community organizer Acorn. "The companies that charge for this service are profit driven, not mission driven, and they can charge up to a couple of thousand dollars for doing an hour's work."

Organizations like Acorn, which has offered foreclosure counseling for 20 years, provide expert, HUD-certified caseworkers at no charge to homeowners. They're paid with funds from the government, private foundations and lenders.

2. How long has the organization performed foreclosure-prevention counseling? Longer, of course, is better. Counselors should be fully up to speed on how to handle the particular problems of their clients. Each case may be unique, but experienced counselors can apply what they've learned to other particular cases.

Not every organization has been handling foreclosure problems as long as Acorn, but if they just got into the field a few months ago, they may not yet be fully up to speed.

3. Does the counselor have a direct pipeline your servicer's mortgage-modification department? Many foreclosure counselors have established working relationships with the mortgage-mitigation specialists at the lenders. These are the people authorized to offer workouts to defaulting mortgage borrowers.

If counselors are already talking to a servicer several times a week, they know what the servicer requires and what workouts are likely to be offered. Counselors also may have established personal relationships that they can leverage to negotiate on your behalf.

Of course, almost any firm trying to win your business will say they have a direct contact. So get specific. Ask if they have a written agreement with your servicer; many have put pledges to work with foreclosure counselors down on paper. You can also ask if they work with a specific person at the servicer, someone who would have the authority to make decisions on your account.

4. Do they have an "in" with a decision maker who can override the mortgage mitigation department? Some foreclosure counselors have a servicer's VP for mortgage mitigation on speed dial. If they can't get a desired outcome from the people they usually deal with, they can call the higher-ups and sometimes get them to override decisions.

5. Does the counselor stay with you every step of the way? Often once a client is assigned a caseworker, that person sticks with the borrower throughout the foreclosure prevention process.

That's important. One of the problems that defaulting borrowers have in dealing directly with lenders is they tend to get bounced around from one mortgage mitigation specialist to the next. Filtering everything through a single counselor can save time, which is often in short supply for at-risk borrowers.

It still might not work

Of course, even with all those factors in place, there's no guarantee of success. Interventions can fail simply because there's nothing anyone can do. If you've lost your job and have no income, even counselors with the best credentials and intentions will be hard-pressed to help

"Not everyone should stay in the house," Rodriguez said.

Counselors, according to her, must ask themselves whether it is in the best financial interest of the borrower to hang on to a home. In some cases, people have to choose "the least amount of collateral damage," she said. That can mean borrowers stop trying to keep homes they simply can't afford under any viable plan and leaving homeownership behind. To top of page

Find mortgage rates in your area

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. More
Worry about the hackers you don't know 
Crime syndicates and government organizations pose a much greater cyber threat than renegade hacker groups like Anonymous. Play
GE CEO: Bringing jobs back to the U.S. 
Jeff Immelt says the U.S. is a cost competitive market for advanced manufacturing and that GE is bringing jobs back from Mexico. Play
Hamster wheel and wedgie-powered transit 
Red Bull Creation challenges hackers and engineers to invent new modes of transportation. Play

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.