Sarasota, FL Foreclosure Prevention is more important than ever. With all that is going on with our homes and the economy, it can be difficult to decipher between truth and fiction. When a homeowner runs into trouble with their mortgage it can leave them vulnerable to tactics used by those trying to take advantage. Here are 5 tactics to be aware of. If you run into someone trying to use one of these on you, don't be fooled!
1. Never sign your deed over to anyone who promises to save your home.
If anyone such as an investor or real estate agent tries to convince you that they can stall your foreclosure but you must sign over your deed first, do not do it. They may reason that because they must invest their time and money into your home that their investment must be protected. They may even argue that it will help you out as you can stay in your home while they try to postpone the sale of your home or try to purchase the home from your lender.
The Reality: Once your deed is signed over, you no longer have legal rights to your home but the mortgage is still in your name. If the investor fails to work something out with your lender, then you no longer have any legal rights to the property. There was a similar scam going around not too long ago. A company was promising that they had discovered a loop hole in the law that could save homes from foreclosure and leave the home to the homeowner free and clear. All the homeowner had to do was sign over their home to this company and pay rent during the legal process. The reality is dozens of homeowners were duped into paying rent to a company that never saved anyone's home. There were several prosecuted in this scam but be aware there are others like it out there. Signing over your deed is never a good idea for Foreclosure Prevention.
2. Never Sign a Power of Attorney:
Very similar to signing your deed over, a power of attorney should never be signed. The investor or real estate agent convinces the homeowner that they need a power of attorney signed in order to negotiate on their behalf. They request several notarized documents such as a contract, release of information, and power of attorney.
The Reality: In order to negotiate with your lender on your behalf all anyone needs is a letter of authorization. This letter does not usually need to be notarized and does not take away any rights. On the contrary a power of attorney gives someone else legal authority to make decisions for you. There have been homeowners scammed into this that have subsequently had their property change hands without their knowledge. Signing a power of attorney is not advised for Foreclosure Prevention.
3. Never Create Issues with the Property:
An investor or real estate agent convinces the homeowner that the bank is more likely to accept an offer in a short sale if the home is in worse condition. So to help out the homeowner should create issues with the property such as a flooded kitchen, punched in walls, leaking pipes, or any other issues that would negatively affect the value of the property.
The Reality: This is called fraud and this is illegal. If your property truly is in bad condition you don't have to fix these things, however, you should never fabricate issues to help out with the sale of your home. This is Foreclosure Prevention in its worst form.
4. Be Aware of The Impossible Refinance:
An investor or mortgage consultant convinces the homeowner that there is plenty of equity in the home and all they need to do to get out from under the bad loan they are in is refinance the loan. They may even promise cash at closing.
The Reality: Always get a second opinion on value. If you know that you do not have equity in your home then perhaps you are right. What might happen? This tactic could waste valuable time you need to save your home. In some cases the refinance will actually go through. Many mortgage brokers will target areas with varied values such as an area where some homes have views while others do not. In these cases an appraiser can get creative and submit a fraudulent appraisal on a lowered value home. If the refinance goes through the homeowner is now even more upside down on their home and may have to pay higher payments as a result. On top of this, the homeowner can become suspect for mortgage fraud. Because of stricter mortgage guidelines, a refinance is not a very common solution to Foreclosure Prevention.
5. Be Leary of a Promise of Seller Cash a Closing:
If you as a homeowner are upside down on your home and decide to sell your home in a short sale as a form of Foreclosure Prevention, please understand that it is against the law to receive cash from the sale at closing. An investor may promise to pay you money outside of escrow. He or she may even offer to buy your appliances at an overvalued price. They may offer you $2,000 for your refrigerator and $3000 for your washer and dryer, for instance. It sounds great but be aware.
The Reality: If you are working with an investor you must understand that they are buying your house to make a profit. The more money they must put out such as money given to you, the lower their offer to your lender must be so they can make their margin. This means that the lender will be less likely to accept the offer which can waste the precious time you need in order to save your home from foreclosure. On top of this, making money off of the sale of your home outside of escrow is also a form of fraud.
6. FORECLOSURE SOLUTION: Short Sale.
What should you do if you find yourself in a situation where you are in pre foreclosure, are behind on your mortgage , or are in danger of falling behind?
If you live in Sarasota, FL or in the surrounding area and are looking for Foreclosure Prevention methods to save your home, always work with someone you trust. If you are looking for a Realtor who is experienced in short sales and other ethical foreclosure prevention solutions, then look no further. I am always a phone call or email away and I am here to help!
Don't spend more time than you need to carrying the burden of your current financial stress the winner between short sale vs. foreclosure is obvious. If putting your life back on track is your goal, then please give me a call. You have many options. Find out if a Short Sale is right for you.
Eric Thompson, Florida State Licensed REALTOR®
Telephone (941) 809-6680
The above agent is not engaged in the practice of law nor gives legal advice.
Realtor License # SL3092706