All of us have turned on the TV and at seen the commercials promising help to troubled borrowers who may be late on mortgage payments or facing foreclosure. Many of the ads that flood our televisions, radios, and the internet are scams. Firms typically will charge a large fee of $1,000 or more and promising the borrower they will do the leg work and negotiate new terms with their current mortgage company. Many borrowers are left with no changes on their mortgage and out even more money.
The President's foreclosure prevention program that was just released may even open the door for more scams to flourish, but there is no need for this. Mr. William Apgar, the senior advisor to Shaun Donovan, the President's new secretary of housing and development, states that borrowers should not pay any fees to any third party firm. The government is offering incentives and subsidies to mortgage companies in hopes they will lower mortgage payments to anyone facing foreclosure.
Borrowers are encouraged to also work with their lender directly. Lenders state they see no advantage trying to work with a third party agency, when lenders have programs designed to help the borrower in distress, as well as seeking out an approved non-profit housing counselor for help.
The Federal Reserve is advising borrowers only work with HUD approved non-profit counselors - see www.hud.gov orwww.hopenow.com to find more information about approved counselors or call the mortgage industry's "Hope Hotline" at (888) 995-4673. In addition, they warn that people should not pay any fees until they are provided with the promised service, stay clear of any third party agency that promises "guaranteed results," and should do not sign any paperwork without fully reading it through.
State Attorney Generals have issued warnings about the scams, and have prosecuted some firms who have scammed borrowers. The Federal Reserve and the Federal Trade Commission have also issued warnings. U.S. Senator Herb Kohl is issuing a legislation that would prevent firms from collecting monies until the process is complete. California, Maryland, Iowa, and Florida have already passed laws preventing firms from collecting the fees upfront. Yet, the scams continue and are expected to get worse.
They has already affected many Americans around the country. Why do people fall for scams like this? Jack Guttentag, a professor of finance emeritus at the University of Pennsylvania's Wharton School, runs a website offering mortgage help for borrowers. He stated that non-profit counselors aren't always helpful, and lenders don't have staff trained to deal with borrowers needing foreclosure assistance. This pushes the borrower to seek other solutions. The agencies offer them the often unrealistic guarantees they want to hear. The borrowers are led to believe this process will be rapid and they will not lose their home.
In this case, truth may hurt, but so does deceit.
Call the Move with Marla Team today for assistance in buying or selling property in Glenview or any North Shore property.
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