Steps to Keep Predatory Lenders at Bay
How homeowners can avoid becoming victims of predatory lending.
April 4, 2008 — -- Jessica Attie, a lawyer with South Brooklyn Legal Services, which counsels homeowners threatened with foreclosure, offered a few pieces of advice Thursday for people faced with foreclosure. Here is an updated tip sheet with Attie's advice for homeowners.
Call for Help:
If you are having trouble paying your mortgage, consult with a nonprofit housing counselor or legal services attorney before talking to your bank or servicer. Ask the counselor or attorney if they can help you negotiate a loan modification. At a minimum, ask the counselor or attorney to look over any modification that the bank has offered you to make sure it is affordable.
If you think you received an abusive or fraudulent loan, call a legal services or nonprofit attorney. They can help you understand whether you have any legal remedies.
Be aware that if you sign a loan modification agreement, you may give up important legal claims that you have against your lender or defenses that you may have to foreclosure.
Don't wait until you miss a payment. If you think you won't be able to afford your loan, call for help right away.
If You Have Defaulted on Your Loan:
Continue to make your monthly payments, if possible.
If the servicer or lender refuses to accept your payments, put aside the money that you would normally pay each month, or as much as you can. You may need that money later if you want to modify your loan.
Don't ignore foreclosure notices. The more time that passes, the more difficult it will be to modify the mortgage or to find another solution.
Don't sign any loan modification or forbearance agreements that you can't afford. Consult with a nonprofit counselor or attorney before signing anything.
Avoid For-Profit Negotiators:
Whatever you do, don't hire a for-profit negotiator. The negotiators "are frequently scam artists who charge fees and produce no agreements," said Attie.
Avoid anyone who tells you that you have to temporarily sign away your deed in order to refinance your home.
To Locate a Nonprofit Housing Counselor or Legal Services Organization:
The following Web sites provide contact information for local and national organizations:
The U.S. Department of Housing and Urban Development
The Center for Responsible Lending
The Institute for Foreclosure Legal Assistance
Your state attorney general may also have resources to help homeowners facing foreclosure.