Keuka Housing Council offers advice for property owners
There are Yates County residents among the 2.2 million Americans who are in default on their mortgage, and some homeowners have already lost their homes or face that very situation.
But a local housing agency says there may be a way to avoid the worst case scenario, according to Kathy Disbrow, executive director of the Keuka Housing Council.
Not all of them are having trouble meeting higher payments due to adjustable rate mortgages — there are other ways people are feeling a financial squeeze these days.
Disbrow says some of these homeowners have fallen victim to sales pitches that put their property and financial future in jeopardy.
“The numbers of homeowners contacting Keuka Housing Council has tripled over the last few months,” says Renee Bloom, housing counselor for Keuka Housing Council (KHC).
Bloom is trained to intervene between a homeowner and mortgage lender when problems arise. Because the agency is certified by the federal department of Housing and Urban Development (HUD), lenders may listen to KHC while the same lender may be difficult for a homeowner to reach by telephone says Disbrow.
Bloom says more and more homeowners are learning it makes sense to contact the agency for help before making a decision that might place them in a position to be over-extended or preyed-upon by an aggressive lender.
“These lenders prey on low to moderate income families and will encourage them to borrow at the highest rate without care of what the family can truly afford. The mortgage lender then receives a higher commission,” says Disbrow, adding, “The new homeowner is excited about purchasing their home and agrees to the higher rate.”
Then, if a hardship such as unemployment or a serious health issue comes up, the homeowner is in a difficult situation.
Disbrow says other problems arise when lenders encourage homeowners to refinance their house, and then the lender suggests an appraiser.
This appraiser will put a higher than market value on the house and the lender will award a mortgage based on that higher appraisal. The loan may be a variable rate for two to three years. The loan officer tells the homeowner at the end of that loan, the homeowner will get a low, fixed rate. But when that time arrives, the homeowner discovers that not only is the promised fixed rate high, but the house is not valued as high, and the interest rate soars. Often, this rate forces payments higher than the homewoner can afford.
Other nightmare situations that could result in serious problems for a homeowner include:
• An offer from a company to take legal ownership of the home temporarily. Disbrow says the homeowner will then pay rent to the company which promises to return legal ownership to them once the family regains financial footing. But too often, the company, which is really a con artist, borrows as much as they can against the equity in the house, collects the rent from the original homeowner and never makes any mortgage payments. The property goes to foreclosure, any equity the homewoner had in the house is gone and their financial ruin is complete.
• Another foreclosure pitch happens when a company offers to renegotiate the homeowner’s mortgage with the lender or help refinance the property for an upfront fee anywhere from $800 to $2,000. The truth is, they may not even contact the lender, says Disbrow. “These companies prey on families and help them lose their homes rather than help them,” she says.
Bloom offers the following tips for protecting against foreclosure:
1. Contact our lender as soon as you know you’ll be late on a payment. The lender may be willing to renegotiate your loan before your credit is affected. “If they will not talk with you, call KHC,” she says.
2. If you are already in foreclosure, speak to a HUD certified counselor, such as Bloom or someone at another local agency similar to KHC. Do not pay a fee to anyone before you see results from their work.
3. Do not contact anyone who promises they will get you out of foreclosure for a fee.
4. Do not make payments to anyone other than your lender.
5. Do not sign your deed to anyone (even temporarily) without advice from an attorney. Reject any deal that involves you renting your home and buying back later.
6. If you absolutely can’t afford your home and you cannot negotiate the terms, you may need to sell it. If you do need to sell it, do so through a licensed real estate agent. They will help you get a far better value and will advertise your property.
7. Never sign documents with blank lines or spaces.
8. Use your own attorney; never use one selected by the so-called “rescue company.”
“Con artists are good at making you feel as if they have placed your best interest first. In truth, they are working to obtain as much as they can for themselves,” says Disbrow.
If you are confused or need advice, contact a HUD certified housing agency whose counselors can provide you with free advice on how best to proceed and they can intervene with your mortgage lender, perhaps coming to a solution that will be favorable to the homeowner.
“Keuka Housing Council is not a loan agency. However, we can help you take the steps that may save your home,” says Bloom, adding, “The sooner you contact us, the bigger chance we have of helping you to a favorable solution.”
KHC offers free counseling services to Yates County residents. To contact Keuka Housing Council, call 315-536-8707.