California is one of the states hardest hit by the crisis in the mortgage market. As real estate values fall and home sales decline, experts have offered suggestions to strapped homeowners struggling to deal with the problem. What follows are some of the myths surrounding the mortgage meltdown, courtesy of the state’s Consumer Home Mortgage Information page. The information was provided by the Homeowners Help Hotline (888-995-HOPE).
MYTH: My mortgage company would rather foreclose on my home than keep me in it.
REALITY: The mortgage company sustains an average loss of about $58,000 when foreclosure occurs (TowerGroup study). They are in the business of providing mortgages – not owning or selling homes – and would always prefer to keep you in your home.
MYTH: Foreclosure is an uncommon problem – I’m all alone in this.
REALITY:Foreclosure is a challenge faced by millions of Americans every year from all walks of life. Rich, poor, young, old – the list is as diverse as society itself.
MYTH: I’ve only missed one payment – I can likely catch up.
REALITY: The most important thing to remember when playing catch-up with your mortgage is you owe any delinquent payments plus the current month’s payment. So, if you’re a month behind, you actually owe two payments – last month’s and this month’s.
MYTH: I’ve missed too many payments to get help.
REALITY: There’s always time to get help. We can’t work miracles, but we can always give expert advice for any situation. That being said, the help we’re able to offer is far more constrained if you’re eight payments behind than if you’re one or two behind. The sooner we can get involved, the better chance you have of avoiding foreclosure.
MYTH: I’m getting many offers of “help” from a variety of different people. Are they all scams?
REALITY: Because of the public nature of foreclosures, anyone is able to access foreclosure listings on a daily basis. These include the owner’s name and address at the very least, and in some states, they could include other sensitive information. Armed with this data, scammers can take advantage of a desperate owner. Here’s what to look for to avoid foreclosure scams:
1. Your home’s ownership changes hands. A common scam is where a party buys your home, then lets you rent it back. It sounds good at first, but you’re losing your property, and your new landlord can now legally kick you out of your home with little to no notice.
2. You’re asked to pay something up-front and/or you’re asked to stop making mortgage payments. Usually, these scams involve paying large sums of money to some sort of “foreclosure prevention service.” These services offer to do what our counselors do: counseling, a budget and approaching the mortgage company to consider a payment plan. But the services don’t do always do this work thoroughly, or follow through at all. The most important thing to remember when it comes to any foreclosure service is this: Foreclosure advice and direction should always be free.
3. You’re under pressure to act immediately. Some will prey on the stress and anxiety surrounding the foreclosure process by convincing owners to sign things they don’t understand. Don’t sign anything without either first talking to an attorney, your mortgage company or a nonprofit foreclosure prevention organization like the Homeownership Preservation Foundation.
MYTH: It’s impossible to stay in my house after foreclosure proceedings begin.
REALITY: Contrary to what you might think, there are still options available to you after the foreclosure process has started. The sooner you call us, the more tools we’ll have to help you fix your situation.