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REALTORS® Provide Advice on Avoiding Foreclosure

Wednesday, March 24, 2010

Helping homeowners stay in their homes is important to REALTORS® because they seek to sustain the communities where they work and live. As mortgage delinquencies and foreclosures continue to plague the market, that goal can be challenging.

Studies show over 50 percent of troubled homeowners believe telling a lender about financial difficulties will only hasten a move to foreclosure, so they prefer to stay silent. "By the time they feel compelled to contact someone about their financial problems, it is often too late to do anything," Jeff Bell, president of the Silicon Valley Association of REALTORS®, recounted what he has heard from members of the association.

"When monthly payments become too much, the first thing to do is seek the help of professionals, whether they are financial counselors, often available through local nonprofit counseling centers, or your lender," said Bell, a REALTOR® with Coldwell Banker in Cupertino.

Bell said borrowers should remember that lenders do not like to foreclose on mortgages.
"Taking possession of your house, maintaining it and then attempting to sell it will nearly always be a losing financial proposition for your bank," Bell said. "Therefore, talk with your lender sooner rather than later to try to arrange new repayment terms."

Bell said REALTORS® are a good source for referrals and can direct their clients to reputable individuals who are involved in various aspects of the real estate transaction, explain sources of help and refer them to counseling.

"Homeowners should turn to the professional in real estate, their REALTOR®, to obtain the objective advice and knowledge about their situation," Bell explained. "The REALTOR®'s knowledge and expertise was used in the purchase of their home and that same relationship should be relied on with respect to not falling into financial traps that are not in their best interests."

Here are steps recommended by the U.S. Department of Housing and Urban Development (HUD) to prevent foreclosure: 

1. Don't ignore the problem.
Take action immediately. Doing nothing will only make a bad situation worse. If you are going to be late with a mortgage payment, contact your mortgage company right away. The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.

2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.

3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.

4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the state's foreclosure laws and time frames in your state by contacting the State Government Housing Office.  

5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.

6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Find a HUD-approved housing counselor near you or call (800) 569-4287 or TTY (800) 877-8339.

7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses--cable TV, memberships, entertainment--that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.

8. Use your assets. 
Do you have assets--a second car, jewelry, a whole life insurance policy--that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.  

9. Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help--use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD-approved housing counselor will provide free if you contact them.

10. Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD-approved housing counselor.


The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.

The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.

Variations of this article have appeared in local area newspapers.

For further information, please contact Rose Meily at SILVAR Public Affairs, email , or phone (408) 200-0109.

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