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- Why the foreclosure crisis isn’t improving
Beware of Predatory Lenders
While most mortgage lenders are reputable, a few unscrupulous lenders engage in predatory lending practices that can increase the likelihood that you will lose your home to foreclosure. These practices include making a mortgage loan to an individual who does not have the income to repay it, charging excessive interest, points and fees or repeatedly refinancing a loan without providing any real value to you.
If you are facing foreclosure, you may also receive refinance offers in the mail telling you that you have been "pre-approved" for credit based on the equity in your home. But consider this, if you cannot make your current payments, increasing your debt, even if you get some temporary cash, will make it harder to keep your home.
Here are several precautions that should help you avoid falling prey to scam artists and predatory lenders:
- Don't sign any papers you don't fully understand
- Make sure you get all "promises" in writing.
- Beware of any contract of sale or loan assumption where you are not formally released from liability for your mortgage debt.
- Check with a lawyer or your mortgage company before entering into any deal involving your home.
Foreclosures and deficiency judgments could affect your ability to qualify for credit in the future.
If you are facing financial difficulties, the following steps can help you keep your home.
- Contact your lender NOW! Many people avoid their mortgage lenders when money problems occur, but they can help. Most lenders have workout options and are willing to explore every possible option. The key is to contact them as soon as problems occur.
- Stay in your home. You may not qualify for assistance if you abandon your property.
- Talk to a Housing Counselor. Speak with a U.S. Department of Housing and Urban Development (HUD)-approved housing counseling agency near you at 1-800-569-4287. They can help you assess your financial situation, prioritize your debts, determine your options, and help you negotiate with your lender. They also have information on services and programs that may help you. They may also offer credit counseling. These services are usually free of charge. For more information, go to the U.S. Department of Housing and Urban Development website at www.hud.gov.