Understanding mortgage assistance relief offers

Facing the possibility of foreclosure is stressful.  While there are many alternatives to foreclosure, the process of determining which option is best for your situation can be difficult and confusing.  During this time, you may be approached by outside organizations and individuals offering to solve your mortgage problems for you.  While this might be very tempting, it is important that you be on the lookout for mortgage assistance relief offers that might not be everything they seem to be.  Following are three mortgage assistance relief offers you might hear and what you need to consider before making any commitments.    

Offer:  We'll give you some money, just sign the house over, we'll cure the default.
What you need to consider: There really isn't a problem with it, IF you know how much equity you are selling and IF the purchaser really will cure the default and IF the purchaser will really make the payments and IF you want to still be responsible for the loan.  Too many IFs to be able to say this is either a good or bad option, just be very careful.

Offer: We'll buy the property, lease it to you, you have the option to buy it back.
What you need to consider: It might have happened, but the reality is, to buy it back you'll need a new loan that's larger than the loan you have with an interest rate greater than what you have.  The payments will be higher and it's going to be very difficult to qualify.  Explore a small hard money loan if you have the equity or consider an open market sale, you'll probably end up with more money in your pocket.

Offer: We’ll take care of everything for you, send us the money and don’t contact your lender.
What you need to consider: Be very wary of anyone who tells you not to contact your lender.  In this case you will probably end up paying something for nothing.  They collect the money and go, leaving you with less money and with the same problem.

Unfortunately, the increased number of foreclosures led to an increased number foreclosure scams.   While the government has been cracking down on foreclosure scams, it is important for you to remain diligent.  Following are some tips to help you avoid foreclosure scams:

  • Don’t panic, get detailed information about your foreclosure deadlines.
  • Never sign a contract under pressure. 
  • Never sign away ownership via a quitclaim deed without consulting a lawyer.
  • Never make your mortgage payments to anyone but your lender.
  • Beware of any home-sale contract where there is no release of liability.
  • Don’t sign anything with blank lines and spaces. 

For more information about mortgage assistance relief scams, visit FTC.gov.  If you have questions or concerns about your mortgage loan, consider meeting with a HUD-certified housing counselor to discuss your options. 

Money Management International (MMI), a HUD-certified housing counseling agency, is celebrating National Homeownership Month throughout June by providing potential and existing homeowners with valuable tips and tools. Visit the updated Homeownership and Home Loans section of MoneyManagement.org to learn more. 

Kim McGrigg is the former Manager of Community and Media Relations for MMI.