How to Protect Yourself: Avoiding Mortgage Foreclosure and Foreclosure "Rescue" ScamsSource: The Florida Attorney General
Contact your mortgage loan servicer as soon as you realize you may have a problem or have missed a payment.
Mortgage Servicers can discuss options with you to help you work through payments during difficult financial times. Servicers prefer to have you keep your home and most will work with you to seek a solution. Be honest with your servicer about your financial circumstances so that you can have a realistic discussion regarding your options. You can find the number for your mortgage servicer on your monthly mortgage statement or coupon book.
Understand your rights.
Learn all that you can about your mortgage rights and foreclosure laws in Florida. Review your loan documents to determine what your lender or servicer may do if you can’t make your payments. Review Florida laws, particularly Florida Statutes Chapter 702 to learn about foreclosure proceedings.
Contact a non-profit housing counselor.
Help and information are available to you free of cost. The HOPE NOW alliance provides a 24-hour hotline to provide mortgage counseling assistance in multiple languages. Reach this hotline by dialing, 1-888-995-HOPE. You may also obtain a list of U.S. Department of Housing and Urban Development (HUD) certified counselors in Florida here.
Understand the relevant terms.
If you are working with your mortgage servicer or an approved housing counselor to keep your home, there are several options:
- Reinstatement: Your servicer may agree to let you pay the total amount you are behind, in a lump sum payment and by a specific date. This is often combined with forbearance when you can show that funds from a bonus, tax refund or other source will become available at a specific time in the future. Be aware that there may be late fees and other costs associated with a reinstatement plan.
- Forbearance: Your servicer may offer a temporary reduction or suspension of your mortgage payments while you get back on your feet. Forbearance is often combined with a reinstatement or a repayment plan to pay off the missed or reduced mortgage payments. Please be aware that some forbearance plans require that you immediately pay back the missed payments in a lump sum at the end of the plan.
- Repayment Plan: This is an agreement that gives you a fixed amount of time to repay the amount you are behind by combining a portion of what is past due with your regular monthly payment. At the end of the repayment period you have gradually paid back the amount of your mortgage that was delinquent.
- Loan Modification: This is a written agreement between you and your mortgage servicer that permanently changes one or more of the original terms of your note to make the payments more affordable.
If you and your servicer agree that you cannot keep your home, there may still be options to avoid foreclosure:
- Short Payoff: If you can sell your house but the sale proceeds are less than the total amount you owe on your mortgage, your mortgage servicer may agree to a short payoff and write off the portion of your mortgage that exceeds the net proceeds from the sale.
- Deed-in-Lieu of Foreclosure: A deed-in-lieu of foreclosure is a cancellation of your mortgage if you voluntarily transfer title of your property to your mortgage servicer. Usually you must try to sell your home for its fair market value for at least 90 days before a mortgage company will consider this option. A deed-in-lieu of foreclosure may not be an option if there are other liens on the property, such as second mortgages, judgments from creditors or tax liens.
- Assumption: An assumption permits a qualified buyer to take over your mortgage debt and make the mortgage payments, even if the mortgage is non-assumable. As a result, you may be able to sell your property and avoid foreclosure.
- Refinancing: While refinancing is not necessarily a good option when facing foreclosure and can sometimes even be a predatory practice, there are instances where it may help. Talk to your servicer to see if refinancing is an option for you.
Research available mortgage-assistance solutions.
Floridians age 60 or older may use the Florida Senior Legal Helpline, a free statewide telephone advice and referral service. Contact the Florida Senior Legal Helpline at 1-888-895-7873.
Veterans of the U.S. Armed Forces may also be able to obtain help from a U.S. Department of Veterans Affairs (VA) financial counselor. Veterans can call the VA toll-free at 1-877-827-3702. The VA offers a home loan guarantee program for veterans. For more information, click here. Veterans at risk of losing their homes should visit www.va.gov/homeless/housing.asp or call 1-877-4AID-VET to seek additional resources.
It is important that you continue to take any and all steps to protect your legal interests and your investment, which may include consultation with a private attorney. A private attorney can provide the legal advice which our office may not by law provide to individuals. You may find an attorney through the Florida Bar Association or by calling their Legal Referral Service toll-free at 1-800-342-8011. Verify your attorney is in good standing and has no disciplinary actions against them. If you cannot afford an attorney, you may be eligible for low-cost or pro bono assistance through a legal aid office in your area.
Carefully examine your finances.
Can you cut spending on optional expenses or delay payments on credit cards or other unsecured debt until you have paid your mortgage? Do you have assets that you could sell to help reinstate your loan? Can anyone in the household get a second job to help with income? These efforts to manage your finances may help you find income to apply to your outstanding payments and will demonstrate to your servicer that you are willing to work on your finances and make sacrifices in order to keep your home.
Do not fall victim to a foreclosure recovery scam.
If any business or individual offers to help you stop foreclosure immediately by signing a document authorizing them to act on your behalf or to set up financing, do not sign without consulting a professional (an attorney or HUD-approved counselor). This may be a trick to get you to sign over title to your home. You are then vulnerable to losing your home and all of your equity in your home to the so-called “rescuer.”
Avoid for-profit foreclosure prevention or loss mitigation companies.
If you fall behind in your mortgage payments, many for-profit companies will contact you promising to help you avoid foreclosure. Some may even appear to be affiliated with your lender or servicer. It is best to avoid dealing with these companies. Most will charge you a hefty fee up front for information that your servicer or a HUD approved counselor will provide for free. You can obtain the same plan or a better plan for free by contacting your servicer or a HUD-approved counselor. Use your money to pay the mortgage instead.
Should you require outside resources to avoid foreclosure, seek out a licensed mortgage broker or an attorney. You can verify a mortgage broker’s license on the Office of Financial Regulation’s website. A “rescue firm” or mortgage broker may never charge you up front. They may only charge you after you receive and accept a written offer for a loan or refinance contract.
Seek additional information.
Information regarding mortgage and foreclosure issues from the below resources may prove helpful during this time:
- CFPB on mortgages
- Making Home Affordable
- Federal Trade Commission (FTC) on homes and mortgages
- FTC on struggling with your mortgage payment
- The Florida Office of Financial Regulation on loan modifications
File a complaint.
If you wish to file a complaint against a mortgage broker or “rescue” firm with the state Office of Financial Regulation, you may do so online at www.flofr.com. Additionally, you may file a complaint against your servicer or a mortgage foreclosure rescue firm with the Attorney General’s Office online at www.MyFloridaLegal.com or toll-free by calling, 1-866-9-NO-SCAM.
If you wish to file a complaint against your lender or mortgage servicer, you may also contact the Consumer Financial Protection Bureau (CFPB), a federal agency tasked with reviewing complaints about mortgages, credit cards and other consumer financial products and services. For more information or to file a complaint, visit www.consumerfinance.gov or call toll-free at 1-855-411-2372.