BEWARE OF FORECLOSURE HELP

I am a bankruptcy lawyer, having practiced for 18 years. With the foreclosures on the rise, I have seen various schemes to take advantage of those who are being foreclosed. There are even lawyers taking advantage of these people. I recently had a client who was charged $3,000.00 by someone who would help them "workout" of the foreclosure. The same client also retained an attorney who was charging $350.00 per month for each month that the home was not foreclosed. The sad thing is that these people did nothing for my client.

Looking first at the "foreclosure speacialists". These people charge anywhere from $1250 to $3,000 to assist you with modifying your mortgage. These people have no special knowledge and are doing nothing that you can't do for yourself. They tell you to put aside some money each month, "above your mortgage amount" while they are working on the modification. The way they work out a modification - they fill out a form that the mortgage company gives them. Do you know what information they use to fill out the form? Information you give them. You can fill out the same form. The trick with the modification is to give the mortgage company the information that they ask for. Try to keep in communication. The frustrating part for you is trying to get the right person to talk to with the mortgage company. But, mortgage companies are starting to be more responsive to your inquiries. Or, they should be.

Attorneys are also taking advantage of your situation. There are legitimate charges to assist with foreclosure defense, but when an attorney charges $350 for each month that you stay in the house, they are taking advantage of the current court workload. These attorneys are doing nothing to forestall the foreclosure. Rather, courts are taking a long time to process all the foreclosure cases. When contacting an attorney, it should cost no more than $1000.00 to file an answer in your case, appear at any hearings, and communicate with opposing counsel. When an attorney charges you a certain amount per month, run away.

How Does Bailout Help You?

As you are well aware, Congress passed a "Bailout Plan" on October 3, 2008. A portion of that bill will help homeowners who are behind on their mortgage. It appears the relief will be limited to "troubled loans controlled" by the government. As of the date of the bill, troubled loans controlled by the government are Fannie Mae and Freddie Mac loans. If your loan is a loan generated by Fannie Mae of Freddie Mac, the government will likely be handling your loan, if you are behind.

What does this all mean? The government will likely be more helpful in trying to workout a payment arrangement. What concerns me is that rarely does government move quickly. That could work to your advantage if you have no interest in keeping your home. It may be frustrating if you are trying to keep your home and workout a new arrangement.

The Bailout Plan will not help those people whose loans are current.

As we get more details about the Bailout Plan, we will update this blog.