There are federal, state and local resources available for homeowners in difficult financial straits and facing losing their homes. These are the best resources for residents dealing with mortgage issues.
“Loan modification” is a term now commonly heard in the media. But, it’s not a guaranteed option for trouble mortgage payers. Loan modification is an adjustment to a home loan that lowers the monthly payments--sometimes only temporarily. In some cases this involves only the interest on the loan, not the principal.
How to apply for a loan modification?
A good starting point is reviewing information at the U.S. Department of Housing and Urban Development and consulting free mortgage counselors. Click for HUD information
One very important first step is to speak with a mortgage counselor at an agency certified by HUD. This listing can also be searched by zip code. Click for a list of HUD approved counseling resources in California
The counselors take down financial information about your mortgage and income. From this evaluation they will tell you whether you're a candidate for a loan modification. There is no charge for this service.
Some of the agencies have established relationships with the major banks and mortgage companies and will contact them on your behalf if it seems there's a chance for a deal.
The State of California also has a mortgage resource page that addresses getting help for many of the issues homeowners may face: Trouble making payments; getting mortgage help; preserving home ownership and avoiding foreclosure. Click for the California Consumer Home Mortgage information page
One notable local resource is Los Angeles Neighborhood Housing Services. This 25-year-old organization has counselors on staff and runs foreclosure prevention clinics at http://www.lanhs.org/. Call 888-895-2647 for more information.
Within this organization is the Center for Foreclosure Solutions, a part of the Los Angeles Neighborworks.
Federal help
One of the primary agencies set up to assist troubled mortgages is Making Home Affordable at http://www.makinghomeaffordable.gov/. The agency is part of the effort to stabilize the housing market and help up to 7 to 9 million Americans reduce their monthly mortgage payments to more affordable levels.
Their site provides homeowners with detailed information about programs along with self-assessment tools and calculators to help borrowers with the resources they need to determine whether they might be eligible for a modification or a refinance under the program.
Click for additional background on the “Helping Families Save Their Homes Act”
Additional help
The Homeownership Preservation Foundation (HPF) is a national non-profit organization dedicated to preventing foreclosure and preserving homeownership. Their main service is their 888-995-HOPE hotline for providing foreclosure prevention counseling to homeowners.
Click http://www.995hope.org/ or call 888- 995-HOPE or 888- 995-4673.
Beware of scams
Foreclosure scam artists often target people in financial distress. The California Home Mortgage Information site lists these suspicious practices:
· Of anyone who wants the deed to your house for any reason, whether it’s to clean up your credit or obtain "special" financing from an investor.
- Who offers to rent your house back to you until you can get back on your feet.
- Lenders who encourage you to borrow more than you need or more than the value of your home.
- Terms that change at the last minute or offer next-day approval based on prepayments or up-front fees.
- Of forms you do not understand or that contain blank spaces "to be filled in later."
- Beware of phony credit counseling agencies charging high fees for financial counseling services you can get for little or no charge through non-profit agencies. You can find a list of HUD-approved agencies by visiting their web site.
REMEMBER: Anything that sounds too good to be true usually is! If you suspect a predatory mortgage company is targeting you, call your local office of consumer affairs, the Federal Bureau of Investigation, an approved credit counseling agency or your local Don't Borrow Trouble campaign.
Alleged scams can be reported to the State Department of Consumer Affairs. Click for the California Department of Consumer Affairs; or call 916- 445-1254 or 800-952-5210.
