As I mentioned I would be back on the first of February, I am now in Pasadena, California, speaking at ARELLO’s (Association of Real Estate License Law Officials’) MidYear Meeting. David Marsh, ARELLO’s Law and Policy Consultant, and I are here presenting “Protecting Mortgage Consumers: The Latest on Real Estate Fraud and Legislation.”
If you’re unfamiliar with ARELLO, the organization founded in 1930 to facilitate the exchange of information and cooperation among regulators and policy makers in the area of real property. Today, the organization has grown in stature and in recognition by growing its membership, attaining financial stability, and formulating and adopting uniform policies and standards in the fields of education, administration and enforcement. From everything I have seen thus far, it is clear to me that the association’s membership is sincerely committed to the effective administration and enforcement of the license laws and of the importance of regulation in a healthy marketplace.
David will lead off our presentation by providing conference attendees with an update on current and pending state and federal laws, while I’ll be sharing information about the latest trends in real estate and mortgage fraud. For more information about the conference or its attendees, visit the ARELLO website.
Chicago Tribune real estate columnist Mary Umberger recently asked me to offer advice to homeowners who are behind on their mortgage payments. From this morning’s Chicago Tribune:
Making the most of workout
April 13, 2008
Options exist for homeowners behind on their mortgage payments—if they act quickly. Lisle attorney Steven Bashaw and Michigan real estate broker Ralph Roberts offer these:
- A forbearance agreement may help borrowers with short-term financial problems, Roberts said. It’s a payment plan with a set pay-back period, and the bank will want proof you can live up to it. “If you owe $3,000 in back payments, for example, the bank may allow you to pay an extra $250 per month for 12 months,” he said.
- Reinstatement entails paying all past-due payments, costs and fees to bring the account current. This may be a good short-term solution, Roberts said, but homeowners have to make hard decisions about whether they can keep paying the loan in the long haul.
- Mortgage modification means working out a new loan, with many possible variations. The bank may agree to roll the amount owed in missed payments, penalties and interest into the total loan amount, for example, Roberts said. Or a modification might lower the interest rate or change the loan’s term.
- Sell the house in a timely manner, pay off the loan and fees, and end the problem, Roberts and Bashaw said.
- A short sale occurs when a lender agrees to take a loss by selling the house for less than the amount owed. “I don’t encounter those as much as you’d think,” Bashaw said. “They’re not the panacea that speculators and investors and real estate agents want you to think they are.”
- Bankruptcy. “It can give you more time to restructure your debt,” Roberts said. “Bankruptcy takes you off the market, the collection proceedings can’t keep going. The clock just stops running.” But it’s extreme, and a lender might get court approval to proceed with the foreclosure anyway, Roberts said. Plus, it poisons your credit-worthiness.
- Redemption. In Illinois, a foreclosed borrower has a certain amount of time after the house is sold at auction to redeem it by reimbursing the purchaser for the sale price and other costs.
- Rescue plans can come from all manner of folks. They are too varied to describe here—except to say that homeowners must be wary of scams.
Bottom line: Don’t sign a quit-claim deed to someone who says this will “fix your problem,” Roberts says. It may be a ruse to steal the house. Check with a lawyer before you sign.
| posted by Ralph R. Roberts, GRI, CRS,
Author of Foreclosure Self-Defense For Dummies
Learn More Here