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Getting behind on your mortgage payment is a frightening situation. You could lose your home! In fact, the foreclosure rate has gone up 93% since July 2006 according to RealtyTrac, an online marketplace for foreclosed properties. This works out to one in every 693 households being in foreclosure. In our research on this topic, we heard this advice time and again-
DON'T DELAY. ACT NOW.
The sooner you contact someone for help, the more likely it is that you will be able to keep your home. When we looked into the reason for the increase in foreclosure rates, we learned the most common issue facing home owners is the adjustable rate mortgage or balloon payments. Many home buyers thought their salaries would increase enough that they could cover the future increase in rates only to find their raises did not match the increase, or they faced downsizing or unemployment.
Studies show that over 50% of those people delinquent on their mortgage payments do not contact their lender. Instead of acting on good financial advice, people often hope the problem will just resolve itself. Getting help early could save your home.
The First Steps:
1. Contact the Home Ownership Preservation Foundation at 888-995-HOPE; www.995HOPE.org, which is part of neighborhood Works Center for Foreclosure Solutions. This is a non-profit organization that has trained foreclosure prevention counselors on staff who will help homeowners with budgeting help, a written financial plan, assistance in contacting the lender, and referrals to other resources. This hotline is available 24/7 and counselors answer the phone. The Neighborhood Works program also has over 200 sites across the country where you can learn about pre-purchase counseling, home repair programs, and more. You can check them out at http://www.nw.org/network/home.asp
2. HUD sponsors housing counseling agencies throughout the country that can provide advice on buying a home, renting, defaults, foreclosures, credit issues, and reverse mortgages. This webpage allows you to select a list of agencies for each state http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or you can call online at 800-569-4287.
3. For those in Disaster Areas: If you live or work in an area declared a disaster by the President and the hurricane, tornado, flood, wildfire, or other natural or man-made event damaged your home or reduced your income, your lender will provide disaster relief for 90 days on an FHA-insured loan and in most cases for other loans.
4. The Federal Housing Administration will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program. FHASecure will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default- to qualify for refinancing. This program is effective immediately. Many families were doing fine until their loans doubled, but now they will be able to refinance easily. FHASecure is designed for families who are good credit risks but were steered into high-cost loans with teaser rates. To be eligible homeowners must:
For more information call the Federal Home Administration at 800-CALL-FHA or www.fha.gov
5. For Active Duty Military: If you or your spouse is on active military duty, you may qualify for a reduction in your interest rate resulting in lower payments through the Servicemembers Civil Relief Act of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) . The Act applies to active duty military personnel who had a mortgage obligation before enlistment or before being ordered to active duty. This includes:
In limited situations, dependents of service members are also entitled to protections. See You Can Avoid Foreclosure and Keep Your Home from the Federal Housing Administration (included towards the end of this newsletter).
6. Contact your State Housing Finance Agency. The programs they offer vary state to state, but many are helping families refinance to make their mortgage payments more affordable. They also may be able to refer you to local programs that offer assistance. When I called the state of Ohio they referred me to several of the offices listed above, plus a local agency that offered the Ohio Rescue Fund which is a forgivable $3,000 loan for those whose income is 65% of the area's median income (roughly $42,000 for a family of 4). They also had a program from the Franklin County Department of Job and Family Services called Prevention, Retention, and Contingency which offers $1,500 grant to families whose income is 165% of poverty for emergency situations.
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Alabama Housing Finance Authority
2000 Interstate Park Dr., Suite 408
Montgomery, AL 36109
P.O. Box 230909
Montgomery, AL 36123
Alaska Housing Finance Corporation
4300 Boniface Parkway
Anchorage, AK 99504
P.O. Box 101020
Anchorage, AK 99510
Arizona Department of Commerce
Office of Housing Development
3800 North Central
Phoenix, AZ 85012
Arkansas Development Finance Authority
423 Main St., Suite 500
Little Rock, AR 72201
California Housing Finance Agency
1121 L St.
Sacramento, CA 95814
Colorado Housing Finance Agency
1981 Blake St.
Denver, CO 80202
Connecticut Housing Finance Authority
999 West St.
Rocky Hill, CT 06067
Delaware State Housing Authority
18 The Green
Dover, DE 19901
District of Columbia
DC Department of Housing and Community Development
801 North Capitol St., NE
Washington, DC 20002
Florida Housing Finance Corporation
227 North Bronough St., Suite 5000
Tallahassee, FL 32301
Georgia Department of Community Affairs
60 Executive Parkway South NE
Atlanta, GA 30329
Housing and Community Development Corporation of Hawaii
677 Queen St., Suite 300
Honolulu, HI 96813
Idaho Housing and Finance Association
565 West Myrtle
P.O. Box 7899
Boise, ID 83707
Illinois Housing Development Authority
401 North Michigan Ave., Suite 900
Chicago, IL 60611
Indiana Housing Finance Authority
115 West Washington St.
Suite 1350, South Tower
Indianapolis, IN 46204
Iowa Finance Authority
100 East Grand, Suite 250
Des Moines, IA 50309
Kansas Housing Resources Corporation
1000 SW Jackson St., Suite 100
Topeka, KS 66612
Kentucky Housing Corporation
1231 Louisville Rd.
Frankfort, KY 40601
Louisiana Housing Finance Agency
2415 Quail Dr.
Baton Rouge, LA 70808
Maine State Housing Authority
353 Water St.
Augusta, ME 04330
Maryland Department of Housing and Community Development
100 Community Place
Crownsville, MD 21032
One Beacon St.
Boston, MA 02108
Massachusetts Department of Housing and Community Development
One Congress St., 10th Floor
Boston, MA 02114
Michigan State Housing Development Authority
735 E. Michigan Ave.
P.O. Box 30044
Lansing, MI 48912
Minnesota Housing Finance Agency
400 Sibley St., Suite 300
St. Paul, MN 55101
Mississippi Home Corporation
840 River Place, Suite 605
P.O. Box 23369
Jackson, MS 39225
Missouri Housing Development Commission
Kansas City, MO 64111
Montana Board of Housing- Department of Commerce
301 S. Park Ave.
Helena, MT 59601
P.O. Box 200501
Helena, MT 59620
Nebraska Investment Finance Authority
200 Commerce Court
1230 O St.
Lincoln, NE 68508
Nevada Housing Division
1802 North Carson St., Suite 154
Carson City, NV 89701
New Hampshire Financing Authority
P.O. Box 5087
Manchester, NH 03108
New Jersey Housing and Mortgage Finance Agency
647 South Clinton Ave.
P.O. Box 18550
Trenton, NJ 08650
New Mexico Mortgage Finance Authority
344 4th St., SW
Albuquerque, NM 87102
New York State Division of Housing and Community Renewal
38-40 State St.
Albany, NY 12207
New York Housing Finance Agency
641 Lexington Ave.
New York, NY 10022
North Carolina Housing Finance Agency
3508 Bush St.
Raleigh, NC 27609
North Dakota Housing Finance Agency
1500 E. Capital Ave.
P.O. Box 1535
Bismarck, ND 58502
Ohio Housing Finance Agency
57 E. Main St.
Columbus, OH 43215
Oklahoma Housing Finance Agency
100 N. 63rd St., Suite 200
P.O. Box 26720
Oklahoma City, OK 73126
Oregon Housing Agency
P.O. Box 14508
Salem, OR 97309
Pennsylvania Housing Finance Agency
2101 North Front St.
P.O. Box 8029
Harrisburg, PA 17105
Rhode Island Housing and Mortgage Finance Corporation
44 Washington St.
Providence, RI 02903
South Carolina State Housing Finance and Development Authority
919 Bluff Rd.
Columbia, SC 29201
South Dakota Housing Development Authority
221 South Central Ave.
Pierre, SD 57501
Tennessee Housing Development Agency
404 James Robertson Parkway
Nashville, TN 37243
Texas Department of Housing and Community Affairs
507 Sabine St.
Austin, TX 78701
P.O. Box 13941
Austin, TX 78711
Utah Housing Finance Agency
554 South 300 East
Salt Lake City, UT 84111
800-284-6950 (UT only)
800-344-0452 (outside UT)
Vermont Housing Finance Agency
One Burlington Square
P.O. Box 408
Burlington, VT 05402
Vermont State Housing Authority
One Prospect St.
Montpelier, VT 05602
Virginia Housing Development Authority
601 South Belvidere St.
Richmond, VA 23220
Washington State Housing Finance Commission
1000 Second Ave.
Seattle, WA 98104
West Virginia Housing Development Fund
814 Virginia St. East
Charleston, WV 25301
Wisconsin Housing and Economic Development Authority
201 West Washington, Suite 700
P.O. Box 1728
Madison, WI 53701
Wyoming Community Development Authority
155 North Beech
Casper, WY 82602
Call your lender, take control of the situation, and do not ignore the mail. Problems do not correct themselves. You need to take responsibility, and there are people out there who will help you do just that! What follows are three publications to help you understand more about how to keep your home. Good Luck
Are you having trouble keeping up with your mortgage payments? Have you received a notice from your lender asking you to contact them?
If you are unable to make your mortgage payment:
1. Don't ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can't make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found on the internet at www.fha.gov/foreclosure/index.cfm.
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender if you need this assistance. Find a HUD-approved housing counselor near you at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm or call (800) 569-4287 or TTY (800) 877-8339.
7. Prioritize your spending.
After healthcare, keeping your house should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses-cable TV, memberships, entertainment-that you can eliminate. Delay payments on credit cards and other "unsecured" debt until you have paid your mortgage.
8. Use your assets.
Do you have assets-a second car, jewelry, a whole life insurance policy-that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don't significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
You don't need to pay fees for foreclosure prevention help-use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month's mortgage payment) for information and services your lender or a HUD approved housing counselor will provide free if you contact them.
10. Don't lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional, or a HUD approved housing counselor.
Losing a home can be financially and personally devastating. Here's information to help you keep your home. Relief may be available.
* People facing money problems:If you are facing unemployment or have money problems, you may be able to keep your home if you know the right steps to take. Read on for important information and links to local organizations that can help you get through difficult times without losing your home. Government organizations and the mortgage industry worked together to provide this information to help you keep your home.
* Disaster area victims:If you live or work in an area declared a disaster by the President and the hurricane, tornado, flood, wildfire, or other natural or man-made event damaged your home or reduced your income, your lender will provide disaster relief:o For 90 days on an FHA-insured loan. o In most cases for other loans.
* Military personnel and spouses:If you or your spouse is on active military duty, you may qualify for a reduction in your interest rate resulting in lower payments. Read how the Servicemembers Civil Relief Act of 2003 (formerly the Soldiers' and Sailors' Civil Relief Act of 1940) affects military homeowners.
Facing Money Problems: Financial problems are most often associated with major life changes like:
If your family is facing any of these issues and you can't pay your bills, look closely at what you owe and what you earn. Eliminate unnecessary spending and reach out for help if you still can't make ends meet. Taking action right away can help you protect your family from the loss of your home.
1. Contact your lender as soon as you have a problem
Many people avoid calling lenders about money troubles because we:
But lenders want to help borrowers keep their homes because:
Lenders have workout options (choices) to help you and:
Don't assume that your problems will quickly correct themselves:
Finding your lender
Check the following sources to contact your lender:
o Your monthly mortgage billing statement
o Your payment coupon book
Information to have ready when you call
To help you, lenders usually need:
o Your loan account number
o A brief explanation of your circumstances
o Recent income documents:
Expect to have more than one phone conversation with your lender. Typically, your lender will mail you a "loan workout" package. This package contains information, forms and instructions. If you want to be considered for assistance you must complete the forms fully and truthfully and return them to your lender quickly. Your lender will review the complete package before talking about a solution with you.
CALL YOUR LENDER TODAY!
The sooner you call, the sooner help is available.
Don't ignore mail from your lender.
If you don't get in touch with your lender, your lender will try to contact you by mail and phone soon after you stop making payments. It is very important that you respond to mail and phone calls offering help. If your lender doesn't hear from you, they will have to start legal action leading to foreclosure. This will greatly increase the cost to bring your loan current.
Information for families with FHA loans
The FHA provides many alternatives and ways for borrowers to get help. These may include mortgage modifications (changes), special forbearances (allowances), and other actions you can take to avoid foreclosure.
FHA works closely with customers who have FHA-insured loans. Do you feel your lender is not responding to your questions? Do you need help contacting your lender? The FHA is ready to help! Contact them at (800) CALL-FHA.
2. Talk to a housing counselor
If you don't feel comfortable talking with your lender, you should immediately contact a housing counseling agency and make an appointment with a counselor. Most FHA counselors are free or cost very little. A counselor can help you:
A good counselor will help you create a monthly budget plan to ensure you meet all your monthly expenses, including your mortgage payment. Your personal financial plan will clearly show how much money you have available to make the mortgage payment. This analysis will help you and your lender determine whether a reduced or delayed payment schedule could help you.
To find out more about HUD-approved housing counseling agencies and their services, please call toll free (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. Eastern Standard Time (6:00 a.m. to 2:00 p.m. Pacific Time). The same number can give you an automated referral to the three housing counseling agencies located closest to you. You can also find them online at http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm.
Many of these local housing counseling agencies are connected with national and regional housing counseling intermediaries (mediators). The website for HUD-approved National and Regional Housing Counseling Intermediaries describes the full range of assistance offered and provides maps showing their member's locations. You can find them online at http://www.hud.gov/offices/hsg/sfh/hcc/nrhci.cfm
3. Prioritize your debts (rank them by importance)
You will need a new, tightened budget if you lose a job. Prioritize your bills and pay those most necessary for your family: food, utilities and shelter.
Failing to pay any of your debts can seriously affect your credit rating, but if you stop making your mortgage payments you could lose your house. Try these suggestions to keep your home:
Besides speaking with your lender, you may want to contact a nonprofit consumer credit counseling agency that specializes in helping restructure credit payments. Credit counselors can often reduce your monthly bills by negotiating lower payments or long-term payment plans with your creditors. Trustworthy credit counseling agencies provide their services free of charge or for a small monthly fee tied to a repayment plan. Beware of credit counseling agencies that offer counseling for a large upfront fee or donation.
For consumer debt advice, contact: www.debtadvice.org/
When you call a credit counseling agency, they will ask you to provide current information about your income and expenses. Make sure you ask if the agency has a charge before you sign any documents!
Preserve your good credit
Do not underestimate (misjudge) how important it is to keep your good credit. Your future ability to purchase items, rent or buy a home, and do other things often requires a credit check. Consumer credit agencies and your lender can help you explore solutions to keep your credit rating from getting blemished.
Maintaining good credit is even important for job hunters. When you apply for a job, the employer probably will check your credit report to determine whether:
4. Explore loan workout solutions with your lender
First and foremost, if you can keep your mortgage current, do so.
But if you find you are unable to make your mortgage payments, you might qualify for a loan workout option. Check with your lender to see which option may be available. Some options may not apply to your loan if it is not insured by FHA.
If your problem is temporary - call your lender to discuss these possibilities:
If it appears that your situation is long-term or will permanently affect your ability to bring your account current - call your lender to discuss options:
If keeping your home is not an option - call your lender to discuss these possibilities:
If you have an FHA-insured loan and your lender is not responsive
Your lender has to follow FHA servicing guidelines and regulations for FHA-insured loans. If your lender is not cooperative, contact FHA's National Servicing Center at toll free (888) 297-8685 or via email: firstname.lastname@example.org. HUD does not oversee VA or conventional loans.
Beware of predatory lending schemes
Most mortgage lenders are trustworthy and provide a valuable service by allowing families to own a home without saving enough money to buy it outright. But dishonest or "predatory" lenders do exist and engage in lending practices that increase the chances that a borrower will lose a home to foreclosure. Beware especially of those who make high risk second mortgages. Other abusive practices include:
Borrowers facing unemployment and/or foreclosure are often targets of predatory lenders because they are desperate to find any "solution".
Homeowners receive many refinance offers in the mail saying they are "pre-approved" for credit based on the equity in their homes. Borrowing against your house may seem attractive when you are struggling to pay your mortgage and other bills. But stop and think about this: if you can't make your current payments, increasing your debt will make it harder to keep your home, even if you get some temporary cash.
Beware of scams
Where to report suspected predatory lending
Homeowners can either visit the Stop Mortgage Fraud website at http://www.stopfraud.gov/protect-mortgage.html or call toll free (800) 348-3931 to get information on what steps to take to file a complaint. Homeowners who call will also receive a booklet containing information found on the website.
For more information about predatory lending go to:
What happens when I miss my mortgage payments?
Foreclosure may occur. This means your lender can legally repossess (take over) your home. When this happens, you must move out of your house. If your property is worth less than the total amount you owe on your mortgage loan, a deficiency judgment could be pursued, meaning you would not only lose your home, you also would owe HUD money.
Both foreclosures and deficiency judgments could seriously affect your ability to qualify for credit in the future. So you should avoid foreclosure if at all possible.
What should I do?
Who is my lender? How do I make contact?
Look at your monthly mortgage coupons or billing statements for the lender's name and contact information.
I don't remember what type of mortgage I have. How can I find this information?
Look on the original mortgage documents or call your mortgage lender.
Do I need to keep living in my house to qualify for assistance?
Usually yes, but call your lender to discuss your specific circumstances and get advice on options that may be available.
My employer has already announced layoffs in the coming month. What can I do now?
You have started learning about available options here. Now, figure out if a layoff will make it hard for your family to make your mortgage payments. If so, consider other resources you have to pay your mortgage. Review your spending habits and see where you can reduce spending. If you have a lot of other debt, consider contacting a nonprofit, consumer credit counseling agency. Take advantage of any help your employer offers. If you still believe you will have trouble making your mortgage payments, contact your lender right away.
What are the key points to remember?
What precautions can I take?
These precautions can help you avoid being "taken" by a scam artist:
If you're selling the house yourself to avoid foreclosure, check to see if there are any complaints against the prospective buyer. You can contact your state's Attorney General, the State Real Estate Commission, or the local District Attorney's Consumer Fraud Unit for this type of information.
Will I be responsible for any out-of-pocket expenses if I am approved for a workout option?
You may have to pay expenses such as recording fees for a loan modification. Because every situation is different, contact your lender for more information. But, if a lender has no contact with you and has to start foreclosure, you may have to pay very high legal fees. To avoid this, call your lender as soon as you realize you might have trouble.
The mortgage lenders listed below have voluntarily joined the federal government to assist homeowners who are concerned about the future or have suffered due to recent changes in the economy. If your lender is listed here, you can help protect your home by contacting them immediately!
Bank of America
(800) 526-0072, ext. 533
Irwin Mortgage Corporation
National City Mortgage
This information is provide for you by the joint efforts of HUD/FHA, Department of Veterans Affairs, Department of Labor, Fannie Mae, Freddie Mac, members of the Mortgage Industry-at-large, and other industry participants.
Reservists, guardsmen and other military personnel can find answers to questions about mortgage payment relief and protection from foreclosure provided by the Servicemembers Civil Relief Act of 2003 (formerly The Soldiers' and Sailors' Civil Relief Act of 1940).
Who is eligible? The Act applies to active duty military personnel who had a mortgage obligation before enlistment or before being ordered to active duty. This includes:
Am I entitled to debt payment relief? The Act limits interest that may be charged on mortgages taken out by a servicemember (including debts incurred jointly with a spouse) before he or she entered into active military service. At your request, lenders must reduce the interest rate to no more than 6% per year during the period of active military service and recalculate your payments to reflect the lower rate. This provision applies to both conventional and government-insured mortgages.
Is the interest rate limitation automatic? No. To ask for this temporary interest rate reduction, you must submit a written request to your mortgage lender and include a copy of your military orders. The request may be submitted as soon as the orders are issued, but no later than 180 days after the date of your release from active duty military service.
Am I eligible even if I can afford to pay my mortgage at a higher interest rate? If a mortgage lender believes that military service has not affected your ability to repay your mortgage, they have the right to ask a court to grant relief from the interest rate reduction. This is does not happen very often.
What if I can't afford to pay my mortgage even at the lower rate? Your mortgage lender may let you stop paying the principal amount due on your loan during active duty service. Lenders are not required to do this but they generally try to work with servicemembers to keep them in their homes. You will still owe this amount, but will not have to repay it until after you complete active duty service.
Most lenders also have other programs to assist borrowers who can't make their mortgage payments. If you or your spouse finds yourself in this position at any time before or after active duty service, contact your lender immediately and ask about loss mitigation options. If you have an FHA-insured loan and are having difficulty making mortgage payments, you may also be eligible for special forbearance and other loss mitigation options.
Am I protected against foreclosure? Mortgage lenders may not foreclose while you are on active duty or within 90 days after military service without court approval., A lender would be required to show in court that your ability to repay the debt was not affected by your military service.
What information do I need to provide to my lender? When you or your representative contacts your mortgage lender, you should provide the following information:
HUD has reminded FHA lenders of their obligation to follow the SCRA. When notified that a borrower is on active military duty, an FHA lender must inform the borrower or representative of the adjusted payment amount due, provide adjusted coupons or billings, and ensure adjusted payments are not considered insufficient payments.
Will my payments change later? Will I need to pay back the interest rate "subsidy" at a later date? The change in interest rate is not a subsidy. Interest in excess of 6% per year that would otherwise have been charged is forgiven. However, the reduction in the interest rate and monthly payment amount only applies during the period of active duty. Once the period of active military service ends, the interest rate will revert back to the original interest rate, and payments will be recalculated accordingly.
How long does the benefit last? Does the period begin and end with my tour of duty? Interest rate reductions are only for the period of active military service. Other benefits, such as postponement (delaying) of monthly principal payments on the loan and restrictions on foreclosure, may begin immediately upon assignment to active military service and end on the third month following the term of active duty assignment.
How can I learn more about relief available to active duty military personnel? Servicemembers who have questions about the SCRA or the protections they may be entitled to, can contact their unit judge advocate or installation legal assistance officer. Dependents of servicemembers can also contact or visit local military legal assistance offices where they live. A military legal assistance office locator for each branch of the armed forces is available at www.legalassistance.law.af.mil/content/locator.php
Are you in need of cash?Do you want to consolidate your debts?Are you receiving home equity loan or refinancing offers that seem too good to be true?Does your home need repairs that contractors tell you can be easily financed?
If you are a homeowner who needs money to pay bills or for home repairs, you may think a home equity loan is the answer. But not all loans and lenders are the same--you should shop around. The cost of doing business with high-cost lenders can be excessive and, sometimes, downright abusive. For example, certain lenders--often called "predatory lenders"--target homeowners who have low incomes or credit problems or who are elderly by deceiving them about loan terms or giving them loans they cannot afford to repay.
Borrowing from an unscrupulous lender, especially one who offers you a high-cost loan using your home as security, is risky business. You could lose your home and your money. Before you sign on the line:
Think about Your Options
If you're having money problems, consider these options before you put your home on the loan line.
If you decide a loan is right for you, talk with several lenders, including at least one bank, savings and loan, or credit union in your community. Their loans may cost less than loans from finance companies. And don't assume that if you're on a fixed income or have credit problems, you won't qualify for a loan from a bank, savings and loan, or credit union--they may have the loan you want!
Do Your Homework
Contact several lenders--and be very careful about dealing with a lender who just appears at your door, calls you, or sends you mail. Ask friends and family for recommendations of lenders. Talk with banks, savings and loans, credit unions, and other lenders. If you choose to use a mortgage broker, remember they arrange loans but most do not lend directly. Compare their offers with those of other direct lenders.
Be wary of home repair contractors that offer to arrange financing. You should still talk with other lenders to make sure you get the best deal. You may want to have the loan proceeds sent directly to you, not the contractor.
Comparison shop. Comparing loan plans can help you get a better deal. Whether you begin your shopping by reading ads in your local newspapers, searching on the Internet, or looking in the phone book, ask lenders to explain the best loan plans they have for you. Beware of loan terms and conditions that may mean higher costs for you. Get answers to these questions and use the worksheet to compare loan plans:
Interest Rate and Payments:
Term of Loan:
Points and Fees:
After you have answers to these questions, start negotiating with more than one lender. Don't be afraid to make lenders and brokers compete for your business by letting them know you are shopping for the best deal. Ask each lender to lower the points, fees, or interest rate. And ask each to meet--or beat--the terms of the other lenders.
Once You've Selected a Lender, Get the Following:
Think Twice before You Sign:
Don't Sign on the Dotted Line if the Lender:
You Have 3 Business Days to Cancel the Loan
If you're using your home as security for a home equity loan (or for a second mortgage loan or a line of credit), federal law gives you 3 business days after signing the loan papers to cancel the deal--for any reason--without penalty. You must cancel in writing. The lender must return any money you have paid to date.
Do You Think You've Made a Mistake?
Has the 3-day period during which you may cancel passed and you're worried that you've gotten in over your head? Do you think your loan fees were too high? Do you believe you were steered into monthly payments you can't afford? Has your lender repeatedly pressured you to refinance? Is your loan covered by insurance you don't need or want?
If you think you've been taken advantage of, state and federal laws may protect you. Also, the following organizations may be able to help:
You can learn more about credit and home equity loans by visiting the federal government's web site for consumers, www.consumer.gov (see the Home and Community section).The Mortgage Comparison Calculator allows you to compare the monthly payments and the amount of equity you will build in your home for several types of mortgages. If you don't have access to the Internet, ask a friend or relative to get the information for you. Or visit your local library or senior center, which may offer you free access to the Internet on their computers.
For More Information
State Banks that Are Members of the Federal Reserve SystemDivision of Consumer and Community AffairsMail Stop 801Federal Reserve BoardWashington, DC 20551(202) 452-3693www.federalreserve.gov
Federally Insured State Non-Member Banks and Savings BanksFederal Deposit Insurance CorporationConsumer Response Center2345 Grand Boulevard, Suite 100Kansas City, Missouri 64108(877) 275-3342www.fdic.gov
National Banks and National Bank-Owned Mortgage CompaniesOffice of the Comptroller of the CurrencyCustomer Assistance Group1301 McKinney StreetSuite 3450Houston, TX 77010(800) 613-6743www.occ.treas.gov
Federally Insured Savings and Loan Institutions and Federally Chartered Savings BanksOffice of Thrift SupervisionConsumer Programs1700 G Street, N.W., 6th FloorWashington, DC 20552(800) 842-6929www.ots.treas.gov
Federal Credit UnionsNational Credit Union AdministrationOffice of Public and Congressional Affairs1775 Duke StreetAlexandria, VA 22314(703) 518-6330www.ncua.gov
For state-chartered credit unions, contact your state's regulatory agency. Mortgage Companies and Other LendersFederal Trade CommissionConsumer Response Center600 Pennsylvania Avenue, N.W.Washington, DC 20580(877) FTC-HELP (877-382-4357, toll free)www.ftc.gov
Other Information Sources
U.S. Department of JusticeCivil Rights Division950 Pennsylvania Ave., N.W.Housing and Civil Enforcement Section, NWBWashington, DC 20580(202) 514-4713www.usdoj.gov/crt/housing/index.html
Federal Housing Finance Board1777 F Street, N.W.Washington, DC 20006(202) 408-2500www.fhfb.gov
Department of Housing and Urban Development451 7th Street, S.W.Washington, DC 20410800-669-9777 (voice)800-927-9275 (TTY)www.hud.gov
Office of Federal Housing Enterprise Oversight (OFHEO)1700 G Street, N.W.4th FloorWashington, DC 20552(202) 414-6922www.ofheo.gov