Legitimate resources for those facing foreclosure

August 27, 2014 18:39 by Consumer Ed

Dear Consumer Ed:

I lost my job last year when my company down-sized.  I have gone through all my savings and even borrowed money from relatives, but I just can’t keep up with my mortgage payments.  I’m afraid that the bank will foreclose on my house.  Is there any help available to me?

Consumer Ed says: 

Unfortunately, you’re not alone in this situation.  Fortunately, there are several state and federal programs that can help some people having difficulties making their mortgage payments.

Your first step should be to contact your mortgage company directly.  Many are willing to discuss your current situation and to try to come up with a solution, including a loan modification, deferment, or
repayment plan.  Look at your mortgage bill to find the name and contact information for your particular mortgage provider.

For consumers who began experiencing difficult times within the last 36 months, Georgia offers several programs.  Go to www.homesafegeorgia.com to find a summary of the programs available, requirements for eligibility, and how to start the application process.  These programs are provided in the form of a loan at 0% interest, and the loan is forgiven after five years if you stay in your home.  The Georgia mortgage assistance programs are:

  • Mortgage Payment Assistance – Provides monthly mortgage payments directly to lenders for up to 24 months to assist unemployed and underemployed homeowners.
  • Reinstatement Assistance – Assists homeowners experiencing a hardship by offering a one-time payment to catch up on missed mortgage payments.
  • Mortgage Payment Reduction (Recast and Modification Assistance) – Assists homeowners experiencing a permanent reduction in income by paying the lender a one-time $30,000 payment to lower the monthly mortgage payment.

The federal government also has several loan modification programs available to struggling homeowners.  Unlike Georgia’s programs, the federal programs aren’t loans, but ways to change the actual terms of your mortgage to make the payments more manageable.  You can find out more about these programs at www.makinghomeaffordable.gov.  The federal programs include:

  • Home Affordable Modification Program (HAMP) – Modifies the terms of the mortgage to lower the monthly payments.
  • Principal Reduction Alternative (PRA) – Assists homeowners who owe more than their home is worth by reducing the total amount owed.
  • Home Affordable Unemployment Program (UP) – Assists unemployed homeowners by temporarily reducing or suspending mortgage payments.

BEWARE!  Unfortunately, foreclosure prevention scams have increased because of recent tough economic times.  Before consulting a provider who claims it can prevent your foreclosure, there are a few things you should do to avoid getting ripped off.  For example:

  • Avoid individuals/companies promising they can halt your foreclosure – These companies cannot guarantee a particular outcome, so their promises are unrealistic (and, most likely, a lie).
  • Always send your mortgage payment to your lender or the mortgage servicer – Even if someone is assisting you in the process, make sure to send your payments directly to your mortgage company or someone approved by your mortgage company, not to any other intermediary.  
  • Avoid providers who charge up-front fees – Federal law makes it illegal for mortgage assistance relief services to collect fees before you enter into any negotiated agreement about your mortgage with your lender.
  • Never sign over your deed to anyone without consulting an independent lawyer whom you select - Some companies will attempt to have you sign over your deed, often claiming that you’ll remain in the home under a lease while they negotiate on your behalf.  This situation almost never ends well, because you no longer have ultimate control over the ownership (or occupancy) of your home.  You should never sign over your deed without first consulting an attorney that hasn’t been chosen by the provider.
  • Always read what you are signing- Some individuals may attempt to trick you into signing over the deed to your property by burying it in other paperwork.  If you don’t understand every item and every page of all documents you’re being asked to sign, DO NOT sign any of them until you have received a complete explanation from someone whom you trust, and who does understand.
  • If the provider makes any promises, get all of them in writing.
  • Don’t do business with any provider that tells you not to contact your mortgage company - Any legitimate service provider should, and will, encourage open communications between you and your lender.

Before making any decisions, contact a counselor or organization to assist you in making the right choices regarding your mortgage.  The following are great resources to learn more about the available programs and the steps required for each:

  • HUD sponsored counseling agencies may be able to provide free advice to help you avoid foreclosure.  Locate an approved counselor near you by going to www.hud.gov.
  • The Home Ownership Preservation Foundation is a non-profit organization providing free counseling to help you learn about the programs available to you.  Call them toll free at 1-888-995-HOPE (4673).

Working with mortgage companies to avoid a possible foreclosure can be overwhelming, but with proper support, you can make the best decision for your family and your home.  Be proactive and seek out the programs and counselors that will work in your best interest. And, don’t wait until the last minute to do so – give yourself as much time as possible to seek a solution that fits your situation.

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Following foreclosure, can new owner raise tenant's rent?

May 14, 2013 17:54 by Consumer Ed

Dear Consumer Ed: 

The house we rent was foreclosed on and then sold by the bank. There are still 6 months left on the lease and the new owners want to raise the rent and get a new security deposit (even though our original deposit was not returned). Is this legal?  If not, whom should I contact to resolve the issue?              

Consumer Ed says: 

The Protecting Tenants at Foreclosure Act (PTFA), a federal law, specifically addresses your issue.  The PTFA was signed into law on May 20, 2009 and protects tenants when the property they rent is sold at a foreclosure sale.  The Dodd-Frank Wall Street Reform and Consumer Protection Act extended the PTFA protections until December 31, 2014.   Even though the PTFA is a federal law, it still applies to state court eviction proceedings.

If you originally entered into your lease before the notice of foreclosure, then the new owners bought the property subject to your rights as a tenant.  In other words, your lease did not end when the property was sold at foreclosure, and the new owners must recognize your original lease.  If the new owners will not use the house as their primary residence, then they must allow you to stay in the house and pay rent until the end of your original lease.  However, the new owners only have to give you 90 days’ notice to vacate the property if they are in fact going to occupy the house (you’d still have 90 days to vacate, even if there were less than 90 days remaining on your lease).

While you remain in the house (either for the remainder of your lease or for the 90 days), the new owners cannot raise your rent or require a new security deposit.  You will still have to pay rent, but you will pay the same rent required under your original lease to the new owners of the house.  If you don’t pay rent, the new owners can go to court to have you evicted; they can also have you evicted if you stay in the house after your lease expires (or after the 90 days’ notice period).
If the new owners continue to insist that you pay additional rent and/or an additional security deposit, you should contact an attorney to address your specific case.  The State Bar of Georgia (404-527-8700 or 800-334-6865) can give you information to help you locate an attorney, or you could contact your local Georgia Legal Services Program office (www.glsp.org).  You may also pursue an issue with your landlord on your own through the local magistrate court.  In the event you cannot afford an attorney, you may want to contact an organization that deals with landlord-tenant disputes, like Atlanta Legal Aid (www.atlantalegalaid.org).

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Landlord is letting house we rent go into foreclosure

June 7, 2012 17:51 by Consumer Ed

Dear Consumer Ed: 

We have been leasing a home since July 2010.  Our lease is set to expire in August 2012.  We just found out today that the landlord has let the rental home go into foreclosure, with a sale date of July 3.  Whom do we notify, advising them of our lease?

Consumer Ed says: 

First, you should know that, until at least the end of 2014, under the Federal “Protecting Tenants at Foreclosure Act of 2009,” tenants have the right to stay in a foreclosed property through the end of their lease, unless the new owner is planning to make the foreclosed property his or her primary residence. In that case, the owner may terminate your lease, but you must be given 90 days’ notice to vacate the premises.  If you don’t have a written lease, if your lease is month-to-month, or if there are fewer than 90 days left on your lease, you are still entitled to 90 days’ notice.

You will want to notify in writing the bank that is foreclosing on the home of your lease. The simplest way to find the bank’s identity is to ask your landlord for that information.  If your landlord is unresponsive, there are other ways to identify the bank.  In Georgia, sale of foreclosures must be advertised at least once a week for four weeks immediately before the date of sale (in this case, July 3). Rather than searching through newspapers, you can go to this website, http://georgiapublicnotice.com, to search for the advertisement. Note that you may not be able to find who put out the ad by simply searching the address, since the address is not required to be included in the notice.

If the bank hasn’t been publishing the sale as the law requires, then you may be able to find out the name of the bank that foreclosed on your landlord by searching for the deed stating the foreclosure (it will state the date of foreclosure and the name of the bank).  Deeds are public records, and you should be able to search for it at your county’s clerk’s office by using the property’s address.  Many, but not all, counties have their tax assessor’s records online.  If your county doesn’t have its records available online through its own website, this website may help: www.gsccca.org.

Once you do find out which bank owns the home, call the bank and tell them about your lease (if they don’t already know, which they may).  Ask if there is a management company temporarily in charge of the rental home, and if so, the contact information of someone whom you can call directly if there are any problems with the apartment (leaky faucet, etc.). And, don’t forget to ask where to send your July rent check.

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