Distressed Homeowner? Know your Options and Beware of the Scammers

It is heartwarming to see how people come together to provide assistance, encouragement and all kinds of support to people who are distressed, there are good people in this world. At the same time there are also bad people and they are preying on these same distressed homeowners.

There seems to be a staggering number of distressed homeowners who are underwater with their mortgages these days and while I know many people who get very emotional about trying to do everything they can to help these distressed homeowners doing a short sale, there are predatory “rescue” scams that distressed homeowners need to look out for.

If a distressed homeowner wants to keep the home there choices are:

Refinance ( I am listing options not probability here )

Loan Modification

Forbearance

or Bankruptcy

If a distressed homeowner wants to or can’t keep the home their choices are basically:

Short Sale

Deed in Lieu

Foreclosure

Bankruptcy

In any event this is not a do-it-yourself project, there are way too many parts (complicated parts) and to many mistakes that can be made without professional advice, you absolutely need to consult a tax adviser and seek legal advise regarding your individual circumstance.

Also be very aware of predatory “rescue” Scams that prey on distressed homeowners, some red flags to look for are:

Large Upfront fees

Guarantees to stop foreclosure (who do they think they are?)

Telling you to transfer your title and/or execute a power of attorney

Forensic Loan Audit

Bait and switch

Rent to Own or Leaseback Scheme

Short Sale Scam – while a short sale may be a legitimate option there are short sale scams out there to look out for they often promise   to be able to expedite the process and usually require you pay a fee upfront

If you like I can send you links to government agencies with more details of these scams as well as ways to report them just let me know.

If you don’t know what the market value of your home is, you need to find out, if after you have evaluated your options you have decided to do a short sale of your home, you will need a realtor that has expertise in short sale negotiation (especially if there is a deficiency to negotiate with your lender) the realtor should also know the market where your home is. If you live in a subdivision larger than a couple hundred homes and they don’t know what city your home is in or what school district your home is in do you really think they really know what the market is where your home is?

And no matter if you want to keep your home or not I cannot stress enough the importance of learning the possible tax ramifications to you under all scenarios from a tax professional as well as your legal rights and possible ramifications of any possible deficiency of the amount owned the lender by contacting a real estate attorney so that you can make informed decisions.

 

This information is for general informational purpose and not intended to be investment advise, and should be explained to you in detail. You should always consult an attorney and/or tax advisor to obtain further information you deem necessary. I want you to be prepared.

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