Myths and Facts about Foreclosure Prevention Counseling

Many of the organizations that offer foreclosure prevention counseling across the State of Maryland are non profit housing counseling agencies. A large number of these agencies have been in existence for years and have a tradition of working hard to benefit the communities they serve. When the proverbial “housing bubble’ burst, countless homeowners found themselves struggling to keep their homes. Faced with homeowners who had become victims of predatory lenders, experienced mortgage fraud or who had simply made poor financial decisions, the nonprofit housing counseling agencies quickly shifted from a primary focus on preparing individuals for homeownership to the more difficult and daunting task of helping people faced with foreclosure save their homes or at least obtain the best outcomes. In the interim, certain myths surrounding foreclosure prevention counseling have developed and certain facts remain true.

MYTH:

Homeowners have to pay fees to obtain assistance with foreclosure problems.

FACT:

Foreclosure prevention counseling is available for free through non profit organizations across the State. Homeowners can find information about free foreclosure prevention counseling by calling the Maryland HOPE Hotline at 1-877-462-7555 or by logging on to the web site www.mdhope.org.

MYTH:

Mortgage lenders won’t talk to a third-party when a homeowner is late with mortgage payments.

FACT:

Foreclosure prevention counselors obtain the homeowner’s written permission and are fully authorized to speak with lenders on their behalf. Many lenders have staff dedicated exclusively to speaking with foreclosure prevention counselors who are seeking to help distressed homeowners.

MYTH:

There is no sense in getting counseling because mortgage lenders just want to take homes back from delinquent borrowers and make a profit by selling them again.

FACT:

Obtaining foreclosure prevention counseling is important for homeowners who have fallen behind in their mortgage payments. In many instances there are options about which homeowners are unaware. Since foreclosing on a home may result in a loss for the lender, mortgage holders are often willing to modify the terms of the loan, accept payment plans or take other steps to assist delinquent borrowers.

MYTH:

Asking for help is a sign of not being financially in control, so foreclosure prevention counseling should be the last option a delinquent homeowner considers.

FACT:

Proactively seeking help with a delinquent mortgage loan is smart. Most often, the longer a homeowner waits to seek help with late mortgage payments the more difficult it will be to obtain a positive outcome.

MYTH:

Foreclosure prevention counseling can’t help when the problem stems from lenders who acted fraudulently or engaged in deceptive practices.

FACT:

The Maryland Department of Labor Licensing and Regulation (DLLR) is major partner of the foreclosure prevention counseling community. DLLR aggressively pursues and prosecutes lenders who engage in mortgage fraud and deceptive lending practices. Counselors are fully aware of the need to refer cases that involve fraud or deception to DLLR.

MYTH:

Foreclosure prevention counseling means a homeowner has to take a lot of classes and pass some sort of test in order to get assistance.

FACT:

Foreclosure prevention counseling may involve advice given over the telephone for less complex situations, but normally involves an in-person meeting with a counselor to review loan documents, financial records and the household budget. Homeowners often prepare in advance for the appointment by completing the Consumer Information Kit that can be obtained by calling the HOPE Hotline at 1-877-462-7555 or by logging on to the web site www.mdhope.org.





Disclaimer: The information and notices contained herein are intended as general research and information and are expressly not intended, and should not be regarded, as financial or legal advice. Individual matters and underlying facts may vary, and a licensed legal practitioner in your jurisdiction should be consulted if any questions arise.