Help for Homeowners in Foreclosure

/Home/Foreclosure Stop

Help for Homeowners in Foreclosure

If you are having trouble making your mortgage payments or have already fallen behind and are in default or foreclosure, you may feel scared, ashamed and overwhelmed. At this critical time it is very important that you act quickly to communicate your situation clearly to your lender and reach out for the help you need.

1. CONTACT YOUR LENDER OR LOAN SERVICER

It is crucial that you contact your lender or loan servicer as soon as you realize that you are unable to make a payment. This is a crucial first step in addressing your situation and identifying possible solutions to your difficulties, including modifying the terms of your mortgage to reduce your interest rate and monthly payment, repayment plans, postponement of regular payments (forbearance) or other options. Provide any information requested by your lender or servicer quickly and keep records and copies of everything.

It is very important that you respond to mail and phone calls from your lender. If your lender does not hear from you, they are more likely to start legal action leading to foreclosure.

2. CONTACT A NOT-FOR-PROFIT HOUSING COUNSELOR

In addition to contacting your lender or servicer, you are encouraged to contact a not-for-profit housing counselor. Housing counselors that handle foreclosure related issues can negotiate with your lender and give you advice on other options and resources at little or no cost. They can also help you find free legal services in your area. To find an approved not-for-profit housing foreclosure counselor in your area, click on the list of foreclosure counselors on the left-hand side of this page or call the New York State Banking Department at 1-877-BANK-NYS.

3. CALL THE HOMEOWNER'S HOPE HOTLINE

Homeowners seeking counseling or advice can also call the HOPE NOW toll-free at 1-888-995-HOPE (1-888-995-4673). HOPE NOW is an alliance of HUD approved counseling agents, servicers, investors and mortgage lenders that provides free foreclosure prevention assistance.

This number is accessible 24 hours a day.

4. SEEK LEGAL ASSISTANCE

If legal proceedings have already started, you should immediately seek legal advice. Call the New York Bar Association’s Lawyer Referral Program at 1-800-342-3661 or visit www.Lawhelp.Org on the Web to find free legal aid near you. A housing counselor or the Banking Department can also help you find free legal help near you.

5. AVOID HOME EQUITY THEFT & FORECLOSURE RESCUE SCAMS

Be aware that if you have fallen behind on your mortgage payments, or your home is in foreclosure or default, you and your home may become targets for certain type of scams known as “home equity theft” or “foreclosure rescue fraud.”

Perpetrators of these scams claim they can solve your debt problems and stop you from losing your home. Some of these scams offer to temporarily hold onto the house while you catch up on your payments. They then use deceptive tactics to obtain ownership of your home for a fraction of its market value, and leave you homeless yet still the holder of the mortgage that is still in foreclosure. Other scams falsely claim that they can stop a foreclosure or tax sale, charge substantial upfront fees and fail to deliver the promised results.

Remember that you don’t need to pay fees for foreclosure prevention help. It’s often better to apply that money to your mortgage payments. Also, many not-for-profit housing counselors will help you negotiate with your lender for free.

There are also two recent New York laws that protect borrowers from the most common foreclosure rescue scams. The Home Equity Theft Protection Act, which became effective in February 2007, covers the sale of certain homes in foreclosure or default where the buyer is purchasing the home as an investment. This includes buyers who promise to bring your mortgage current and allow you to buyback the home from them. If you are planning to sell a home that is in foreclosure or default, be aware of your rights under this law, and know what to expect from a legitimate buyer. If your sale is protected by the law, and your buyer fails to fulfill any of these requirements you may be able to void or legally cancel the contract and the sale and you may be able to sue the buyer for recovery of damages. For more information see our Home Equity Theft Scams Fact Sheet.

In August 2008, Governor Paterson signed into law a Subprime Lending Reform Bill. The new law prohibits “distressed property consultants” -- individuals, corporations or other entities that promise to stop or delay a foreclosure or tax sale – from charging any upfront fees before completing their services. For more information, see the ‘Rescue Scams’ section of the Subprime Lending Reform Bill at http://www.banking.state.ny.us/legal/slov.htm.

QUESTIONS?

If you still have questions about where to turn for assistance or don’t know who to call first, call the New York State Banking Department Helpline at:

1-877-BANK-NYS
(1-877-226-5697)

Our staff can answer your questions about mortgages, personal debt and the foreclosure process and can help you find professional help and resources in your area.

We can also assist you in filing a complaint against a state-chartered or state-licensed financial institution.