St. Louis, Mo. - Mortgage foreclosures are up and the number of houses languishing on the market is up. All of this is happening as the value of homes is flattening or declining.
"With mortgage foreclosures surpassing 240,000 homes a month according to RealtyTracs figures, it's important for consumers to understand the situation and learn what they can do to protect themselves," said Michelle Corey, president of the Better Business Bureau of Eastern Missouri and Southern Illinois.
Who is affected? A large group of homeowners have ARM's-adjustable rate mortgages are affected. They are approaching an interest reset point causing their monthly payments to rise. Other homeowners with subprime loans or interest only loans already may be at the point of imminent foreclosure. And consumers in between whose interest rates already have been reset, but are beginning to face not being able to make their monthly payment. Many in each group would like to refinance, but don't have the financial resources.
Many borrowers did not understand that their mortgage was tied to fluctuating rates. Others borrowed more that they could afford assuming that home prices would continue to soar-they did not.
Sub-prime borrowers did not understand the repercussions of the payment fluctuations and many assumed that their salary increases would cover the increase in payment-they did not. Many borrowers did not anticipate having to make higher mortgage payments with increasing gas prices and minimum credit card costs rising.
The Better Business Bureau offers the following information for consumers in the above situations:
What do I do if I cannot make my payment?
Review the terms of your mortgage. Check to see if you have a reset on the horizon.
Can you rework your budget? If you don't hear from your lender contact them.
Your lender would prefer to avoid foreclosure too. Speak to the right person. Focus on the Loss Mitigation and Collection Departments. Discuss your situation honestly. This allows the lender to identify the best workout solution.
Are there are other options?
There are special programs in place for those with VA and FHA mortgages. The federal government is working to help as well. Research your choices and talk to professionals.
Is there anything I need to avoid to protect my family?
Yes. Avoid foreclosure rescue scams. They put ads on telephone poles, flyers in mailboxes, and make in-home visits saying they will save your home by paying off the amount you owe. Ultimately, you could be forced to move out and deed over your home to the party who said they would save your home.
These scammers can raise your rent on your home too high for you to pay or raise the price on the house higher than you can afford. At the same time you will lose all of the equity you have in your home.
Never sign paperwork without first reading it. Many homeowners have actually signed a quit claim deed (a common way to transfer your share of interest in property to another individual) without realizing it. If you are confused, ask an attorney, trusted friend or financial specialist to review the paperwork.
Be especially suspicious of individuals who urge you not to contact a lawyer or your mortgage lender. Your mortgage lender and your attorney are usually the first persons that should be called!
Do not make mortgage payments to anyone other than your lender. If you are unable to pay, contact the company. Do not ignore warning letters form your lender.
For further information, call the Better Business Bureau at 314-645-3300 or visit www.stlouisbbb.org.
