Tuesday, April 7, 2009

Need Help with your Mortgage? Watch Your Back!

As a real estate professional, I get calls from people that are struggling to pay their mortgage, or concerned because they have to sell, and they owe more than their homes are worth. Many in my profession have been recommending services from "professional negotiators". These are companies that brag about large success rates and large volumes of completed transactions - either in loan modifications or short sales, or both. But, these "professional negotiators" cost money - anywhere from a few hundred dollars to several thousand. Most of their fee is not contingency based, and it's often required to be paid up front. Many of these companies are SCAMS. (Click here to see the CBS Articles on these scams and how the government is working to stop them.) No, I do not believe that the agents who are referring these companies recognize they are scams... I think they've been duped like everyone else. I think these agents and loan officers want to help the consumer, but they simply don't know where to send troubled homeowners to get the assistance they need. Here's the straight truth: There are different groups of consumers, with different needs, and each should be seeking the type of help they need from different types of professionals. So, WHO YA GONNA CALL? Some homeowners want to stay in their homes, but are struggling to make ends meet. These people need to be talking to their lenders, particularly if the reason they are struggling financially is a temporary hardship which will be resolved in the foreseeable future. When homeowners are overwhelmed or unsuccessful they can ask for help through HUD approved loan counselors who do not charge a fee to the consumer for their services. The reality is very few loan modifications have been done, and of those that were completed, many homeowners are delinquent, AGAIN, despite the temporary reprieve. So, they may have to find a way to sell or allow the bank to foreclose. Some owners MUST sell - perhaps because of a job relocation, divorce, or other life change, but they owe more than their homes are worth. These people need to be talking to a real estate agent they trust and working on a short sale to avoid a foreclosure. Real estate agents will charge a commission, and the fee is usually only paid if there is a successful sale. Some agents will require the use of a professional negotiator. If that negotiator's fee is a large, upfront, non-refundable fee to the seller... run. If the negotiator charges a fee to the seller, the buyer, the agent, the buyers agent, the title company and anyone involved in your transaction- run, run, as far as you can, as fast as you can. These are definately scam artists - and if they are going to require that everyone who is involved in the transaction pays a fee, then your house's chance of successfully selling is significantly reduced. Some very busy real estate agents may think it makes sense to hire professional negotiators to assist them with getting the sale from contract to close. If the agent is paying for this, and it is included in their fee, then I think this is okay - it would be the same as if the agent was hiring more administrative help to support the increased work load. I also think it is fair when agents charge more for a short sale than another type of transaction. But, commissions are negotiable, and any consumer (and agent) involved in a transaction needs to know that the bank - who is ultimately paying the commission - will have to approve the commission expense, so it must be within certain limits. [Fannie Mae issued a guideline that a maximum of 6%, with a small administrative fee is acceptable.] Still other owners are comfortable paying their mortgage and may or may not have equity, but want to take advantage of programs that are available that may help make them more comfortable - forgiving part of the debt, lowering payments, whatever is available. These people need to make friends with a good loan originator who stays up on the current trends and can tell them when there is an incentive or a loan program that will benefit them. Loan officers do get paid for originating any loan that is successfully closed, but again, only if they are successful. Consumers - watch your back. Many people out there see you as vulnerable, and they will take every last dollar you have. The government has made free help available to you, and true professional loan officers and real estate agents will be skilled in helping you navigate the ins and outs of today's market - for selling or refinancing.
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