If you’re a homeowner facing default on your mortgage, you’ve probably gotten a lot of calls lately from mortgage advisors who are offering to help modify your loan. However if you are like most people having trouble making mortgage payments, you probably can’t spare the thousands of dollars many of these organizations require. There are options. The US Department of Housing and Urban Development (HUD) maintains an approved list of housing counseling agencies throughout the United States that offer free or low cost advice.
What can they do for you? HUD backed agencies offer a range of services, providing information on both renting and buying while avoiding foreclosure and default. If you are 62 or older, the counselors can also walk you through the steps involved in pulling some of the equity out of your home in a Home Equity Conversion Mortgage, also known as a reverse mortgage. Fees charged by these agencies must be reasonable while services are provided free for those who can’t afford the advice. All charges must be appropriate to the service provided, and be explained in advance.
The best news for people facing foreclosure is that these counseling services are offered for free. HUD approved agencies are funded by the federal government and NeighborWorks America, a national non-profit. To find a local agency, click here or go through HUD’s interactive voice system at: (800) 569-4287.
States also offer similar programs. For a look at state and local plans, click here.
One of the limitations to these services, is that although they are providing information about legal issues, it is not considered legal advice under the law. There is no attorney client privilege. Nothing you divulge such as revealing that you misstated your income to get your mortgage, is treated as being confidential.
Don’t be fooled by firms masquerading as non-profit organizations that employ deceptive practices and charge exorbitant fees. If you go for counseling, verify that it is on the HUD approved list.
Another good option is to take advantage of firms where the fees are paid by loan servicers to reach accommodations that work for both lenders and borrowers.
Finally, be patient. Counselors are overwhelmed with calls, so start your inquiries early and be persistent in your quest.