The Saunders Blog

Taming the Beast

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The road to recovery for Southwest Florida’s real estate market has been long and arduous; fraught with an overabundance of properties for sale—many of them short sales and foreclosures.  Yet following a winter in which sales of correctly-priced homes sizzled, even the most skeptical market watchers are trading die-hard pessimism for a healthy dose of informed optimism.

Prices are at long last stabilizing on properties priced below $300,000.  The total number of properties for sale has retreated into a much healthier zone of balanced supply and demand; and the phenomenon of multiple offers on well-priced properties is not uncommon.  The market for correctly-priced properties between $500,000 and $1 million has also begun to show signs of a slow recovery—although sales of properties above $1 million remain sluggish.  Still, were it not for the 800-pound gorilla occupying the driver’s seat, some might conclude that our overall recovery is finally cruising in the fast lane.

That 800-pound gorilla is the beast called “foreclosure,” a tenacious problem applying considerable drag to the pace of our recovery.  Yet, while the total number of foreclosures in Sarasota, Manatee and Charlotte Counties has essentially remained flat over the past few months, the number is still high—9,844 at last count in March—and could potentially get higher before subsiding.  That’s the sobering news of the day.

But there’s good news too.  Unlike earlier in the crisis, newer foreclosures are being handled somewhat more proactively by the major financial institutions, who now realize that it’s often in their best interest to strike constructive accords with “underwater” borrowers at risk for defaulting on their loans. With so many foreclosures exerting downward pressure on prices, everyone’s bottom line is better served by keeping home and homeowner together wherever possible.   Thus, the result of a constructive give-and-take between borrower and lender increasingly comes in the form of a loan modification or principal reduction plan, which typically reduces principal and payments for the borrower while keeping the property lived-in, cared for, and of greater value to the lender.

Unfortunately, just as the government and major financial institutions are making real progress in devising programs to help beleaguered borrowers (who qualify) modify their mortgages, the crooks have likewise shown up—as they usually do—to prey on desperate people in dire straits.  Many of the scams they use to defraud homeowners are fairly sophisticated, requiring anyone seeking help to restructure their mortgage to act with caution when dealing with anyone offering help.

According to a recent consumer advisory issued by U.S. Department of the Treasury, there are five key ways to avoid becoming the target of a foreclosure scam:

1.   Contact your lender first.  Do this as early as possible in order to preserve all your options; and stay away from any “counselor” who advises you not to.  Do not stop making your mortgage payments or trust anyone to make them for you.  Speak with someone in your lender’s loss mitigation department for mortgage modification options and other viable alternatives to foreclosure. You do not have to pay anyone to learn about or benefit from such initiatives.

2.   Be very skeptical about who you deal with. Scammers work overtime to appear legit; often using deceptive practices to convince consumers they’re reputable.  Many present themselves as agencies or arms of the government, going as far as to use similar names, stationery and Web URLs. Often they use such official sounding terms as “federal,” “TARP” or other words and acronyms that hearken to official government programs.  Moreover, be very wary of claims offering “government-approved” or “official government” loan modifications.

To be confident about whom you’re dealing with:

• On the Internet, stick with Web sites officially associated with the government.  Most of these have URLs that end with the “.gov” domain name.
• When talking on the phone, you should never be afraid to ask for the main switchboard number of the agency the caller represents.  That way you can call back to make sure the number and person are legit.
• Government agencies never ask for personal financial information upfront; or request fees at any time.  Be very wary of anyone who does.
• For extra reassurance, visit the local office of the government agency in question for on-site verification.

3.   Don’t pay for help.  HUD-approved counseling agencies offer free foreclosure prevention counseling. They are not permitted to charge consumers for these specific services.  By contrast, scammers request up-front fees to act as an intermediary between you and your lender; doing little, if anything, in return.

4.   Never transfer the property deed. Multiple scams involve the scammers trying to encourage homeowners to transfer title to the property.  In exchange, one of these scams offers to obtain new and better financing and/or allow the homeowner to remain in the home as a renter before eventually buying it back.

Transferring your title does not free you from your payment obligations.  You still own your mortgage debt.  The difference will be that you no longer own your home.  In short,  run from anyone who asks you to transfer your property deed or tile to their name.

5.   Ignore promises of shortcuts.  Scammers frequently promise to make foreclosure problems go away overnight.  The foreclosure process is typically lengthy and complicated; and any genuine solution takes time and patience.  Just say “no thanks” to anyone who suggests otherwise.

Above all, trust your first instincts.  If it sounds too good to be true, it probably is.