In the last 3 days I’ve had two friends ask me about loan restructuring and foreclosure, so I’ve decided to publish the results of my research. Doing a search on Google, I found several commercial companies out there who deal with people who are in or about to go into foreclosure and handle not only loan restructuring but things like short sales and the purchase of your property by an investor. Whatever the method chosen to get you of foreclosure, you agree to pay these companies a fee for handling your situation. Smell a rat? You should. You can handle all of these situations yourself by making a few phone calls. With every crisis comes the vultures who are ready to exploit! Among the promises:

• Help you set up a payment plan for back payments owed on your mortgage
• They have a bunch of investors ready to take your home off your hands. (They will also purchase the home from you if you turn over the deed to them.)
• If you’re upside down in the value of your home vs. your mortgage, they will try to arrange a short sale for you, meaning they will get the mortgage company to take less than what is owed and they will buy the home at that price.
• They will loan you private, non-qualifying money and loans with which you can refinance your home.

First of all, if you even suspect you may be in trouble with your mortgage, the time to take action is NOW. Short sales require that you actually have a buyer for your property - so you need to get it listed as soon as possible. Loan restructuring takes time to get approval. Don’t wait until the sheriff is knocking at your door.

Here’s what you can do yourself in each of these situations.

Loan Restructuring This means you may be able to skip some payments and stretch out your loan somewhat. If you want to explore this option, call your lender and talking to their REO (real estate owned) department or customer service. Be forewarned, you may not qualify for loan restructuring. Loan Restructuring does not mean your lender will reduce the amount of the loan. And skipped payments will be added (along with additional interest) to the end of the loan cycle. To qualify, most likely you will have to provide tax returns, W-2s and 1040s. It’s almost like taking out a new loan.

Short Sales: There are short sale specialists among your local pool of real estate agents. Get a referral from a friend, call them up and discuss with him or her your options. The service is free. You may be able to avoid having a foreclosure on your credit report by going this route.

Purchase by an investor. Again, call a Realtor in your area and see if they have a list of investors who can purchase your property quickly. If you have some equity in your home and you agree to take less than what the property is worth, sometimes these deals can move fast. Don’t be greedy - if your house goes into foreclosure, you will lose all of your equity.

Private, Non Qualifying Money To Catch Up on Your Payments Can you say “Loan Shark”? This option will only be offered to you if you have lots of equity and the sharks are smelling blood. They will loan your money to catch up on your payments, often at outrageous interest rates which will land you in a worse position than you first found yourself. And you can bet they will demand a quit claim from you (signing over the deed to your home to them if you do default) as part of the deal. DON’T DO IT!! This technique reminds of payday loan lending.

Foreclosure is very commonplace these days and the options are not pleasant. Don’t compound the misery by hiring one of these scam agencies to “help” you out. You can retain the services of a qualified professional for free - your mortgage lender and your local Realtor.

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