Understand a Lender’s Options upon Loan Default
There are many types of loans that are secured by real property. These may be purchase loans, refinanced loans, home-equity loans, or one of the various other types of loans. The type of loan and type of property will determine what remedies a lender may have if the homeowner fails to make the agreed upon payments. The available remedies, the homeowner’s overall current or potential future financial strength, the lender’s cost in acquiring the loan and any shared-loss or similar agreement if the loan was acquired by purchase or merger, are some of the many factors that the lender may consider in deciding how to proceed when a loan is in default. Click For an overview of these issues.
Be Aware of Predatory “Rescue” Scams & Short Sale Fraud
Homeowners worried about foreclosure may be susceptible to predatory “rescue” scams which may cost you money with no results, result in the loss of your home entirely, or involve you in a fraudulent scheme.
Additional information can be found here.
“Red Flags” of fraudulent schemes include:
- Guarantees to stop the foreclosure
- Large up-front fees
- Instructions not to contact the lender
- Transfer of title or lease of the property
- The proposed buyer is an LLC
- Requests that the homeowner execute a power of attorney
- The proposed buyer at the buyer’s sole expense retains a third party to negotiate the short sale for the seller’s benefit.
Report suspected scams to the Department of Financial Institutions at fraudline@azdfi.gov; the Attorney General’s Office or NeighborWorks©.
Contact a free HUD-approved housing counselor or contact your lender directly
Contact a HUD-approved housing counseling agency online or call (800) 569-4287 or TDD (800) 877-8339 for advice on your options.
- http://portal.hud.gov/portal/page/portal/HUD/topics/avoiding_foreclosure
- Contact the Neighborhood Assistance Corporation of America
- Contact the lender directly.To find the lender’s contact information, check the loan billing statement, or coupon book. Ask for the lender’s home retention department, loss mitigation department, (or other department that handles negotiation of loans in default); explain the situation and find out if the lender is willing to discuss options.
Utilize Free Services Available to Arizona Residents
- Contact the Arizona Foreclosure Helpline at 1-877-448-1211 (toll-free) or visit www.housingaz.com.
- Review the Arizona Foreclosure Prevention Task Force WorkbookThis book will help you evaluate your options and provide you with tools to take action. Additional resources are available at: www.azforeclosureprevention.org.
Obtain Legal Advice
An attorney can advise you about your options and legal liability. You can:
- Find out if you are eligible for free or low cost legal assistance, contact a legal aid organization in your county or one of the organizations listed here or here.
- Contact the Lawyer Referral Service in your county where you can consult with an attorney for a small fee for a half-hour consultation.Maricopa County: www.maricopabar.org/displaycommon.cfm?an=16 (602) 257-4200.
Pima County: www.pimacountybar.org/web/lawyer-referralservice-lrs (520) 623-4625. - Attorneys who are State Bar Real Estate Law Certified Specialists can be located at: www.azbar.org/LegalResources/findspecialist.cfm.