In response to the small decrease in foreclosure filings, RealtyTrac CEO James Saccacio said, “There are several indications that this lower activity is simply a temporary lull before another foreclosure storm hits in the coming months.”  In other words, things could still get worse before they get better.  Another aspect that has affected the foreclosure rate is the moratorium on foreclosures that some states have imposed.  Once this expires, analysts expect the foreclosure rate to dramatically climb again as the economy continues to struggle and the jobless rate continues to soar.

Other indicators of continued rough times include the record rate of homeowners falling behind on their mortgages and the 8.1 million foreclosures that Credit Suisse predicts will occur by 2012.  The estimated high rate of coming foreclosures is supported by the lack of foreclosure-prevention efforts by homeowners that are behind on their mortgage payments.

Previous efforts to renegotiate loans do not appear to be helping, either.  A report dated December 8 from the Office of Comptroller of the Currency says that over 50% of homeowners that had their mortgages modified earlier this year have already fallen behind on their payments.  Since further renegotiation does not seem likely for these homeowners, the properties are expected to fall into foreclosure in the coming months, adding to the high rate of foreclosures.

However, there is some good news on the horizon.  In recent weeks, more homeowners have reached out to banks for loans.  While not all of these loans have been approved, it is a good sign that the credit crunch may be coming to an end, which will make loans easier to obtain.

Scam artists are able to find potential victims by looking at public foreclosure records that are readily available in newspapers, on the Internet, or at a local government office.  Through these sources, the scammers are able to get the homeowner’s name and address.  Once this information is obtained, many will send personalized letters to the homeowner.  These letters will usually say something like, “STOP FORECLOSURE NOW” or “WE CAN SAVE YOUR HOME” or any similar promises.  But remember that anything that sounds too good to be true probably is.

Scam artists will often call and pretend to be able to help.  These typically occur in one of two ways.  The scam artist may say that they will negotiate with the lender and advise the homeowner not to contact the lender or an attorney.  Once the homeowner agrees to the fee, the scam artist will disappear.  The other scam scenario involves the scam artist “negotiating” with the lender while the homeowner makes the mortgage payments directly to him.  Some of these scams will involve a bait-and-switch where the homeowner signs a document that supposedly represents the renegotiated mortgage.  In reality, signing this document often means the homeowner just signed over ownership of the home to the scam artist.

These examples underscore the need for legitimate advice in times of need.  It is important not to immediately trust anyone that approaches you with promises of a quick and easy fix and it is extremely important not to sign anything without fully understanding it.  If you find that you are in need of assistance, contact a qualified foreclosure attorney.

In foreclosure cases, not only do tenants end up in an unfortunate situation through no fault of the own, they are not granted a day in court and have very little, if any, recourse.  And to make matters worse, the tenants often receive no warning of the pending foreclosure until a Sheriff’s deputy arrives and tells the tenants that they must vacate the premises immediately.  It is not uncommon for the property owners to either not inform tenants of the pending foreclosure or to outright lie about it.  Many owners are not truthful for fears that the tenants may not want to pay their rent after they find out a foreclosure is imminent.  The courts are supposed to notify the tenants when a foreclosure is pending on a rental property, but the recent flood of foreclosures has made it difficult for the overwhelmed courts to notify all involved parties.

State laws typically offer next to no protection for tenants; some states do not even require owners or servicing companies to notify the tenants of the pending foreclosure.  If any notification is required, the servicing companies are required to notify the tenants of the eviction date, but this is typically late in the process and may not give tenants sufficient time to find another place to live.

With all the debate over how to best help troubled homeowners, some concern for renters’ rights have begun to emerge.  A few members of Congress have recently urged the Federal Housing Financing Agency (FHFA) to include renters’ rights in the reforms the agency is in the process of bringing about.

On December 12, 2008, the Attorney General of Massachusetts announced the issuance of a restraining order against a mortgage broker who posed as a bankruptcy attorney.  The individual, David Coleman, would offer legal advice and assistance to distressed homeowners despite the fact that he wasn’t licensed to practice law in Massachusetts.

Coleman would choose his potential victims by looking at the foreclosure notices listed in the local newspapers.  He would then contact the homeowners over the phone and pretend to be a bankruptcy attorney.  He would offer to assist in obtaining a foreclosure rescue package or help the homeowner file for bankruptcy, all for a $1,000 fee.

It isn’t surprising that many frantic homeowners believed his false promises and handed over the $1,000 with the hopes that this man could help.  Instead, he often made matter worse by offering advice that was either not applicable to a homeowner’s situation or just plain wrong.  He would file bankruptcy petitions that were often incorrectly or incompletely filled out without the homeowner’s knowledge.  When the homeowners would try to contact him, he would not be available and never returned phone calls.

This unfortunate story has two valuable lessons.  It reinforces the old saying that if something seems too good to be true, it probably is.  It also shows the importance of consulting a qualified attorney when the need arises.  Scam artists are only working for themselves, but an experienced foreclosure lawyer will always keep the client’s best interests in mind.

These lower rates have led to the largest increase in mortgage refinance applications in the 18 years that the Mortgage Bankers Association has been publishing its weekly report on mortgage applications.  And while all that apply are not being approved for refinancing, it is a sign that the lower interest rates are creating confidence in the housing market amongst homeowners.  It has also increased the number of people reaching out to banks for money, which helps shore up the banks during the economic crisis.  To keep this trend going, the U.S. Treasury Department is considering a move that will lower the average interest rate to 4.5% from its current 5.6%.

The dip in interest rates comes as a response to Federal Reserve Chairman Ben Bernanke stating that the Federal Reserve would purchase approximately $500 billion in long-term securities in hopes of driving the yields on long-term Treasury bonds down.  The interest rates for 10-year Treasury bonds and 30-year mortgages are usually the same.

This is another glimmer of hope for homeowners that are having trouble making ends meet and are afraid of losing their homes to foreclosure.  As the interest rates fall and more people approach the banks for loans, the more likely the banks will be to grant loans.  This means that they will also be more likely to refinance mortgages.  With interest rates this low, it is a good time to try and lock these low rates in with a 30-year fixed rate mortgage.

However, if you can’t wait or can’t get your mortgage refinanced, take action. Contact a qualified foreclosure attorney who can help you work through your foreclosure problems.

Sometimes, counseling can make all the difference.  To help homeowners find counseling, the National Foundation for Credit Counseling has set up the Homeowner Crisis Resource Center.  This service helps homeowners find certified credit counselors that can help with creating a budget that will help make paying the mortgage a bit easier.  These counselors can also offer advice on renegotiating the terms of the loan.

The FHASecure plan is designed to help homeowners refinance certain adjustable rate mortgages.  Unlike similar programs, FHASecure is only available for owner-occupied properties (no landlords) that have adjustable rate mortgages that were not issued by the FHA.  These mortgages also have to reset between June 2005 and December 2009.

Hope Now is an alliance of lenders that collectively service about 80% of subprime loans.  The Hope Now effort is primarily aimed at freezing the interest rate on homes with adjustable rate mortgages.  Eligibility for this program requires a good payment history, a loan that was taken out between January 2005 and July 2006, and a loan reset that will result in a 10% increase.

There are other sources of assistance available, but getting help may still be difficult.  The high numbers of people in need of assistance means that many of these programs will be overwhelmed with requests.  If you find that you cannot get help from anywhere, contact a qualified foreclosure attorney who may be able to suggest other options.

Foreclosures during the third quarter of 2008 grew to a record number of 1,350,000 homes.  This latest spike has driven the overall foreclosure rate to 2.97% nationwide and represents a 76% increase over the same period in 2007, according to the Mortgage Bankers Association.

This increase indicates that approximately one homeowner in ten is either delinquent on their mortgage or they are in foreclosure.  And things are not expected to improve for some time as falling home values and rising rates of unemployment drive more homeowners into foreclosure.

To address this, some states have instituted foreclosure moratoriums in an effort to help troubled homeowners find ways to solve their financial problems without having to go into foreclosure.  Unfortunately, this act is simply delaying the inevitable for many.  Massachusetts instituted a foreclosure moratorium, which initially pushed the foreclosure rate down.  However, once the moratorium expired, the rate climbed dramatically.

Some lenders and government agencies have been pushing for loan modifications to help homeowners prevent foreclosures.  The success of a modification plan is uncertain.  According to MBA Chief Economist Jay Brinkmann, approximately 40% of the homes with delinquent mortgages have been abandoned by homeowners will no hope of avoiding foreclosure.

But not all the news is bad.  According to the MBA, the rate of homeowners that are one month behind on their payments has held steady at 3.39%.  This number has been expected to grow as people find it harder to make their mortgage payments.  The fact that this number has been stable shows that conditions may be better than economists estimate.

Speaking at the Columbia School of Business, Bernanke said, “Realistic public- and private-sector policies must take into account the fact that traditional foreclosure avoidance strategies may not always work well in the current environment.”  His comments are directed at the fact foreclosure filings saw a whopping spike of 112% during the first three months of the year.

We’re in a recession, and Bernanke is running scared that it will continue for far longer than originally anticipated.

The declining home values mean that homeowners are losing what equity they had built up.  In many cases, they end up owing more than the home’s current market value.  Foreclosing on these homes ends up costing the lenders money, which means there is less money available for new loans.  By preventing foreclosures, Bernanke hopes to prevent the overall economy from worsening as a result of the housing market.  He went on to say, “Doing what we can to avoid preventable foreclosures is not just in the interest of lenders and borrowers. It’s in everybody’s interest.”

It would seem as though this is strong support for programs like the Federal Housing Administration’s Hope for Homeowners.  This program offers incentives for lenders that are willing to work with homeowners to renegotiate mortgage terms in an effort to prevent foreclosures.  However, as of yet there are no punitive measures in place for lenders that are unwilling to work with homeowners.  It is not certain how willing lenders will be to work with borrowers without these measures.

Once that first mortgage payment is missed or late, the lender is likely to report that payment to the credit bureaus, which will damage your credit score.  On top of that, the majority of lenders will charge a 5% late fee on delinquent payments.  Once you have fallen 90 days behind on your mortgage payments, the lender can file a notice of default, which is the beginning of the foreclosure process.

The notice of default can be filed anywhere between 90 days and a year, depending on the lender.  Some will file as quickly as possible to protect their investment and some will wait until all possibilities for homeowner to get current have been explored and exhausted.  Once the notice of default has been filed, the homeowner typically has 90 days to eliminate the delinquency.

A popular way to try and fix a delinquency is to renegotiate the loan.  However, this is often easier said than done.  When a lender tries to contact a homeowner, the people calling are most likely from the collections department.  The people in collections do not have the ability to discuss any renegotiations and are only interested in having the homeowner pay up.  To discuss a workout, the homeowner needs to talk to the loss mitigation department.  This department is often willing to work with the homeowner and will present more options than the single-minded collections department.  If all else fails, talking to a foreclosure attorney can help open more options.

Well, kind of.  See, assuming that the mortgage servicer has the ability to do a workout (and many don’t), the can do so only if there’s a reasonable chance that a default won’t happen again in the future.  Workout plans are only offered if it will fix the situation instead of merely staving off the inevitable.

There is a series of documents that must be submitted to the lender before they will seriously consider renegotiation.  Each lender has its own list of required documents, but there are a few that almost all will want.  One of the most important is a hardship letter.  A hardship letter explains how and why the homeowner has fallen behind on the mortgage payments and what has been done to try and recover.  Basically, this letter outlines why the bank should give the homeowner a second chance.

Paystubs are also very important.  Stable income shows that the homeowner stands a better chance of paying the renegotiated loan back.  Tax returns for the previous two years will also show that stable income exists.  The amount of the income can also be used to determine how large of a payment the homeowner can afford.  Bank statements should be included with the paystubs.  The bank statements will show if there is an emergency fund that can be accessed in times of need.  Bank statements will also give the lender an idea of the homeowner’s spending habits.  These are crucial if the lender is to be convinced to give the borrower a second chance.

Even if a homeowner has all of these documents and they reflect a good, stable income with responsible spending habits, there is still a chance that the lender will not agree to the workout.  If this is the case, the homeowner should consider contacting a qualified foreclosure attorney.  An attorney will have experience in negotiating with lenders and is likely to have more success than the homeowner alone.  If all else fails, an attorney will know of other ways to stop foreclosure, such as Chapter 13 bankruptcy.