FAQ

What is foreclosure?

Foreclosure is the process by which a lender takes back a property on which the mortgagor has defaulted. The foreclosure process usually starts if mortgage payments are more than 90 days past due.

What is a Foreclosure Consultant?

A Foreclosure Consultant is a person who makes an offer to a homeowner at risk of foreclosure to perform specified services that the Consultant represents will help the homeowner. (Definition from MD Bill SB761) A Foreclosure Consultant should not be confused with a Foreclosure Purchaser.

A Foreclosure Consultant CANNOT:

• Buy a pre-foreclosure property.
• Have an equitable interest in the sale of the property.
• Induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property.
• Have "agency" with one investor/investment firm.

What is a Foreclosure Purchaser?

A Foreclosure Purchaser (Investor) is a person who acquires title or possession of a deed or other document to a residence in foreclosure. A Foreclosure purchaser should not be confused with a Foreclosure Consultant.

A Foreclosure Purchaser CANNOT:

• Market directly to homeowners in pre-foreclosure.
• Have initial contact homeowners to discuss options.
• Negotiate directly with mortgage companies and law firms on behalf of the property owner.
• Induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property.

Do I need a foreclosure consultant?

A Foreclosure Consultant can explain your options and rights when facing foreclosure and possibly help with the sale of your property. The answer depends largely on your personal situation, level of knowledge, and comfort level with the foreclosure process.

Why is a Foreclosure Consultant important?

Many homeowners facing foreclosure may decide to sell their homes to an investor. Unfortunately, some investors have not always been above board and entirely honest when dealing with homeowners. Many homeowners have found themselves holding empty promises and bad debts while an investor walked away with the property. Recognizing that a problem exists, several states have enacted laws to protect homeowners. The role of the Foreclosure Consultant was introduced to provide information and help homeowners make educated choices about their home.

When should someone seek out the help of a foreclosure consultant and why is it helpful?

The role of a Foreclosure Consultant is to clearly explain your options and rights when you are facing foreclosure. A lawyer, real estate agent or broker, or Foreclosure Consultant are some examples of legally-defined professionals who can assist you with your property sale. These professions are performing a service for a fee, and do not have an equitable interest in the sale of your home.

To explain this clearly, you should understand the differences between a Foreclosure Consultant and a Foreclosure Purchaser (an Investor).

A Foreclosure Consultant is a person who makes an offer to a homeowner at risk of foreclosure to perform specified services that the Consultant represents will help the homeowner. (Definition from MD Bill SB761)

A Foreclosure Purchaser (Investor) is a person who acquires title or possession of a deed or other document to a residence in foreclosure.

A Foreclosure Consultant and a Foreclosure Purchaser are two separate entities. One person cannot be both. If a person represents him/herself as a Foreclosure Consultant and offers to purchase your home, they may not be working in the utmost integrity.

A Foreclosure Consultant CANNOT:

• Buy a pre-foreclosure property.
• Have an equitable interest in the sale of the property.
• Induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property.
• Have "agency" with one investor/investment firm.

A Foreclosure Purchaser CANNOT:

• Market directly to homeowners in pre-foreclosure.
• Have initial contact homeowners to discuss options.
• Negotiate directly with mortgage companies and law firms on behalf of the property owner.
• Induce the homeowner to sign documentation that waives their rights regarding the transfer of ownership of their property.

Do I need a lawyer or a Foreclosure Consultant?

A lawyer or Foreclosure Consultant are both legally-defined professionals who can explain your options and rights when facing foreclosure and possibly help with the sale of your property. The answer depends largely on your personal situation, level of knowledge, and comfort level with the foreclosure process.

Is there a federal law which covers foreclosures?

There is no single federal law covering foreclosure although many states have state specific laws. There are also several federal programs that may impact foreclosure. The Foreclosure Workbook includes a resources section for federal programs and details on every state.

Why go through all this trouble? Can't I just file for bankruptcy?

In 2005, laws were passed that make filing bankruptcy much harder than before. This is not an effective last minute option because of the paperwork, process of filing, and additional costs associated with bankruptcy including hiring an attorney.

The American Bar Association has reported that 96% of homeowners who declare bankruptcy end up losing their home to foreclosure anyway. With one missed payment the bankruptcy can be cancelled and the foreclosure process reinstated immediately.

How do I avoid foreclosure scams?

Don't sign any papers you don't fully understand! Leasebacks, escrow loans, Trust agreements, equity strippers, foreclosure mediators, and predatory lenders could all be wolves in sheep's clothing. The Foreclosure Workbook separates fact from fiction and covers common foreclosure scams and how to avoid them.

What advice would you give to someone who is looking to buy their first home and wants to avoid a problem in the future?

Understand everything about your finances and mortgage before buying. It's easy to fall in love with a home and then try to figure out how to buy it. Work the opposite way — REALISTICALLY understand how much you can afford, and then find houses in that exact price range OR BELOW and buy. Also make sure you understand the terms of your mortgage and how payments may change over the life of the loan.