Foreclosure counselors can make the difference between losing your home and keeping it. Here is how you can find, choose and see how they work.
If you’re facing foreclosure, your foreclosure counselor will be a key part of your foreclosure team. As you start looking for one, however, you need to know what exactly they do, what they don’t do, and how to choose one who’s legitimate and qualified.
What a foreclosure counselor does
Reviews your finances with you
Helps you establish a finiancial plan and budget
Explains you on-foreclosure options, such as loan modification, short sale or deed in lieu of foreclosure or possible refinance; helps you navigate the process with any chosen option.
Be your advocate on your behalf with lenders and loan servicers.
Counselors whould also be upfront about discussing their own track records as well as the track records of the agency they work for.
Expect to spend some time with a counselor, depending on the complexity of your foreclosure situation, including how many lenders you have to provide documentation to and negotiate with, this could take any where from two to 24 hours.
Be sure the counselor is looking at your entire situation and not just your foreclosure. If a counselor focus only on your mortgage, they’re fixing only one aspect of your financial situation. They should give you an action plan containing the tasks you are going to perform to change your financial situation.
What a foreclosure counselor doesn’t do.
Give you tax advice
Give you legal advice
Give guarantees regarding a particular outcome
Give you real estate advise
For additional advice, add a tax adviser, Realtor and attorney to your team.
Finally, don’t expect a counselor to be a genie. If you’re in a home that under the most aggressive scenario you can’t afford, but maybe you got into it because of some toxic loan that should never have been available in the first place, you’re probably going to have to move. It’s best you get out smoothly.
How to choose an agency
Type in your state or ZIP code at www.finaforeclosurecounselor.orgor call HUD’s foreclosure counseling hotline at 800-569-4287 or its foreclosure prevention hotline at 800-995-HOPE (4673). HUD-approved agencies are all nonprofit, community-based organizations that have administered a housing counseling program for at least a year.
HUD-approved agencies also are required to:
Employ counselors who are knowledgeable about federal housing programs
Have a staff of counselors of which at least half must have two or more years of counseling experience. At least half must also have received housing counseling training in the past two years.
Provide you with certain documents, such as a privacy agreement explaining how your personal information will be handled.
In addition, at the agency you work with, see if you can find a foreclosure counselor who has certification through the Neighborworks Center for Homeownership Education and Counseling Look (NCHEC), which has a foreclosure intervention and Default Certification Program. Certified counselors must follow NeighborWorks counseling standards and code of ethics and conduct.
If you are advised and decide to go down the path of a short sale or loan modification then you will need a Home Value Evaluation so you can determine if and how much under water you may be with your mortgage.