Debthelper: Divorcing? Want to Save Your Home?

    Trying to sell your house after a divorce can be the pits, and leave you feeling desperate to take any offer. Last year when my mom was trying to sell her house, she wanted to move and get down to Florida as soon as possible to start her new life. She was approached by a strange character who said he would buy her house and take over her payments so she could move. 

She seriously considered taking up this man’s offer. She quickly told me about it, and I told her to watch out. She said the man had even said her attorney would not agree with his proposition. I warned her that if her attorney wouldn’t like it, most likely it was a scam.  Thankfully, she decided it was a bad idea. 

A few months later, her house sold the conventional way, and she was glad she had said no. The current real estate market is providing a haven for scam artists. Almost every corner has a sign sticking out of the ground saying, “Save your home from foreclosure.” There are few legitimate “miraculous” ways to save your home from foreclosure, and even the legitimate ways don’t sound too appealing.  

Equity stripping is a controversial foreclosure rescue tactic where an investor buys the home and allows the homeowner to stay in the house as a tenant. Often times, the transaction is so complex homeowners are unaware that they are giving away their homes and the equity in their homes. If the homeowner is aware of the consequences, that is the only way this could work, and even then it seems like a shady practice.  

In rare situations, certain foreclosure rescue tactics can benefit the homeowner. When the homeowner has exhausted all efforts to save the home, an option would be to sell the home to an investor that would buy the home and then allow the homeowner to buy it back when their financial situation improves. This tactic usually has high fees, but if the consumer is aware of the consequences this can give the homeowner a second chance.  The best way to do this would be to have a friend or family member buy the property and have an experienced attorney involved.  

What are some other ways to save your home from foreclosure?

1. First you must ask yourself if you can really afford the home in the first place. 
Many homeowners call the non-profit credit counseling agency I work for, and when you compare their income with their mortgage payment, it is just impossible. If you take home $3,000 a month and your mortgage payment is $2500-3000, you need to face reality. There may be ways to avoid foreclosure, but you need to sell the home. 

2. Call your lender for details about setting up a short sale or deed in lieu of foreclosure. 
If you are experiencing a temporary financial hardship, but will be able to make mortgage payments in the future, call your lender. Lenders have many options available to help homeowners avoid foreclosure. Remember your lender doesn’t want to foreclose on your home; they lose money, too. Call up your lender’s loss mitigation department and see if they are willing to set up a special forbearance or loan modification.

3. Check your FHA options.
Also, if you have an FHA insured loan there may be even more options available to you.

Jennifer Lane is a certified credit counselor and is taking questions I can answer in upcoming articles. Please feel free to e-mail your questions to me at jlane@debthelper.com.