Marietta Rodriguez, head of Neighborworks America’s National Home Ownership Programs, said many counselors charge high fees for simple services and make guarantees for services that they cannot deliver. She said even licensed foreclosure services require upfront payments before they begin working with homeowners.

The first thing that you should consider when you are looking for services specializing in averting foreclosed homes is the total cost of the service and how the payment is scheduled. You should stay away from counselors demanding high upfront fees and guaranteeing loan modifications. Legitimate services often split payments so that you will give them the final payment when the desired service is completed.

Austin King, a spokesperson for the community association Acorn, said many for-profit counselors charge fees for information available for free on the Internet. King advises homeowners to contact HUD-certified counselors, who are paid by government agencies and nonprofits to help avert the soaring number of foreclosed homes.

Check if the counselor or service provider has been working in the area of foreclosed homes for years. Counselors who have known lots of foreclosure processes are more adept in evaluating various foreclosure cases and are more skillful in finding options under Obama’s program that fit your case.

Ask the counselor for proof of working relationships with your mortgage servicer. Is the foreclosure prevention firm familiar with the modification procedures of your mortgage lender?

Make sure also that the counseling firm assigns you a counselor that will stay with you until your mortgage loan is modified and safe from following the fate of foreclosed homes.

One of the strategies of money-making foreclosure prevention firms is to pass you from one counselor to another, especially if you have already paid the fees and they have found that your mortgage cannot be modified by the lender.

Finally, one of the marks of a good and experienced counselor is to be able to see when it is best for the borrower to just let the property follow its course to foreclosed homes. There are many borrowers who cannot really afford even low monthly payments.

Stay Away from Scammers Capitalizing on Foreclosed Homes is a post from: Foreclosure Homes Investing

The first issue is the insolvency of mortgage lenders and the banks. Loan modifications and loan refinancings will work only if the banks have the funds to carry out restructuring processes.

Another issue is the problem related to the estimated 2.3 million residential foreclosures in 2008, as counted by foreclosure tracking firm RealtyTrac. As this figure was linked to the estimated 2.6 million jobs eliminated last year, something must be done to make businesses survive the downturn so that they can preserve jobs. According to Kenneth Rosen of the University of California’s Fisher Center, up to 8 million new foreclosures will occur in the next 3 years if nothing is done at the national level to address the causes of foreclosures.

The first recommendation is to reduce the principal of mortgage loan balances by about 20 percent to help prevent foreclosures. The reduction in principal reflects current home values in the housing market. The 20-percent reduction is also a better option for mortgage lenders than the 40 percent that they lose in commissions, fees and discounts when they finally resell foreclosures.

Another recommendation is the setting of limits to write-downs in loan modifications ordered by bankruptcy judges. Based on data from the Congressional Budget Office, about 350,000 homeowners will likely file for bankruptcy in order to avoid foreclosures. To prevent a rise in bankruptcy filings, write-down limits based on current home prices must be set.

The third recommendation is the provision of compulsory counseling to all who receive loan modifications, refinancing, write-downs, bankruptcy provisions and other kinds of assistance. All homeowners must be enjoined to help themselves and prevent further foreclosures.

Before Obama’s program was launched, Fannie Mae, Freddie Mac and other mortgage companies were already using traditional loan relief techniques to help deserving borrowers. These techniques are still practicable especially for borrowers whose mortgages are not owned or guaranteed by Freddie Mac or Fannie Mae.

These are short sales, surrender of deeds, forbearance plans and charge-offs. Each of these techniques can help borrowers avoid foreclosures if they get cooperation from the lenders.

Some More Recommendations for Averting Foreclosures is a post from: Foreclosure Homes Investing

A home is classified as pre-foreclosed when its owner has been delinquent on his mortgage payment for at least a month and has received notice of default from mortgage lenders.

The property is not yet legally foreclosed until the notice has been filed 90 days after the delinquent homeowner’s last due payment. Potential homebuyers may take the opportunity to find some bargain houses to their liking during the 90-day window.

Pre-foreclosure may offer potential homebuyers a chance to purchase distressed properties at low prices and help stop the growing number of foreclosure homes in the country. Pre-foreclosure properties can be acquired directly from their distressed owners who are more than willing to sell to recover a portion of their investments.

Aside from helping stem the tide of foreclosure homes, here are other advantages of buying pre-foreclosure:

• Struggling owners who want to dispose of their distressed properties to avoid a bad credit report may accept lower offers from potential homebuyers.
• Unlike in foreclosure homes auctions, potential homebuyers have enough time to carefully examine the home.
• Owners of the pre-foreclosed properties are more flexible with their payment terms than banks. Foreclosure homes auctions require buyers to give cash down payment, or sometimes upfront payments in cash.
• Less competition than buying properties in foreclosure homes auctions.

How to find pre-foreclosure homes:

• Check legal notices and public records. Most foreclosure-related information is provided in public records, such as notices of auctions and defaults. These make researching on pre-foreclosure homes by prospective homebuyers easier.
• Remember to check also filings on bankruptcy, divorce and probate since most of these are linked to foreclosures.
• Check Web sites for pre-foreclosure homes locations. If possible, limit your search to areas you are familiar with.
• Contact any person or groups that may provide you with inside knowledge of the area where you want to buy a property. They could be residents, postal workers or service people. Ask these people to inform you of properties that are being foreclosed or are on the brink of foreclosure. Usually a neglected property is one indication that it is in the pre-foreclosure process. It would not hurt your search for pre-foreclosure homes if you offer a finder’s fee.

Pre-Foreclosures, a Way to Reduce Foreclosure Homes is a post from: Foreclosure Homes Investing

President Barack Obama has called Congress’ decision to pass the stimulus bill as a major milestone. In his weekly Internet and radio address, Obama described the development as just a start of efforts to turnaround the country’s economy.

He added that the problems that cause the country’s economic crisis are widespread and deep and the government’s response should commensurate with the task needed to address these problems which include the foreclosure crisis.

To succeed, Obama added, the recovery plan should include measures to bail out banks to boost credit flow and help homeowners avoid losing their homes to foreclosures.

Obama’s statements indicate that he plans to move forward immediately to the next phase of his recovery plan which is expected to include measures that will help distressed homeowners avoid foreclosures.

Obama, who is currently on a road tour to gather support for his recovery plan, is scheduled to sign the stimulus bill in Denver, Colorado.

Also, he plans to outline his economic recovery proposal to spend about $50 billion to reduce the number of distressed properties in Arizona in his speech in Phoenix. Arizona is among the states immensely affected by foreclosures.

Meanwhile, the Obama Administration is preparing for possible negative reactions to its foreclosure prevention plan, following the stock market’s unfavorable response to the financial bailout plan unveiled by Treasury Secretary Timothy F. Geithner.

The administration has not yet provided additional details on the housing portion of the recovery plan which fueled the decline of stock prices.

White House Press Secretary Robert Gibbs said that the success of the recovery plan should be gauged by the number of American homeowners who are protected from foreclosures.

On the other hand, Representative Barney Frank said that the plan to help distressed homeowners avoid losing their homes is designed to enable them to set aside 31 percent from their income for mortgage payment.

Frank said that he anticipated that the recovery plan will encourage mortgage lenders to write off the principal instead of the interest rate of the loan to help homeowners reduce their chances of default.

Obama Expected to Sign Recovery Plan to Address Foreclosure Crisis is a post from: Foreclosure Homes Investing

With a $300 billion fund approved by Congress was given to the U.S. Department of Housing and Urban Development to effectively implement the program and stem the flow of foreclosure homes. However, due to the strict requirements and guidelines that wrapped the program in red tape, few homeowners have actually signed since it started operation in October. With even fewer applications from homeowners facing foreclosures in the works, the program is expected to go bust.

Currently, the Hope for Homeowners program requires lenders and servicers to issue a strict write-down on their mortgages which the Federal Housing Administration has set to 90 percent of the foreclosure homes’ appraised value.

This will be an automatic 10 percent loss to the lenders, which could actually be more due to the heavily reduced market values of foreclosure properties. This strict requirement attracted little support from lenders. With lenders not cashing in, homeowners will not out their trust in the program.

Facing this predicament, the Housing and Urban Development would have to modify its rules and create more incentives to attract more lender participation and get homeowners facing foreclosures to participate. Under the new set of rules, the Home for Homeowners program will insure loans even as little as 3.5 percent write-off from their original values.

Loans will also be extended from 30 years to up to 40 years. Investors will also receive up-front payments as incentives to waive their interest in these mortgages. HUD policy makers stated that although these changes are not perfect, it can surely get the ball rolling.

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