6 Things Distressed Homeowners Should Know

This is a weekly column by local real estate agents Walt Fitzgerald and Alison Ludwig, also known as Walt and Ali's Team.

As we all know, there are many homeowners across the country who are unable to pay their mortgage, for various reasons, and who are facing foreclosure.  With more and more attention being given to the sometimes illegal, and unethical behavior of the banks who are foreclosing, it is extremely important for homeowners to know their rights when faced with this situation.

Rick Misitano, Senior Paralegal at the Law Offices of James M. Bosco & Associates, specializes with Foreclosure and Short Sale Clients. 

He offers the following opinions:

1. Do not ignore notices from the lender. Along with this, do not follow the advice of anyone who says to stop making payments.  This behavior will only get you further in arrears and do more damage to your credit rating.  It will also bring you closer to being foreclosed upon.

2. Whatever the lender promises, do not trust them at their word.  Many homeowners when faced with the inability to pay their current mortgage, try to modify their loan through their current lender.  A minimal amount of all loan modifications have panned out.  Many people have spent a great deal of time and completed mounds of paperwork, along with making payments towards an agreement only to find themselves facing foreclosure anyway.

3. It is illegal for a  non-attorney to demand an upfront fee. Many homeowners look for help in negotiating with their lenders for a short sale or when facing foreclosure.  Attorneys are the only person or entity that can accept an upfront fee for services.  Companies or people asking for money upfront for this service are acting illegally!  

4. Make them produce the original note. Homeowners have the legal right to know who they owe money too. Since Massachusetts is a non-judicial State, it is up to the homeowner to file a lawsuit to make them prove that the foreclosing party has the legal right to do so. If the foreclosing party does not have the original note and is able to foreclose, the homeowner will still be liable if another party produces the original note in the future.

5. Never agree to any proposal where you are required to transfer title to another party.

6. Is a short sale your best option? Many mortgage lenders are willing to work with homeowners to sell their homes as a short sale rather than go through the foreclosure process. It saves them a great deal of time and money.  The benefits to homeowners can be many. The credit report will report that the "account is settled" instead of "foreclosed," which will also be a part of the permanent public record.  There are potentially large tax consequences to foreclosures and the negative credit will impact ratings for years.

If you find yourself facing foreclosure, these 6 tips should help. 

However, it is always important to know your full rights and responsibilities in this situation. Professionals should always be consulted- real estate agents with experience in short sales, a tax accountant, or the many resources available for distressed homeowners are important for consultations. 

An attorney, especially one who specializes in the area of foreclosures and short sales is an important asset to a homeowner, who is entering into an arena with an un-level playing field, where the banks are comfortable with playing the game.  If you have legal questions regarding this issue, please contact Rick Misitano at 978-687-8804 x2.