As Prince George’s County continues to lead Maryland in foreclosures, local, state and national legislators still have a cauldron of hurdles to overcome before the problem improves.
But the burden does not rest solely with policymakers. Homeowners must also be proactive in protecting their residences from foreclosure.
Donna Hurley, president and founder of Housing Options & Planning Enterprises (HOPE Financial), said property owners should seek help at the first sign of financial distress. Otherwise, a bad situation may become insufferable. “The pitfall is that you can go right into foreclosure. Many people don’t know that they have options,” said Hurley. “A lot of times those individuals who don’t reach out for help often just vacate the property without even giving it a try.”
The former realtor said residents can safeguard themselves throughout the foreclosure process by visiting HUD.gov to locate a reputable counselor before defaulting on a loan. “Once homeowners contact a counselor, they should work with them closely while they stay in touch with their servicer,” she said. “They should work with a HUD-approved agency before they get into any trouble, making sure they don’t go to any of these for-profits or any other organization that markets to them because in a lot of cases they’re scams.”
If default is inevitable, there are still a number of options. Homeowners should maintain communication with lenders for additional opportunities and know whether their loan came from Fannie Mae or Freddie Mac. “If it’s a Fannie Mae or Freddie Mac loan, may be eligible for making Home Affordable,” Hurley continued. “ can reduce your mortgage or change the terms of it so the modification works out really well when it’s a Fannie or Freddie. It just depends on who the investor is as to what other options are available.”
Those options could include modifications, forbearances or a flexible repayment (workout) plan. If homeowners can’t afford any of those options or are not eligible for a workout plan, disposition is the only option. This may come in the form of a short sale or a deed in lieu (DIL), which transfers all real property from the homeowner to the lender and frees the homeowner from all mortgage obligations.
If foreclosure proceedings begin, it is now Maryland law that lenders have to begin mediation proceedings with homeowners. Homeowners should be proactive in the process, as the state has put this law into place for their protection.
“The goal of the law is to help homeowners get relief through a loan modification if they qualify or to find an alternative to foreclosure,” according to a statement from the Maryland Home Owners Preserving Equity (HOPE) office. “The law gives homeowners a new opportunity to meet with the lender and an independent party to ensure that alternatives to foreclosure have been considered and evaluated.”