Steps to Keep Predatory Lenders at Bay
How homeowners can avoid becoming victims of predatory lending.
Apr. 3, 2008— -- In an interview with ABC News, Jessica Attie, a lawyer with South Brooklyn Legal Services who counsels homeowners threatened with foreclosure, offered a few pieces of advice for people faced with foreclosure. Jessica will provide additional advice and we will update this page with more tips. Click on us again tomorrow for more.
Call for Help:Call a nonprofit housing service or legal aid society to find out who owns your mortgage. They're listed on hud.org, the Web site for the federal Department of Housing and Urban Development.
"You'll need help with this," she said, "because 90 percent of the time, a bank has resold your loan and it's almost impossible to find out on your own who currently owns your mortgage."
Don't Call the Bank Yourself:It's probably a bad idea to call up the bank yourself. "Experts say many banks will not only not help you, they might get you to sign things that could ultimately harm you," said Attie.
Hire a Lawyer:If a bank refuses to renegotiate your loan, hire a lawyer. "There were so many predatory lending practices and loans made with such egregious terms that many were plain illegal," she said. "A lawyer can see if that was true with your loan, in which case you could take the mortgage broker to court to stop the foreclosure."
Consider Selling Your Home: If none of the above works, sell your house for less than the amount that you owe the bank, if necessary. "Banks will sometimes agree to let you sell [your house] and eat their loss," Attie said. "The leverage you have here is the banks lose less money if you sell the house than if they foreclose and lose more or all of the loan."
Avoid For-Profit Negotiators: Whatever you do, don't hire a for-profit negotiator or think you can solve your problems by declaring bankruptcy. The negotiators "are frequently scam artists who charge fees and produce no agreements," said Attie. And under current bankruptcy law, "judges can't modify terms of mortgages, so you will still have to pay even if you declare bankruptcy."