Avoid Foreclosure
Red flags in offers aimed at distressed homeowners
Default notices are public in most places, which means the mail and the phone calls start almost immediately. Most of the people contacting you are ordinary buyers. A few are not, and the ones who are not rely on speed and shame rather than on complicated schemes.
Pressure to sign quickly
Urgency is the common ingredient. Someone at your door with paperwork, a today-only price, a warning that this is your last chance before the sale date, or a reason you should not tell your family or take it to an attorney first. Legitimate buyers accept a delay of a day or two for review, because their offer survives scrutiny. Ask yourself who benefits from you not reading it.
Terms that stay verbal
If a promise matters, it belongs in the contract. Assurances that you can stay in the house, buy it back later, or that the arrears will be handled are worth nothing spoken. Refusal to put a promise in writing, or blank spaces to be filled in later, or a document you are asked to sign without a copy left with you, are all reasons to stop.
You are also entitled to know exactly what you are signing. If nobody can tell you plainly whether a document transfers ownership, do not sign it until someone independent tells you.
Deed transfers presented as help
The most damaging version involves signing over the deed as part of an arrangement described as rescue, rent-back, refinancing help, or temporary. Once the deed is transferred, your equity and your control of the house go with it, and the mortgage often stays in your name. Undoing it is a lawsuit.
A deed transfer should only ever happen at a closing you understand, with a settlement statement showing where every dollar goes, and with your own attorney or agent involved.
Money asked of you up front
Be skeptical of any request for an advance fee to stop a foreclosure, negotiate with your lender, or guarantee a modification. HUD-approved housing counselors provide free help, and your servicer's loss-mitigation department does not charge you to talk to them.
How to protect yourself without becoming an expert
- Take 24 hours before signing anything. Nothing legitimate expires in an hour.
- Have a real estate attorney or a licensed agent read any document that involves the deed.
- Confirm the reinstatement figure and the sale date directly with your servicer, not with the person making the offer.
- Call a HUD-approved housing counseling agency. It is free.
- Get a second offer. Predatory numbers only look reasonable in isolation.
One more thing
Shame is the mechanism these offers depend on. People who have told someone — an agent, a counselor, a family member — are much harder to rush. If you are behind, the most protective thing you can do this week is say it out loud to someone whose interests are not tied to your signature.
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