The District Chronicles

Issue date: 12/14/08 Section: Business

Media Credit: Freddie Allen

(This is part three of a series triggered by a Maryland borrower who got a 100% stated-income loan for the purchase of his primary residence and less than one year later, he can not afford the monthly payments. He is a wage earner and his debt-to-income ratio is 75%, meaning 75% of his monthly income pays his debts. Unaware of his tax rate and with a lender who does not escrow property taxes, he has to pay income taxes, property taxes and the normal expenses of living on the remaining 25% of his income. It is time he meet with a Foreclosure Consultant.)

Though this column specifically addresses Maryland foreclosure laws, the advice is relevant to all regions.

Former Maryland Governor Robert Ehrlich signed the Maryland Protection of Homeowners in Foreclosure Act in 2006 specifically to protect homeowners facing foreclosure. This law was passed after a mother of four and wife of a state trooper, who was killed on duty, faced foreclosure.

An investor told her that he would help her save her house by buying it from her at a discounted price and renting it back to her until she could buy it back from him. As soon as he bought the house, he asked her when she was moving. She incurred significant legal costs but lost her legal battle.

The law specifically creates the designation of foreclosure consultant and specifies certain types of documentation and other requirements the foreclosure consultant must adhere to. According to Edith Smith, a realtor with Keller Williams Capitol Properties, it also requires homeowners to use foreclosure consultants to determine if there is a workable solution with the lender or if the house must be sold.

According to www.marylandforeclosureconsultants.org, the Web site of the Maryland Association of Professional Foreclosure Consultants (MAPFC), "(t)he foreclosure consultant is defined not by his title or training, but by his actions. Homeowners facing foreclosure face a daily barrage of phone calls, letters, post cards, and knocks on the door from buyers who don't know they are foreclosure consultants, individuals who call themselves foreclosure consultants but have little or no training or experience, scam artists who want to take advantage of vulnerable homeowners, and those who are trained and have experience helping homeowners facing foreclosure.  The problem, until now, is that the homeowner does not have a means of differentiating between experienced, educated, and reputable foreclosure consultants and the rest of people marketing to them."

Continued...

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