In foreclosure, negative emotions can shackle and discourage you from taking action to fight the situation at hand. While government relief–as we’ve all seen all over the news these past few days and months–may make up part of the “help mix” coming your way, there may be other avenues for you to take.

In the meantime, I want you to understand how negative emotions can sink your ship. When you see these problems possibly coming your way, you can perhaps do something about them.

1. Yelling your way to the poorhouse: Unless you stop playing the blame game, the crisis can continue to escalate, until nothing gets done and everyone loses. You can end up losing your home and all the equity in it, not to mention your relationships with the people who matter most to you — your family and friends.
2. Who’s really to blame? If you find yourself blaming a family member, you need to realize that what’s past is past and that you’re both responsible for correcting the situation moving forward. The only thoughts you should have about the past are that you won’t repeat it.
3. Becoming paralyzed with fear: A defeatist attitude can be your worst enemy. It can cause you to lose everything unnecessarily. By keeping your emotions and fears in check, and taking a more proactive approach, you may be able to significantly improve the outcome.
4. Shaming yourself out of asking for help: “Loser, you’ve always been a loser, and soon it’s going to be official. In a matter of days or weeks everyone in your neighborhood and your family is going to know that you failed to pay your bills and shelter your family.” If that’s what you’re thinking, stop right there. Plenty of people who’ve been far more successful than you have suffered greater failures. The only real losers are those who let others and their negative emotions control the outcome. As long as you do your best to achieve the optimal outcome, you can hold your head high.

Remember: It’s important to involve family members in positive and productive ways. Never make and implement a plan without informing your significant other, and never assign all the responsibility to one partner. The more you and your mate sacrifice and work together, the more successful the plan will be.

My recent book, Foreclosure Self-Defense For Dummies, will take you all the way through the above topics, and more, and help you regain emotional and financial composure.

It’s a sad reality but even when you’re facing foreclosure, someone wants to take advantage of you. As soon word hits the streets that foreclosure is imminent, you become a prime target for every real estate con artist within 50 miles of your home. To protect yourself and your family, you have be smarter than the bad guys.

Here’s some information about the scams and the scammers who perpetrate them:

1. Be wary of Quit-Claim Deeds: Signing a quit-claim deed (or any other type of deed for that matter) is the equivalent of waiving the white flag of surrender. Essentially, it says, “I hand over any rights of ownership I have in this home to so-and-so.” That so-and-so can then sell your property, use it as a collateral for a loan, or give the home to someone else, and then kick you out. Pretty scary, eh? That’s why I always warn to be extremely careful about any papers that you sign.
2. Avoid "Buy-Rent-Redeem" Scams: Here’s how it works: The scammer agrees to buy the home from you because you can’t afford to make the payments on the mortgage. She agrees to purchase it for what you owe on the property and then rent the house back to you. The scammer is supposed to go down and redeem the property, no problem. This sounds good to you. You’re currently paying 8 percent to 12 percent interest, so the “investor” can take out a 4.5 percent loan, pay off your high-interest mortgage, rent the home back to you for less than you’re currently paying per month, and still earn a profit. Everybody wins.

   The scammer may also offer to sell the property back to you after a certain amount of time under a lease-option agreement, or, maybe you just want to rent until your son or daughter graduates high school in two or three years. As long as you make your monthly rent payments, everything is supposed to be okay.

   Problems arise, however, when the scammer never redeems the house. What?! Why would the scammer pass up the golden opportunity to take out a loan at 4.5 percent and purchase this valuable piece of real estate? Because the scammer probably can’t qualify for a mortgage. They’re just out to collect some rent money from you.

3. Protect Your Tax Deed: A complete stranger shows up at your home with a tax deed claiming that he is now the proud owner of your home. You knew you hadn’t been able to pay your taxes for the past couple years, but could someone come along and buy your home just by paying the back taxes you owed? In some cases, perhaps, but never take anyone’s word for it.! Contact a qualified real estate attorney immediately if this happens to you. Don’t ever take anyone’s word for it. In most cases, you can redeem your property yourself but you have to act quickly.
4. Know Your Redemption Period: When an investor purchases your mortgage at a foreclosure auction and you live in a jurisdiction that has a redemption period, you suddenly become one of the biggest obstacles sitting in the way of that investor making money. Until you move out and the investor can get in with a crew to rehabilitate the property, they can’t fix and sell the property. Even worse, they may have the added expense of paying interest on any money she borrowed to make the purchase, along with property taxes and other costs.Know your rights. Know your local redemption-related laws.
5. Watch for Equity Stripping Scams: Some of the lowest of the lowlifes pose as good guys in white hats coming to save the day. They have a special program that has helped hundreds of homeowners just like you avoid foreclosure and bankruptcy, and they say they can help you, too! Some foreclosure rescue services are legitimate. Just make sure you check them out very carefully, work only with brick-and-mortar businesses that have real addresses and phone numbers, and verify everything they tell you through someone who knows the foreclosure laws in your area.

Check back later in the week for additional advice on protecting yourself from foreclosure-related scams and the people who are out to take advantage of you.

My last few blog entries have focused on rebuilding your life after foreclosure. In today’s post, I’ll show you how to assess your current situation and set a steady course (financially speaking), so you can more effectively deal with coming out of foreclosure without making matters worse.
Here’s exactly what we’ll cover (again, from my book, Foreclosure Self-Defense For Dummies):

• Finding out how much you’re worth
• Calculating your monthly income and expenses
• Checking your credit report
• Searching for other sources of cash
• Holding a steady course.

1. Calculating Your Net Worthiness: If you sold everything you currently own and paid off all your debts, how much money would you have? That’s your net worth, and when you’re facing foreclosure, that amount is key in assessing your options. One of the first questions your lenders or future lenders are going to ask you is “What’s your net worth?” So grab a pencil and a piece of paper, and do the math. Officially, the equation goes like this: Net Worth = What You Own – What You Owe
2. Taking the Pulse of Your Current Cash Flow: Imagine your house is a big bucket with a garden hose pouring water into it from the top and a spigot at the bottom where the water flows out. The flow of water into and out of the house is like your cash flow. As long as cash flows in fast enough to keep up with the cash that’s flowing out, your finances are stable. If more cash flows in than flows out, you can sock away some money. If more cash flows out than flows in, however, you begin losing your financial footing. Now that you know what cash flow is, you know enough to realize the importance of a budget. To establish a healthy, positive cash flow, your household needs to be bringing in more money (from wages, salaries, bonuses, odd jobs, and so on) than it’s spending (on groceries, utilities, mortgage and car payments, gas, and so on). The formula for calculating cash flow is fairly easy to remember: Cash Flow = Income – Expenses
3. Checking Out Your Credit Report: Access to loans can often buy you time and enable you to restructure payments in such a way as to make them more affordable. To gain access to loans, however, you need a a fairly clean credit report. If you apply for a loan, one of the first things a loan officer is going to look at is your credit history, so make sure yours is accurate and do what you can to remove any blemishes and boost your credit score. Remember: No irregularity is too small to correct.
4. Hitting up Relatives for Gifts or Loans: If you need a one-time cash infusion to set you on the straight and narrow, consider asking a relative for assistance. Tread carefully when borrowing from relatives — you want to make sure that whatever arrangement you agree to doesn’t jeopardize your relationship. Treat their money better than you would treat your own, and pay it back as soon as possible.
5. Keeping a Bad Situation from Getting Worse: As soon as you begin to sense your financial situation has taken a turn for the worse, you and the rest of your household need to work together to prevent the problem from getting any worse. The situation is as though you’re in a boat that’s taking on water. Before you start bailing out the water, you want to find the holes and plug them.

In Part 1 of this blog entry, I pointed out that everywhere you look on the Internet, everyone’s concerned about how they’re going to make it through this credit situation of ours.

With that simple thought in mind, it’s always important to remember  that true failures in life occur only when people stop trying. As long as you’re alive, you have opportunity. If you managed to keep yourself going and/or your family together through these trying times, you have even more to start out with and keep you going. Some of the most successful people I know were baptized by fire.

Here are some more tips from my recent book, Foreclosure Self-Defense For Dummies, that speak directly rebuilding your life post-foreclosure:

1. Downsize to More Affordable Accommodations: Over the past 20 years or so, families have shrunk while houses have expanded. In the old days, a family of six managed just fine in a rinky-dink three-bedroom house. A second bathroom was considered a luxury. In modern homes, everyone has his or her own bedroom and each person shares a bathroom with, at the most, one other person. You don’t need much to live. Having a roof over your head, a place to sleep, a kitchen in which to cook meals, and a shared bathroom is sufficient for most families. It may feel a little cramped, but you can certainly get by until better days return.
2. Make a Lateral Move:  People often feel like failures when they’re not constantly ascending the ladder of success. You don’t need to constantly strive for promotions. If you’re good at what you do and you’ve simply lost your job, don’t worry about finding something better. Look for something that can bring in about the same amount of income or even less, if you’re able to make some lifestyle adjustments.
3. Pep Up Your Pocketbook:  You downsized, slashed your budget, and are holding down a fairly steady job, but you still can’t make ends meet. What do you do? Well, you have to find another source of income. You have to earn more. Here are some options:

• Pick up some overtime.
• Take on side jobs.
• Work shifts that offer premium or time bonuses.
• Moonlight by taking on a second job.
• Put other family members to work to cover some expenses.

4. Healing Your Bruised Credit:  Although cutting up all your credit cards and paying for everything with cash is certainly a possibility, you need to think about rebuilding your credit for the long haul — especially if you’re thinking about buying a house again someday. Take some positive steps to heal your bruised credit:

• Get into the habit of paying all your bills on time every time.
• Apply for a credit card if you don’t have one (use the new card to pay for necessities only, and then pay off the balance in full when you receive your monthly statement).
• Keep tabs on your credit report.
• Start saving a little every month and socking the money away in a savings account.

5. Get Back into the Game of Life:  When you suffer a series of minor setbacks or one big setback, you may feel as though life has just knocked the stuffing out of you. Perhaps you feel as though, no matter what you do, you can never get the break you need to make it. However bad you feel, you need to wake up every day, get out there, and do it. Otherwise, you’ll never get the big break you’ve been waiting for.

Recent articles on rebuilding or reestablishing your credit after foreclosure are popular and can be in all corners of the Internet. But what about rebuilding your life after foreclosure?

“Life goes on” may sound like a cliche, but no matter how devastating the experience, it’s true: Life does goes on. How well it goes on for you and your family hinges a great deal on how well you prepared for and controlled the foreclosure fallout, as well as on your financial resources and emotional frame of mind.

Here are some tips from one of my latest books, Foreclosure Self-Defense For Dummies, that speak directly to rebuilding your life post-foreclosure. In Part II of this post, which will appear later this week, I’ll share five additional ways to rebuild your life after foreclosure.

1. Reboot: As you run and then exit programs on a computer, those programs are not completely removed from your computer’s memory. Over time, the computer’s memory is overrun with errant instructions that slow it down and cause all sorts of mysterious problems. Rebooting the computer by shutting it down and restarting it often resolves the problem. The same is true in life. Sometimes a fresh start is all you really need to get back on track. Leave all the bad stuff in the past, especially any mistakes that you or your partner/spouse may have made leading up to the foreclosure. You can’t change the past. You can only make adjustments to ensure that history doesn’t repeat itself.
2. Swear off the same mistakes: If some human foible led to your foreclosure — overspending, not working hard enough, gambling, substance abuse, or some other weakness — own up to it and then make a commitment to change. The same applies to any errors of judgment you may have made, such as making your partner/spouse solely responsible for the finances or letting a loan officer convince you that you could “afford more house.”
3. Lean on family and friends: After foreclosure, whether you managed to keep your home or ended up losing it, friends and family can give you the support you need to get back on your feet:
   • Encouragement and love to keep going.
   • Financial support in the form of loans or a job.
   • Watching your children, so you can take on an extra job.
   • Driving you to work and back if you have no reliable mode of transportation.
   • A temporary place to live.
4. Move on, literally: The United States is a big country and jobs often move from one state to another. Consider moving to wherever the best- paying jobs are. Move to where the housing is cheapest. Move to where the schools are excellent and free. Whatever your most pressing needs are, research to find areas that are best suited to meet those needs. The loss of a job in Ohio may be just the opportunity you need to pick up and move to North Carolina.
5. Slash expenses and your cost of living: Chances are good that when you first set out to seek your fortune, your standard of living was fairly low and you needed very little to survive. You lived frugally, had plenty of time, and probably enjoyed life more than ever. What’s to stop you from doing that again? Do you really need a big house and all the trappings of “success?” Most people don’t. Society has sold us a bill of goods, making most of us believe that happiness hinges on owning things.

Check back later in the week for Part II of this important topic.

While it’s probably of little comfort to the majority of homeowners caught up in the current mortgage meltdown and foreclosure crisis, we are now starting to receive word that some of the Nation’s most expensive zip codes are feeling the crunch. While high-priced areas have generally held up better than most home prices–which dipped by slightly more than 14% in the 12 months ending March 31 (that, according to the S&P Case/Shiller Home Price Index)–many traditionally posh towns and neighbors are feeling the pain also.

From CNNMoney.com:

• In Palm Beach, Fla. (zip code 33480), median home prices fell 38% during that period
• Prices in Greenwich, Conn. (06831), dropped 15%
• Homes in Wayzata, Minn. (55391), are selling for 28% less
• Gladwyne, Penn. (19035), was down 6%
• Beverly Hills (90210), Lincoln, Mass. (01773), and Ladue, Mo. (63124), each slid 2%

According to one foreclosure estimate, in Beverly Hills alone, home of the famous 90210 zip code, foreclosure filings almost doubled to 41 in the first quarter of 2008, up from 22 in the first quarter of 2007.

Again, there’s not much to take comfort in from these statustics. Nevertheless, they are noteworthy because they speak to the size and scope of the foreclosure crisis nationally.

This morning’s edition of The New York Times included a story by Business writer Joanne Kaufman entitled, "A Shift in Real Estate Books." The article talks about how publishers are working hard to get books to market to help homeowners and real estate investors with the downturn in the housing market and increasing foreclosures.

The article begins by focusing on the fact that even celebrities are finding themselves ensnared by the mortgage meltdown. Recently, Johnny Carson’s co-host, Ed McMahon–who became just as famous for making a very small number of people ecstatic as spokesperson for American Family Publishing sweepstakes as he did for his role on The Tonight Show–has run into some financial trouble and is facing foreclosure on his California home. As the article points out, I tried to contact Mr. McMahon to offer my help in reviewing his real estate files (to see if he had been mislead–or even worse–by his financial advisors or the real estate industry professionals who worked on his behalf), but I wasn”t able to get very far.

In any case, The New York Times article serves as yet another nod toward the fact that a lot of people are in trouble these days because of the mortgage meltdown.

From The New York Times:

A few years ago, when the housing market was white-hot, companies that publish how-to books were tripping over themselves to pump out titles about buying property and making money in the real estate business.

Now that the bottom has fallen out of the housing market, the opposite is true: publishers are updating their backlist titles as well as rushing out newly acquired manuscripts to advise consumers who may have stumbled in the housing game.

For more on this story, read "A Shift in Real Estate Books".

Chicago Tribune real estate columnist Mary Umberger recently asked me to offer advice to homeowners who are behind on their mortgage payments. From this morning’s Chicago Tribune:

Making the most of workout
Mary Umberger

April 13, 2008

Options exist for homeowners behind on their mortgage payments—if they act quickly. Lisle attorney Steven Bashaw and Michigan real estate broker Ralph Roberts offer these:

• A forbearance agreement may help borrowers with short-term financial problems, Roberts said. It’s a payment plan with a set pay-back period, and the bank will want proof you can live up to it. “If you owe $3,000 in back payments, for example, the bank may allow you to pay an extra $250 per month for 12 months,” he said.
• Reinstatement entails paying all past-due payments, costs and fees to bring the account current. This may be a good short-term solution, Roberts said, but homeowners have to make hard decisions about whether they can keep paying the loan in the long haul.
• Mortgage modification means working out a new loan, with many possible variations. The bank may agree to roll the amount owed in missed payments, penalties and interest into the total loan amount, for example, Roberts said. Or a modification might lower the interest rate or change the loan’s term.
• Sell the house in a timely manner, pay off the loan and fees, and end the problem, Roberts and Bashaw said.
• A short sale occurs when a lender agrees to take a loss by selling the house for less than the amount owed. “I don’t encounter those as much as you’d think,” Bashaw said. “They’re not the panacea that speculators and investors and real estate agents want you to think they are.”
• Bankruptcy. “It can give you more time to restructure your debt,” Roberts said. “Bankruptcy takes you off the market, the collection proceedings can’t keep going. The clock just stops running.” But it’s extreme, and a lender might get court approval to proceed with the foreclosure anyway, Roberts said. Plus, it poisons your credit-worthiness.
• Redemption. In Illinois, a foreclosed borrower has a certain amount of time after the house is sold at auction to redeem it by reimbursing the purchaser for the sale price and other costs.
• Rescue plans can come from all manner of folks. They are too varied to describe here—except to say that homeowners must be wary of scams.

Bottom line: Don’t sign a quit-claim deed to someone who says this will “fix your problem,” Roberts says. It may be a ruse to steal the house. Check with a lawyer before you sign.

Maryland’s Governor has signed into law emergency legislation that may help thousands of Maryland homeowners who are at risk of losing their homes. The emergency bills signed late last week include:

• The Real Property – Recordation of Instruments Securing Mortgage Loans and Foreclosure of Mortgages and Deeds of Trust on Residential Property bill. This legislation significantly lengthens the foreclosure process from 15 days to approximately 150 days, making it fairer for homeowners and providing them with more time and notice before a foreclosure sale. It also requires lenders to wait 90 days after default before filing the foreclosure action and to send a uniform Notice of Intent to Foreclose to the homeowner 45 days prior to filing an action. Additionally, the bill requires personal service when notifying a homeowner of impending foreclosure actions and requires that a sale may not occur for 45 days after service. A lender must produce proof of ownership when filing a foreclosure action. The bill codifies the right to cure, which will allow a homeowner to stop foreclosure by paying what is owed up until one business day before the sale.
• The Real Property - Maryland Mortgage Fraud Protection Act is a comprehensive criminal mortgage fraud statute that makes mortgage fraud in Maryland a crime for anyone involved in the mortgage transaction. The bill provides for significant fines and imprisonment for violators and gives the court authority to order restitution and forfeiture and enhanced penalties for cases involving vulnerable adults. The bill also authorizes the Attorney General, a State’s Attorney, and the Commissioner of Financial Regulation to take action to enforce the statute. The bill allows victims of mortgage fraud to bring private action against violators.
• The Protection of Homeowners in Foreclosure - Prohibition on Foreclosure Rescue Transactions – Enforcement is an emergency bill that bans foreclosure rescue transactions that scam homeowners out of their homes and the equity they’ve built. The bill also provides additional consumer protections for people who are trying to sell their homes because they are in default.

Foreclosure rates have risen dramatically across the nation, and Maryland has not escaped the trend. In the fourth quarter of 2007, Prince George’s, Montgomery, Washington and Worcester Counties saw the number of foreclosures double from previous quarter. In other Maryland counties, such as Kent, Garrett and Somerset, the numbers nearly tripled. Statewide, Maryland saw 9,722 foreclosures, compared to 7,001 in the previous quarter, an increase of 2,721 foreclosure events statewide.

Earlier this year, Maryland introduced its “Bridge to HOPE” Loan Program, which provides small gap loans at zero percent interest to homeowners facing difficulty, giving them time to get back on their feet or find a solution. The statewide program is administered by the Maryland Department of Housing and Community Development’s Community Development Administration (CDA). Families and individuals facing the possibility of foreclosure should call 1-877-462-7555 or visit www.MDHOPE.org for assistance.

RealtyTrac, a leading online marketplace for foreclosure properties, yesterday released its February 2008 U.S. Foreclosure Market Report, which shows foreclosure filings — default notices, auction sale notices and bank repossessions — were reported on 223,651 properties nationwide during the month, a 4 percent decrease from the previous month but still a nearly 60 percent increase from February 2007. The report also shows one in every 557 U.S. households received a foreclosure filing during the month.

Nevada, California, Florida post top state foreclosure rates

Nevada continued to document the highest foreclosure rate among the states, with one in every 165 households receiving a foreclosure filing — more than three times the national average. Foreclosure filings were reported on a total of 6,167 Nevada properties during the month, up 1 percent from the previous month and up 68 percent from February 2007.

California registered the nation’s second highest state foreclosure rate in February, with one in every 242 households receiving a foreclosure filing during the month, and Florida registered the nation’s third highest February foreclosure rate, with one in every 254 households receiving a foreclosure filing during the month. Both states documented foreclosure rates that were more than twice the national average.

Arizona foreclosure activity was up 6 percent from the previous month and nearly 210 percent from February 2007, helping the state’s February foreclosure rate — one in every 264 households received a foreclosure filing during the month — rank fourth highest in the nation.

With one in every 305 households receiving a foreclosure filing in February, Colorado’s foreclosure rate ranked fifth highest among the states despite a 1 percent decrease in foreclosure activity from the previous month. The state’s foreclosure activity was still up nearly 27 percent from February 2007.

Other states with foreclosure rates among the nation’s 10 highest were Michigan, Ohio, Georgia, Indiana and Tennessee.

California, Florida, Texas report highest foreclosure totals

Foreclosure filings were reported on a total of 53,629 California properties in February, the most of any state despite a 6 percent decrease from the previous month. The state’s foreclosure activity was still up 131 percent from February 2007.

With foreclosure filings reported on a total of 32,447 properties, Florida documented the second highest state total in February. The state’s foreclosure activity was up more than 7 percent from the previous month and more than 69 percent from February 2007.

Texas documented the third highest state total — 12,261 properties with foreclosure filings — despite a nearly 17 percent decrease in foreclosure activity from the previous month and a 1 percent decrease in foreclosure activity from February 2007. With one in every 736 households receiving a foreclosure filing during the month, the state’s foreclosure rate ranked No. 17 among the states and was below the national average.

Michigan and Ohio both reported more than 10,000 properties with foreclosure filings in February. Other states in the top 10 in terms of total properties with foreclosure filings reported were Arizona, Illinois, Georgia, Colorado and Nevada.

California and Florida cities dominate top metro foreclosure rates

California and Florida metro areas accounted for nine of the top 10 metro foreclosure rates in February. The Cape Coral-Fort Myers, Fla., metro area documented the highest February foreclosure rate among the 229 metro areas tracked in the report, with one in every 84 households receiving a foreclosure filing — 6.7 times the national average. The other Florida metro area in the top 10 was Fort Lauderdale, which ranked No. 10.

The Stockton, Calif., metro area documented the second highest metro foreclosure rate, with one in every 87 households receiving a foreclosure filing in February. Other California metro areas in the top 10 were Modesto at No. 3, Merced at No. 4, Riverside-San Bernardino at No. 5, Bakersfield at No. 7, Vallejo-Fairfield at No. 8 and Sacramento at No. 9.

Las Vegas was the only metro area in the top 10 that was not in California or Florida. With one in every 131 households receiving a foreclosure filing in February, the city’s foreclosure rate ranked No. 6.