If you or someone you know is currently facing foreclosure, you have options, including:

1. You are not alone. Foreclosure knows no geographic, racial, ethnic, or socio-economic boundaries. We have seen real estate agents, attorneys, and others face foreclosure. Michael Jackson recently filed for bankruptcy. Foreclosure is much more prevalent than you think.
2. Most people facing foreclosure have at least a dozen options. (Many people falsely believe that they have only two options – pay up or move out.) You can reinstate the loan, refinance (consolidate debt), list the home for sale with an agent, sell to an investor (if you have insufficient time to list the property), offer a deed in lieu of foreclosure, declare bankruptcy, negotiate forbearance or a mortgage modification, to name several of the most common options.
3. Banks and other lending institutions do not want to foreclose. They make more money if you can make your payments. When they foreclose, they not only lose your monthly payments, but they also have the expense of foreclosing, rehabbing the home, and then selling it. In today’s market, there’s a good chance they’ll have to sell the home at a loss. This is all good news for you – it means the bank is highly motivated to make a deal with you.
4. Given the current mortgage crisis and resulting foreclosure epidemic, the federal government, your state government, and consumer protection advocacy groups have put more pressure on mortgage lenders and provided them with additional resources to help homeowners in distress. In a way, people facing foreclosure now may be in a much better position to avoid it than they would have been, say five years ago.
5. If you own the home with your spouse or life partner, tell them immediately. Far too many people try to keep their partner in the dark. Eventually, the person will find out. It’s always better if they find out from you earlier rather than from someone else when they have little or no time to do anything about it. Couples that work as a team almost always see much better results.
6. Call your lender – the sooner, the better. As soon as you stop making payments, the foreclosure clock starts ticking. The earlier you know your options, the more time you have to pursue those options.

Stop by before the end of the week for six additional options!

Over the past decade, I have seen fraud rot the very foundation of the real estate industry, but what upsets me most is that 80% of it involves industry insiders–professionals who earn their living from this great industry. Every day, I see cases in which real estate agents, loan originators, mortgage brokers, appraisers, and other industry insiders play an active role. But the people who could stop it often choose to look the other way.

Anyone can see the fallout from this greed; fraud has hurt everyone. The value of the dollar has plunged, global stock markets are fluctuating wildly, the U.S. is on the brink of one of the worst recessions since the Great Depression, our neighborhoods are crumbling under the weight of foreclosure, and economists are warning of a global recession.

Yet, the people committing fraud have not curtailed their activities. If anything, they have ramped up their efforts to cash out before nothing is left. And all the while, far too many honest citizens and real estate professionals continue to look the other way.

In order to stem the tide of real estate and mortgage fraud (the fastest-growing, white-collar crime in America), we need to realize that those committing fraud threaten our very livelihoods. The crimes that a minority of professionals in our industry are committing fuel distrust among consumers, tarnish our reputations, and undermine our integrity. We need to pledge allegiance to the American dream of homeownership and fight back.

To regain control of our industry, we must first pledge to not go along with questionable transactions. This is tough. When the guy or gal down the street is willing to go along with a scam in order to earn the commission, acting with integrity can hurt your short-term business. This is why the second pledge is so important: to report suspected incidents of fraud.

When you see the asking price for a home that has been sitting on the market for six months suddenly shoot from $350,000 to $500,000, and then sell the next day, you should become more than a little suspicious. Do not look the other way. Call your local FBI office and report it (to find the number for your local FBI office, visit the Report Real Estate Fraud page on FlippingFrenzy.com and choose your state from the pull-down menu in the left hand column).

If something suspicious occurs at the closing, ask to speak with the manager of the title company. Explain what you are concerned about and request the phone number for the lender. Every closing packet has a phone number to call for funding approval that will get you in contact with a real person rather than an automated system. Call the number and explain what’s going on.

Do your part to clean up the industry. Spot the signs. Stop the fraud.

Federal Reserve Chairman Ben S. Bernanke told a gathering of the Independent Community of Bankers of America that they need to do a lot more to help distressed homeowners, especially those facing foreclosure. Bernanke called earlier today for a “vigorous response” to help stem rising home foreclosures, saying some banks and lenders could do more to help ease the U.S. housing crunch and keep more American’s in their homes.

Bernanke’s remarks, which can be read in their entirety here, are groundbreaking because they signify the first time someone with any power over the direction of the financial markets has publicly asked a question so many of us have been asking for over a year now… what’s the point in forcing people out of their homes when they can afford to pay their pre adjustable rate payments. As Larry Rubinoff asked in a guest blog post on FlippingFrenzy.com this past weekend, would it not be better to freeze the interest rate for a homeowner who has been paying at that rate rather than foreclosing and kicking them out onto the streets? In the extreme, would it not be better to cut the rate in half rather than foreclose?

At the end of the day, the proof will be in the pudding. If the bankers chose to respond vigorously, more of us will win. If they don’t, Bernanke’s 3,175-word speech will have been for not.

If you live in or around the Phoenix, Arizona, area and are interested in learning more about how to defend against foreclosure, consider stopping by the Phoenix Convention Center this Saturday for the 2008 Real Estate and Mortgage Expo where Lois Maljak and I will be presenting the following workshop:

TOPIC: Foreclosure Self-Defense: The Short Sale and Other Proven Strategies for Surviving a Homeownership Crisis
When: Saturday, February 23, 2008
What Time: 11:00 a.m. - 11:45 a.m.
Where: Phoenix Convention Center

When most people fall behind on their mortgage payments or receive a notice of default or foreclosure, they panic and waste precious time trying to hide the problem. They mistakenly believe they have only two options – pay up or face eviction. Lois Maljak and I, co-authors of Foreclosure Self-Defense For Dummies, know better. In this informative workshop, we reveal over a dozen strategies for keeping your home or selling it and cashing out the equity, including:

• Negotiate a short sale by convincing the lender to accept less than the balance due on your mortgage.
• Ask a third-party to negotiate the short sale on your behalf – if the bank refuses to work with you.
• File for bankruptcy…or at least let the bank know you are considering that option so you gain leverage in the negotiating process.
• Negotiate a mortgage modification, essentially rewriting the mortgage with a more affordable interest rate and terms.
• Sell your home, so you don’t lose your home and your equity.

In this workshop, you discover the truth about foreclosures that the banks don’t want you to know–they need to resolve the problem as much as you do, and sometimes more than you do. Everything is negotiable, including how much you owe them!

For more information about the event, visit the 2008 Arizona Real Estate and Mortgage Expo website.

While Barack Obama’s The Audacity of Hope: Thoughts on Reclaiming the American Dream is all about reclaiming the American Dream, Foreclosure Self-Defense For Dummies shows homeowners facing foreclosure how to reclaim their American Dream of Homeownership.

The American Dream of Homeownership has been under assault for the past several years by numerous threats, including the following:

• Outsourcing of good-paying jobs for middle-class workers, resulting in a shrinking of the middle class and little opportunity for the lower class to climb the ladder.
• Increasing cost of living, with salaries failing to keep pace. Increased fuel prices affect the price of everything, from gas for our cars to food on our tables.
• Lack of sufficient health insurance, often leading to foreclosure or bankruptcy when a family member falls ill with a condition that requires expensive medical care.
• Inflated house values resulting from several factors, including fraud, flawed government policies, and irresponsible lending and borrowing.
• Inflated property taxes based on inflated house values.
• Speculative investing or what former Federal Reserve Chairman Alan Greenspan might characterize as “irrational exuberance.”

I often warn homeowners not to use their homes as ATM machines–cashing out all of their equity to finance a lavish lifestyle–but what is happening more and more is that homeowners are not cashing out their equity to finance a lavish lifestyle, but simply to pay their bills.

Although some people facing foreclosure are primarily responsible for the situation they find themselves in, many are simply victims of stagnant wages and a steadily increasing cost of living. In Foreclosure Self-Defense For Dummies, my co-authors and I advise that regardless of the reason for your foreclosure, you have options, but you have to act quickly before those options dry up.

If there is any good news coming out of the current mortgage meltdown and foreclosure epidemic, it is that more and more lenders are willing to negotiate a deal with homeowners/borrowers. Contact your lender and find out which options are available. You can also contact Hope Now by calling 1.888.995.HOPE to get in touch with a free or low-cost, HUD-approved credit counselor.

Don’t put it off another minute. Have the audacity to hope for and secure a better future for you and your family. Get help and start taking steps to save your home or get out from under a home you can no longer afford.

NPR recently carried a story by Eric Weiner called “ Why Not Just Walk Away from a Home?” in which he discusses the option of simply abandoning the home and letting the lender deal with it.

As I explain in Foreclosure Self-Defense For Dummies, jumping ship when you owe more on your home than it is worth and you will never be able to afford the payments, is certainly a viable option for some. In most cases, the lender will not attempt to collect on the debt if you simply walk away from the property.

I provide instructions in the book on how to pursue this option most effectively. If, for example, you live in a jurisdiction that has a long redemption period, you can legally remain in your home without making payments until the redemption period expires. In Michigan, that’s usually about six months. During this time, you can save some money on rent, so you have a little nest egg to finance your move.

The reason walking away usually works is that in many cases, your home is the only collateral securing your loan. The mortgage you signed when you took out the loan gives the bank the right to take possession of the home in the event that you fail to make the agreed-upon payments.

In some jurisdictions and with some lenders, simply abandoning the home could be a risky move, however. If you signed a promissory note in addition to the mortgage, and if you live in a jurisdiction that allows for deficiency judgments, you are responsible for repaying any debt that remains after the bank takes possession of your property and sells it. So, for example, if you owe $250,000 and you walk out on the home, the bank may foreclose, sell the home at auction for $120,000, and then file a law suit against you to collect the remaining $130,000.

A much better way to walk away without having the bank chasing after you to collect the deficiency is to negotiate with the bank to accept a deed in lieu of foreclosure. With this arrangement, you hand over the deed to the property and the keys and usually agree not to trash the house. In exchange, the bank forgives your debt.

If you are able to negotiate with the bank to accept a deed in lieu of foreclosure, be sure you get the agreement in writing – a signed letter from the bank’s representative stating that you are free and clear of the debt. It’s a good idea to have your own attorney look everything over before you sign any agreement. You want to make absolutely sure that the bank has no legal right to try to collect on the unpaid debt.

RealtyTrac, a leading online marketplace for information about properties in foreclosure, today released its Year-End 2007 Metropolitan Foreclosure Report, which shows Detroit, Stockton, Calif., and Las Vegas documented the three highest foreclosure rates among the nation’s 100 largest metro areas during 2007. As expected, the number of properties entering some stage of foreclosure in 2007 was up in the vast majority of the country’s 100 largest metro areas, with 86 metros reporting increases from 2006. Most of the metro areas with the highest foreclosure rates were either cities like Stockton and Las Vegas, which experienced meteoric growth and unsustainable price appreciation over the past few years, or cities like Detroit, which are undergoing a more widespread economic downturn along with higher unemployment rates.

California, Ohio, Florida and Michigan cities dominate top 20 metro rates

Fifteen of the metro areas with the top 20 metro foreclosure rates were located in four states: California with six, Ohio with four, Florida with three and Michigan with two.

Detroit registered the highest foreclosure rate among the nation’s 100 largest metro areas, with close to 5 percent of its households entering some stage of foreclosure during the year — 4.8 times the national average and up from about 3 percent in 2006. A total of 72,616 foreclosure filings on 41,273 properties were reported in the Detroit metro area in 2007, up 68 percent from 2006. The other Michigan metro area with a foreclosure rate in the top 20 was Warren-Farmington Hills-Troy at No. 17.

With 4.866 percent of its households entering some stage of foreclosure during the year, Stockton, Calif., documented the second highest metro foreclosure rate. A total of 22,184 foreclosure filings on 10,608 properties were reported in the metro area in 2007, up 271 percent from 2006. Other California metros with foreclosure rates in the top 20 were Riverside-San Bernardino at No. 4, Sacramento at No. 5, Bakersfield at No. 7, Fresno at No. 14 and Oakland at No. 16.

Las Vegas posted the third highest metro foreclosure rate among the 100 largest metropolitan areas in 2007, with 4.228 percent of its households entering some stage of foreclosure during the year. A total of 59,983 foreclosure filings on 30,375 properties were reported in the metro area during 2007, up 169 percent from 2006.

Cleveland’s 2007 foreclosure rate — 2.972 percent of households entering some stage of foreclosure during the year — ranked sixth highest nationally and was the highest of any Ohio metro area on the list. A total of 49,071 foreclosure filings on 27,848 properties were reported during 2007, up 112 percent from 2006. Other Ohio metros with foreclosure rates in the top 20 were Akron at No. 12, Dayton at No. 15 and Toledo at No. 19.

With 2.724 percent of its households entering some stage of foreclosure in 2007, Miami documented the eighth highest metro foreclosure rate, highest among Florida metro areas. A total of 51,662 foreclosure filings on 25,296 properties were reported in the metro area during 2007, up 106 percent from 2006. Other Florida metro areas with foreclosure rates in the top 20 were Fort Lauderdale at No. 10 and Orlando at No. 20.

Other cities in the top 20 were Denver at No. 9, Atlanta at No. 11, Memphis at No. 13, and Indianapolis at No. 18.

For more information, see Foreclosure Activity for the Nation’s 100 Largest MSAs.

Just yesterday, Countrywide Financial Corp. announced that it was partnering with the community advocate group, ACORN (Association of Community Organizations for Reform Now) to expand relief for its borrowers who are facing foreclosure. Today, the Bush administration followed up with its own foreclosure relief expansion plan — “Project Lifeline” — giving distressed homeowners an additional 30 days to work out more affordable payment options with their lenders.

If you need additional information about Project Lifeline, read the following information and consult your lender:

Project Lifeline Overview

• Members of the Hope Now Alliance are employing multiple strategies to help prevent avoidable foreclosures and continue to look for additional solutions to reach and help homeowners. Since the Alliance was formed last October, servicers, nonprofit counselors and investors have launched several programs to help homeowners struggling to make their mortgage payments.
• Project Lifeline is a targeted outreach to seriously delinquent homeowners (90 days or more late) that currently face the greatest risk of losing their home. Project Lifeline is encouraging homeowners to reach out to their mortgage servicer or counselor. It’s an effort to directly “pause” the foreclosure process, where appropriate, through a single call.
• Servicers have been aggressively reaching out to struggling homeowners in an attempt to find a work-out solution. Given the dynamic environment in the housing market–with declining home values, fluctuating interest rates, elevated housing inventory–aggressively targeting these seriously delinquent homeowners one more time is in everyone’s best interest (homeowners, servicers, investors and communities in which we all live.)
• Six HOPE NOW alliance members–Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo–are participating in the launch of Project Lifeline. These servicers will begin the program by providing a letter to seriously delinquent homeowners nationwide giving homeowners a simple “step-by-step” approach that, if followed, may enable them to “pause” their foreclosure for 30 days while a potential loan modification is evaluated. All six banks will reach out to homeowners on a nationwide basis–with this step-by-step approach to finding a solution which meets their individual needs. This is different than the “streamlined” approach to loan modification announced previously. This is a broad, national approach to help all homeowners individually.
• The six lenders mentioned above–which collectively represent around 50% of mortgages–will soon
  begin to reach out to homeowners giving them a few simple steps that may qualify them for a loan modification:

1. Step 1: call your mortgage servicer.
2. Step 2: tell the servicer you have received the letter, you want to stay in your home and you are willing to seek counseling, if necessary.
3. Step 3: provide updated financial information so the servicer can explore an appropriate solution.
4. Step 4: if appropriate, any pending foreclosure may be “paused” for up to 30 days during this review process until a formal decision is made and, if possible, a plan is created.
5. Step 5: if a workout plan is established and the homeowner follows the plan for three consecutive months, their loan will be formally modified as they will have demonstrated their ability to meet the requirements.

• Hope Now will continue to work with other members of the Alliance to further expand the reach of Project Lifeline to all servicers.

Qualifying Loans

All 90-day delinquent loans, including subprime, Alt-A, prime, second liens and home equity loans, that are not:

• In active bankruptcy.
• In active foreclosure with sale date less than 30 days.
• Where the homeowner has indicated that they want to give up the home.
• Investment properties.
• Vacant properties.

Requirements for a Loan Modification

Homeowners must do the following to be evaluated for a loan modification:

• Call your servicer within ten days of receiving the notice.
• Tell your servicer that you have received the letter, you want to stay in your home and you are willing to seek counseling, if necessary.
• Provide updated financial information so the servicer can explore the appropriate solution.

If applicable, homeowners already in the foreclosure process will have the process “paused” for up to 30 days while they are evaluated for a loan modification.

Frequently Asked Questions (FAQ) — Project Lifeline

What is new about this Program?

Project Lifeline is a special effort focused on reaching homeowners who are 90-days or more delinquent but who want to stay in their homes; it seeks to let them know that their servicer is anxious to consider them for a modification. By also offering the homeowner a foreclosure “pause” where appropriate, the servicer is letting the homeowner know that they’re now serious about trying to find a loan modification that works, as well as giving both parties time to take action where a solution appears possible.

How does this program fit into the other HOPE NOW Alliance activities?

Project Lifeline is an additional program designed to reach all seriously delinquent homeowners who want to keep their homes. While the Fast Track program announced in December 2007 streamlines the loan modification process only for homeowners with subprime adjustable loans, Project Lifeline applies to any homeowner in any type of loan product. It’s one more way that HOPE NOW is developing solutions to help homeowners.

Specifically, it is a new program undertaken by six of the leading servicers that are part of the HOPE NOW Alliance. It will include not only subprime, but also Alt-A and prime loans as well. Additional HOPE NOW servicers are encouraged to adopt the program. Keep in mind that all HOPE NOW servicers are already actively employing existing programs such as homeowner outreach, support of the HOPE hotline, the HOPE NOW letter campaign, and employing the ASF fast-track framework for subprime resetting loans.

What exactly are Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo committing to?

These servicers will begin by providing a letter to seriously delinquent homeowners giving homeowners a simple step-by-step approach that, if followed, may enable them to pause their foreclosure for 30 days while a potential modification is evaluated. Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo will reach out to homeowners on a nationwide basis–with the step-by-step approach to finding a solution which meets their individual needs. This is a broad, national approach to help all homeowners individually.

What should homeowners do?

You should begin by calling your servicer and expressing your interest in keeping your home; the sooner you reach your servicer, the more options the servicer has in trying to find a solution. You should prepare for the call by gathering income and expense documentation that might be needed by the servicer to consider a potential modification.

Does Project Lifeline guarantee a loan modification?

No, it does not guarantee a loan modification, but where homeowners express an interest in keeping their homes, servicers will try their best to find an appropriate modification wherever possible.

Is Project Lifeline a foreclosure moratorium?

No, Project Lifeline is not a foreclosure moratorium, but it includes a case-by-case foreclosure pause where appropriate. Where foreclosure pauses are applied, it is both a win for the homeowner and the servicer, since it will be applied where the homeowner both indicates an interest in keeping the home and there is a reasonable prospect of finding an acceptable loan modification.

When will Project Lifeline begin–when will letters from Bank of America, Chase, Citigroup, Countrywide, Washington Mutual and Wells Fargo be mailed?

Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo will begin mailing letters to targeted homeowners as soon as they are ready on an individual company basis. Outreach letters will be sent in waves to homeowners beginning, for some servicers, immediately.

How many homeowners will Project Lifeline help?

According to the federal government, Bank of America, Chase, Citigroup, Countrywide, Washington Mutual, and Wells Fargo are seeking to help as many homeowners as possible through the program. The number of homeowners who are at least 90 days delinquent is in the hundreds of thousands, so this program could potentially have a significant impact. Ultimate effectiveness will hinge in part on the response rate of homeowners calling their servicers and expressing interest in keeping their homes; since loan modifications also are done on a case-by-caseestimate a precise number of those who may be helped.

If you obtained an adjustable-rate mortgage from Countrywide Financial and are having trouble making your monthly payments because of an interest-rate increase, you may be in luck. According to Associated Press report, “Countrywide to Aid More Borrowers,” by Alex Veiga, Countrywide “will expand programs to help borrowers manage their mortgage payments regardless of the type of subprime loan they have or whether they have already fallen behind on payments.” The deal was brokered with national community advocacy group ACORN (Association of Community Organizations for Reform Now).

According to Veiga’s report, “borrowers with subprime hybrid adjustable-rate mortgages, which typically were issued with a low ‘teaser’ interest rate and then adjust higher after two or three years, could be offered the option of refinancing into a lower prime rate loan, or have their initial interest rate frozen for five years.”

We expect lenders to offer more and more of these programs, not only to help distressed homeowners but to keep themselves from having to deal with costly foreclosure proceedings, a huge inventory of repossessed homes, and angry mob of borrowers.

As we recommend in Foreclosure Self-Defense For Dummies, if you are having trouble making your mortgage payments, call your lender immediately. This is now more important than ever, so you can learn about any new programs your lender has in place to assist homeowners.