Housing counselor Lon Shook didn't waste a breath as he talked with about a dozen homeowners Tuesday night at the in Farmington Hills.
Representing the Oakland County Community & Home Improvement Division's program for homeowners facing foreclosure, Shook talked and answered questions for nearly an hour at "My Home - My Future", a home ownership retention seminar. There was a lot of ground to cover, from the timeline of a foreclosure to the tools homeowners can use to get themselves out of trouble.
Shook said the "first thing (lenders) have to do is give you an opt-in letter", which homeowners must answer within 14 days to participate in mediation that can help them save their homes. Typically in Oakland County, he said, the letter comes from Farmington Hills-based Trott & Trott or Troy-based Orlans Associates.
The bad news is that there is a requirement for public notice to be published, which opens homeowners up to scam artists looking to take advantage of people in trouble, Shook said. He said new foreclosure bills moving through the state legislature might change this requirement, however.
He urged homeowners to be realistic and take a hard look at whether they can afford to remain in their homes, a question the mortgage company will consider as they review income and expense information. Shook said lenders want to see a budget that is tied to proof of income and will even look at spending habits, and verify what you tell them by tracking use of credit cards or debit cards.
Another consideration is what caused the financial problem and whether the hardship is temporary or likely to continue, he said.
"I've seen people borrow on their retirement account ... and still lose the house," he said. "It's just a Band-Aid, it doesn't stop the bleeding."
He encouraged homeowners in financial trouble to prioritize payments. For instance, DTE Energy reports to credit agencies, so it's important to pay the electric bill on time. If there's a second mortgage on the house, that's a lower priority, because those lenders know that if the home goes into foreclosure, they likely will collect very little, if any, of the debt.
Shook outlined a number of options to help someone keep a home, including reinstatement, which allows a homeowner to catch up when they're only a couple of payments behind, and reverse mortgages, which can be helpful for seniors. If keeping the home is not an option, he said, a short sale, traditional sale or deed-in-lieu (handing the home back to the bank) are all ways to get out from under.
He urged homeowners to get in touch with the lender at the first sign of trouble, to stay in touch with the lender, and to keep an eye out for scams. "Red flags" are:
- A guarantee to stop foreclosure
- Advice against contacting the lender, an attorney or housing counselor
- A cash offer to buy the house for fixed price not set by the housing market
- Offers to fill out paperwork you can fill out yourself
- Pressure to sign paperwork you don't understand
Shook said the county offers free advice and information about state programs that offer mortgage subsidies to people who are unemployed, a mortgage loan rescue of up to $5,000 for eligible homeowners' delinquent mortgage or tax payments and a principal curtailment program that can provide up to $10,000 to reduce a mortgage so that the payment is more affordable.
The county hopes to offer more of these seminars in the coming year, Shook said. Look for information at oakgov.com/chi
To learn more about help available in Michigan, visit stepforwardmichigan.org. To receive free housing counseling services available to Oakland County residents, call 248-858-5402 or toll-free 888-350-0900, ext. 85402.
The Tuesday workshop was filmed and will eventually be broadcast on the City of Farmington Hills channel 8 (Bright House Cable).