Laws Protect Homeowners Facing Foreclosure
Michael Ferry Legal Services of Eastern Missouri, St Louis Post-Dispatch (MO)
Q: What is a foreclosure consultant? If you are being threatened with foreclosure, is it a good idea to consult one? Do you have to pay, or sign a contract for a consultant's services?
A: Missouri adopted laws in 1992 regulating foreclosure consultants. The laws are intended to protect homeowners who are being threatened with foreclosure from predatory practices by persons who would take advantage of the homeowner's situation.
A foreclosure consultant is someone who offers, for compensation, to do any of the following for you:
Save your home from foreclosure.
Stop or postpone a foreclosure sale.
Fix your credit rating if it has been damaged in connection with a foreclosure process.
Help you get a loan or other funds to avoid having your home foreclosed.
Help you exercise any right of redemption.
Take various other steps to help you delay or avoid foreclosure, temporarily or permanently.
Several types of people are exempted from the laws, including lawyers acting as such, people acting under governmental authority, licensed small-loan lenders, banks and similar institutions, people who actually hold liens on the home in foreclosure, title and escrow businesses and, in some cases, real estate brokers.
All contracts between a homeowner and a foreclosure consultant must be in writing. They must say exactly how much the consultant is being paid, the terms of the payment and the services to be provided.
The contracts must also say, in boldface type, that the consultant or anyone working for the consultant cannot:
Take any money from you or ask you for any money until all of the promised work is completely finished.
Ask you to sign any deed, deed of trust, lien or mortgage.
They must also give you a three-day right to cancel.
Foreclosure consultants are barred from doing several things. They cannot:
Claim or collect any compensation until after they have done everything they have promised to do.
Charge any fee, interest or other compensation that exceeds 10 percent per year of any loan they may make to you.
Take any lien on property, wage assignment or other security to ensure their compensation.
Take any compensation from any third party in connection with services given to you unless that is fully disclosed to you. …