Good Foreclosure Counseling Vs. Bad Advice

There are two types of counseling agencies referred to here – housing counselors and credit counselors.  The first category, consumer housing counselors, refers to agencies that focus mainly on your delinquent home loan situation.  They offer primarily foreclosure counseling. 

Some groups calling themselves ‘home counseling agencies’ or ‘foreclosure counseling agencies’ may approach you and offer to perform certain services for a fee.  Be careful.  These could well be services you could do yourself for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale.  Ask up front exactly what services are being offered and at what cost.  And if any counseling agency asks you for money up front just walk away.

If talks with your lender aren’t going well, you should immediately contact a HUD-approved housing counseling agency and arrange an appointment with a counselor.  A counselor will help you assess your financial situation, determine what options are available to you, and help you negotiate with your lender.  A counselor will be familiar with the various workout arrangements that lenders will consider and will know what course of action makes the most sense for you and your family, based on your circumstances.  In addition, the counselor can call the lender with you or on your behalf to discuss a workout plan.  By meeting with a counselor before your mortgage payments are too far behind, you can protect yourself from future credit problems. 

A good counselor will help you establish a monthly budget plan to ensure that you can meet all of your monthly expenses, including your mortgage payment.  Your personal financial plan will clearly show how much money you have available to make the mortgage payment.  This analysis will help you and your lender determine whether a reduced or delayed payment schedule could help you.  Also, a counselor will have information on services, resources, and programs available in your local area that may provide you with additional financial, legal, medical or other assistance that you may need.

To find out more about HUD-approved housing counseling agencies and their services call (800) 569-4287 on weekdays between 9:00 a.m. and 5:00 p.m. ET (6:00 a.m. to 2:00 p.m. PT).  You can also get an automated referral to the three housing counseling agencies located closest to you by calling (800) 569-4287.

Many of these local housing counseling agencies are affiliates of national and regional housing counseling intermediaries.  The Websites for the HUD-approved National and Regional Housing Counseling Intermediaries describe the full range of assistance offered, as well as maps showing location of their affiliates.  Go to:

www.hud.gov/offices/hsg/sfh/hcc/nrhci.cfm 
 
To find a HUD-approved foreclosure counseling agency by call 1-800-569-4287 or TDD: 1-800-877-8339 or go to: 

www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm

To locate a Veterans Administration (VA) approved foreclosure counseling agency call 1-800-827-1000 or for more information go to:
 
www.homeloans.va.gov/faqpstln.htm  

The VA also has a help page on delinquent mortgages located at:
 
www.homeloans.va.gov/paytrbl.htm
 
The nonprofit Homeownership Preservation Foundation has set up a nationwide toll free foreclosure hotline at (888)995-HOPE – (888)995-4673.

Foreclosure Counseling information specifically for seniors:

www.consumerlaw.org/initiatives/seniors_initiative/advforcl.shtml  



The second category of counseling is consumer credit counseling.

These organizations differ from housing counselors in that they attempt to restructure your entire debt portfolio. Often they negotiate with your creditors to establish a debt management plan.  These plans can often reduce your monthly bills and put you in a better position to catch up on your mortgage.

A word of caution:  A reputable credit counseling agency will provide their services free of charge or for a small monthly administrative fee tied to a repayment plan.  Beware of credit counseling agencies that offer counseling for a large upfront fee or donation.  When you call a consumer credit counseling agency, you will be asked to provide current information about your income and expenses.  Make sure you ask if the agency has a charge before you sign any documents!  With consumer credit counseling, your best option is to locate a nonprofit agency.  You will find legitimate counseling agencies listed at the National Foundation For Credit Counseling at:

www.nfcc.org
 
or at The Association Of Independent Consumer Credit Counseling Agencies at:

www.aiccca.org  

Make sure you know who you are dealing with. One good way is to contact the Better Business Bureau at:

www.bbb.org