How to avoid foreclosure

The Orlando Sentinel (MCT) - Carolyn Patmon has lived in what she calls her "modest little house" in Orlando's Carver Shores neighborhood for 38 years. At one point, she owned it free and clear. Then she took out a loan to add a sun porch.

Because she was on disability and wasn't working, she was offered a mortgage rate of 14 percent.

"But the rate was supposed to go down in a couple of years," said Patmon, 59.

It didn't. What the mortgage brokers had told her and what the fine print in the loan documents said were two different things. Within a few years, Patmon found herself owing $115,000 on a $42,000 loan _ and being sued for foreclosure.

Nothing about her story is particularly remarkable these days _ except how it's ending. Because Patmon went to Orlando, Fla., ACORN, a nonprofit community organization with chapters nationwide, she has been able to stop the foreclosure process and is working on having her loan modified to more affordable terms.

Experts say plenty of help is available to those such as Patmon, but that homeowners need to seek assistance early and often. And they shouldn't expect it to be easy.

"We may tell people, 'Listen, you need to sell your car.' Or 'you need to get another job, and here's how much time you have to do that,'" said Stephanie Porta, head organizer for the Orlando branch of ACORN, the Association of Community Organizations for Reform Now.

"It could be a painful conversation, but we'll tell you what you need to know to get a loan modification," Porta said.

For Patmon, it was worth it.

"If it hadn't been for ACORN, I'd be in court on the foreclosure case right now," she said.

WORKING WITH YOUR LENDER

_Stay in your home as long as possible. "Until you get kicked out," Porta said. If you move out and the home is vandalized, the bank can charge you a fee to repair the damage.

_Follow up _ repeatedly. If you lose your job and know you'll have trouble making your mortgage payments, call your lender immediately and then follow up in writing. Above all, don't ignore letters from the mortgage company, said Anita Lynn Lapidus, a staff attorney for the housing unit of Community Legal Services of Mid- Florida, another nonprofit. The agency has set up a foreclosure defense fund, recruiting attorneys to tackle such cases without charge.

_The more equity you have in your home, the less eager your lender may be to work with you. It's an ironic fallout of the foreclosure crisis that those who have been the most diligent about making payments and have lived in their homes the longest are most at risk. Simply put, the lender can take what you've already paid in equity, sell the home for less than it's worth and still make money.

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WHEN TO WATCH OUT

_Beware of scams and predators. One red flag is someone who wants a fee upfront for something you can do yourself or get for free. For instance, if you're having trouble getting through to your lender on the phone, don't pay someone else to call. Ask yourself, "Is anyone going to profit from this?" If the answer is yes, proceed with caution. A better move is to see whether a nonprofit group can help you first.

_Under no circumstance should you sign over your house to someone who agrees to pay the mortgage until you get back on your feet. This is one of the most common scams going, and it typically ends with you renting back your home until the new owner decides to sell the place and evict you.

"Unfortunately, sometimes saving the home is not the right thing to do for the person in the long run," Lapidus said. "Sometimes buying the home in the first place was just totally the wrong move."

IS THERE HOPE?

_Know whether a short-term fix will give you the time you need to catch up on your payments. Several programs have been set up to offer homeowners one-time assistance, often only for a single month. They might only postpone the inevitable.

_What about the new Hope for Homeowners bill? It's not a panacea. First, it doesn't start until Oct. 1 and only covers homeowners who bought on or before Jan. 1, 2008, and are using the home as their primary residence. Further, to be eligible, your monthly payment _ including interest, insurance and taxes _ has to be at least 31 percent of your monthly income.

And the biggest catch: The program is voluntary, so its success rides on how willing mortgage investors are to participate.

WHO CAN HELP?

Make sure you're using a Housing and Urban Development-approved foreclosure-prevention counselor. To check credentials, call 1-800-569-4287 or go to www.hud.gov/foreclosure.

ON THE WEB:

_On the Web, see Home LoanLearningCenter.com; www.HousingHelpNow.org; and HopeNow.com, the government-led alliance of lenders, mortgage servicers, investors and community advocacy groups.

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© 2008, The Orlando Sentinel (Fla.).