With the slowdown in the housing market continuing and foreclosures up 80-95% in some areas of the country, it seems as if more and more fraud, ignorance, and bad decisions are coming out with each new foreclosure filing. With the homeowners we are working with, we have discovered that loans placed within the past few years were often made on homes that were grossly overvalued. This means that, when a neutral third party performs a valuation or appraisal of a property, it becomes apparent that homeowners owe much more than the value of their home. This situation makes it very difficult to stop foreclosure, because banks do not want to admit that they allowed such poor lending guidelines to come about. Homeowners in danger of losing their homes need to find out the most accurate status of their property.

There are two main items a foreclosure victim will need to find out about the property that is in danger. The first is a fair valuation of the property, while the second is a title and lien search. With such shenanigans in the housing market over the past few years, appraisals can no longer be trusted, and third parties may place liens on the property that the homeowners never know about. Seldom are homeowners told if the city has placed liens on the property, or they have been sued for an old medical bill or unpaid credit card, and appraisers often inflated the values of homes to increase the commissions of their real estate agent and mortgage broker friends. Homeowners should obtain the relevant information and use their own judgment and research to verify any numbers they are given.

Knowing the true value of a property can give homeowners a bit of bargaining room when speaking with their banks about a solution to foreclosure. If they are aware that the property was overvalued to begin with, and the bank will not be able to sell the property for anywhere near the loan amount, foreclosure victims may find that the lender is much more willing to work with them to save the current loan. Lenders would rather put together a forbearance agreement or mortgage modification, or even consider a reasonable short sale, than lose an even larger amount if the house is sold at sheriff sale and must be sold on the open market for a low price.

Obviously, homeowners will need to decide if they want to continue paying for a house that is worth far less than what they agreed to pay for it, but real estate values habitually rise over the long term. This means that, if the homeowners can avoid foreclosure now, by the time they have paid back the loan, the property will likely be worth far more than they paid for it originally -- regardless of temporary drops in the market. Nearly every asset tends to go up or down in the short run, while experiencing long term trends of rising prices. Real estate is no different but is a more tangible asset than stock ownership or mutual funds that homeowners can hold onto, improve, and use for their own utilitarian purposes, rather than for strictly investment purposes.

The importance of having a title or lien search done on a property also can not be understated. When homeowners begin falling behind on their mortgage, they may also miss a water bill, sewer bill, homeowners association payment, and have numerous other credit lines go into collections. Many of these bills can show up later on the title as a lien on the property, preventing the homeowners from being able to refinance out of foreclosure or decreasing their profits from a sale of the property. Especially if the missed payment was years ago, the foreclosure victims may have no recollection of the bill at all, nor of the city or county court allowing the lien to be placed.

Another, possibly more important, reason to have a title search is simply to verify ownership of the property. During foreclosure, many possible solutions will be presented to homeowners, some of them from unscrupulous foreclosure scams. These often attempt to trick homeowners into signing over the deed to their homes, in some misguided attempt to stop foreclosure. If the scammer was able to pull this off, the homeowners may not even own their home any longer, and the process of saving a home that they no longer own will be very costly and time-consuming. The scam company will have to be sued and the transfer rescinded in order for the foreclosure victims to reclaim ownership of the property. Hopefully this never happens to anyone, but frequently news stories are released with exactly this scenario being played out in real life.

Foreclosure victims are often thrown into the process with very little warning and absolutely no preparation, and are expected to put together a viable solution to prevent foreclosure. This is a quite unreasonable task, and it is remarkable that so many homeowners are able to save their homes. Once foreclosure starts, however, homeowners often need to gain foreclosure advice relating to how foreclosure works, what can be done to stop the process, and what is the true status of their home's value and ownership. Having done this research, plus gaining other foreclosure information from various sources, will give foreclosure victims a much better chance of saving their homes and avoiding potential scams.

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