10 Common Myths about Foreclosure

Below are common foreclosure myths that many people have when facing losing their homes.

Foreclosure Myths #1: You can’t save your home once Foreclosure begins

Yes, you can! Foreclosure in Connecticut is a long court process that takes months or longer.  Thousands of homes are saved from the throes of a pending foreclosure each year.  There are state and federal laws that protect homeowners by stopping and fixing foreclosures. At the Law Offices of Neil Crane we’ve had tremendous real success in saving homes through foreclosure mediation. While the process is often laborious and somewhat slow, our office has successfully negotiated mortgage rate reductions, principal reduction and home retention solutions through the Connecticut foreclosure court system. Any bankruptcy filing stops a Connecticut foreclosure.

Foreclosure Myths #2: Banks want to help you keep your home

Don’t rely on the bank to save your house. Banks and mortgage companies are only concerned with corporate profits. As large, bailed-out institutions, Banks and servicers don’t care about your home, your family, or your future.

How to Win at Foreclosure Mediation

Financial turmoil can turn your life upside-down. Debt problems can quickly overwhelm you – you are several months behind on your mortgage and the bank stops accepting payments. Phone calls and efforts with your bank prove unrewarding. You may even receive the dreaded foreclosure notice. This is happening to hardworking homeowners just like you, all across Connecticut. The government’s answer for homeowners? Work with your lenders to modify mortgage obligations, and when that doesn’t work, negotiate terms under the foreclosure mediation process. But lenders don’t seem interested or motivated, and don’t often help – You need to get solid advice from our experienced mortgage modification and foreclosure experts.

Foreclosure Myths #3: I can just negotiate with the Banks to adjust my mortgage

No Bank can be forced by any Foreclosure Court Judge or private homeowner to negotiate with a borrower.  While State Court foreclosure mediation is mandatory, thousands of homeowners without lawyers never get to negotiate with their banks, even in Court.  In Connecticut, a properly filed mediation request must be made within 15 days of a foreclosure return date. Banks never actually attend foreclosure mediation and you will not be in front of a Judge. Foreclosure Judges have no power to control Banks or lenders.

Participation in mediation is a right, but it can’t force banks or servicers to negotiate.

Foreclosure Mediation is an option if you obtain a Foreclosure Relief Attorney to Fight for You.

Other than a successful mediation or bankruptcy protection, the foreclosure process is a bank-run, steady path to home loss and deficiency judgments. Unfortunately, thousands of homeowners fail at mediation because they try to go it on their own. This is a huge mistake.

Foreclosure Myths #4: I don’t need a lawyer for Foreclosure Mediation

Not true.  You do need an experienced foreclosure defense or bankruptcy attorney to win at mediation.  Every Bank has a lawyer – You need one, too.

Foreclosure Mediation Attorneys Save Homes

The foreclosure system scares homeowners, causing them to freeze up or go it on their own. In fact, the mediation system encourages self-representation, and many unknowing homeowners fail to obtain legal counsel with the experience necessary to save their homes. Mediators and court officials are wrongly encouraging homeowners to fight their banks for modifications without the benefit of any legal representation. Banks have attorneys hired to take your home as promptly as possible. Mediators are paid by the foreclosure courts. Who represents you and your family?

Attempting foreclosure mediation without the benefit of experienced legal counsel is the biggest most common, disastrous mistake made by homeowners in foreclosure.

Foreclosure Myths #5: I can Refinance to save my home from Foreclosure

Banks almost never refinance homeowners in foreclosure.  No matter what’s “promised,” don’t rely on a refinance to save your home. Do not count on a bank or servicers to save your home. Banks collect payments or liquidate homes.  Despite what you may be promised, banks rarely resolve or refinance loans for borrowers that are already in trouble. This is especially true in today’s economic climate.

Foreclosure Myths #6: There is a guaranteed way to reduce your mortgage payments without Foreclosure Mediation

There is no guaranteed way to reduce mortgage payments through courts, mediation, or otherwise.  A mortgage is a fully legally enforceable contract in any court in America, other than the Bankruptcy Court.

Avoid scams. Seek out only legitimate and experienced professional help. Avoid out of state companies and internet scams. Remember that foreclosure is a legal proceeding that can only be handled by an attorney licensed in Connecticut.

Predatory Loan Modification Companies Continue to Hurt Homeowners

You may have seen the advertisements, perhaps on Internet advertisements or on flyers. “Reduce your mortgage payments now! We know the tricks banks aren’t telling you!” Sounds too good to be true? Unfortunately, it is. Scared, unsuspecting homeowners can be easily trapped into paying a large fee to companies who end up hurting the homeowner’s situation even more.  Get experienced foreclosure legal counsel.

In Connecticut, taking upfront fees for mortgage modification is illegal. Always meet with a specialized attorney in Connecticut. You should always check the state bar association where an attorney is licensed by calling or checking its website to make sure you are dealing with a legitimate attorney. Read our testimonials and get educated.

Foreclosure Myths #7: There are Government programs that can bail me out

Unfortunately, there are very few, if any, government programs that provide real help to distressed homeowners. Don’t wait for someone else to save you, take action now.

Government programs don’t help Second Mortgages or allow for Lien Removal

Many homeowners over-leveraged their properties through second mortgages, HELOCS and credit lines that now destroy their homes’ equity and threaten their ability to make monthly mortgage payments. Many of these “easy” credit lines were interest only and are now coming due. First mortgage holders don’t address second mortgage problems, even if it’s the same bank or lender.  To be truly successful, all homeowners need to address all forms of debt, including second mortgages, credit card debt and other bills. Fortunately, with proper legal counsel, homeowners can resolve these second mortgages and equity lines by restructuring or eliminating those secured obligations through the Chapter 13 bankruptcy process.

Foreclosure Myths #8: The only alternative to Foreclosure is Short selling my home

Make sure you understand the full short sale process before allowing lenders to press you to “short sell your home.”  Short sales almost never benefit most homeowners.  Get educated on short sales.

Be careful. Banks will always encourage short sales but almost never truly assist the homeowner in producing a swift and successful short sale. In truth, short sales are very rare and in almost all cases slow and painful.  They rarely benefit homeowners who are already behind or in foreclosure.  They force families out of their homes, don’t help their credit score, and often produce a very serious federal and state tax problem.  They also don’t work for homes with other mortgages or liens.

Only in rare situations is a short sale a viable or proper option for a Connecticut homeowner..

Consult with our experienced attorneys in advance to determine if a short sale will provide you with proper debt relief and assure you a lasting and improved financial future.

Foreclosure Myths #9: The bank is offering Mortgage Modification risk free

Banks never offer anything free.  If you think it’s good for you, it’s way better for them. While everyone wants a lower mortgage payment, the mortgage modification process is rife with dangers and pitfalls. Modifying your mortgage often means risking your family’s home. Be certain that you understand all of the risks involved and don’t ever try to modify your mortgage without the experience and assistance of an expert mortgage modification attorney.

The mortgage modification process has a number of substantial risks, many common mistakes are made by families seeking modification without the benefit of legal counsel. At the Law Offices of Neil Crane, we have saved thousands of Connecticut homes over 35 years. Let our knowledge and experience guide you through the mortgage modification minefield.


Foreclosure Myths #10: Once the Modification process starts, I can stop paying on my mortgage

Only if you save the money each month.  The modification process is long, slow, and no guarantee.  Even a successful modification starts with a “trial modification” which is 3 to 6 months with no promise of the final terms of the permanent modification.  Most modifications extend mortgages for a new forty-year term, assuring that you’ll never own your home.  While some modifications produce lower payments, all modifications make tens of thousands of dollars in new profits for banks and lending companies.

 Missed Monthly Payments are the greatest danger to successful modifications and the leading cause of lost homes in Connecticut. Missed payments create big back balances, including late fees, default charges, home inspection fees and forced insurance. These back charges or “arrearages” are due at once on demand. If your bank doesn’t modify your mortgage, missing payments will cause you to go into foreclosure. Missing payments means that even modified mortgages will have high monthly payments as back balances are jammed into the remainder of the loan or spread over decades of additional payments.

Lack of Savings creates an inability to catch up on payments missed during the modification process. Families who miss payments almost never save the money. Over 35 years of experience saving homes shows us the people who don’t make mortgage payments never save the money they don’t pay on the mortgage. Failing to save missed payments is the biggest mistake made by homeowners seeking modification. 

Ways a Bankruptcy Attorney Can Help

An experienced bankruptcy attorney can help you separate the myths from the facts and provide real customized answers that will work for you and your family, with a thorough discussion of your financial situation. An attorney can get you educated about all the steps needed to save your home or help you prepare for mediation with your lender. An attorney can also explain how Chapter 13 bankruptcy might be right for you – and how it is one of the most reliable process for saving your home.

If you are in danger of losing your home, don’t panic and fall for a loan modification scam, or a hollow bank promise. Speak with a bankruptcy and foreclosure defense attorney who can fully explain all of your options and work with you to save your home.

Find out more about the Foreclosure and Mortgage Modification process.