Options for those considering foreclosure

Drivers leaving Hilton Head Island pass a billboard that says: "Foreclosure Affects the Entire Family." While foreclosure rates on Hilton Head and in Bluffton aren't nearly as bad as in Florida, California and other areas of the country, the economic downturn has impacted people from every socio-economic sector in the Lowcountry—from school teachers to corporate executives, longtime locals and second-home and lotowners. "At one time, we could generalize a typical client," said Debbie Kidd, housing director for the Homeownership Resource Center, a division of Family Services, Inc., in Charleston. "Now the clients come in from all walks of life, from the single parent low-income household, to two income, six-figure salary folks with homes on the ocean."

Currently, there are about 100 foreclosures listed on the Hilton Head Area Multiple Listings Service. Kidd's Charleston office receives 500 calls a month from across the state for foreclosure mitigation, and her staff are dealing with 1,086 active cases of pending foreclosure.

A NEW SPECIALTY: FORECLOSURE PREVENTION

Some local Realtors have decided this unfortunate situation presents an opportunity to help. Veteran Lowcountry Realtor Bob Raehn attended training in Orlando, Fla., to attend educational seminars and obtain accreditation as a certified distressed property expert. Other local Realtors also have earned the certification or are in the process of doing so.

"You would be surprised at the number of people who think foreclosure or bankruptcy is the only way out," said Raehn, who has been working with the local real estate market for 28 years.

Kidd agrees, citing statistics that show 50 percent of homeowners who are behind on their payments will lose their homes to foreclosure unnecessarily.

"That's because they never contact their lender, or answer the phone, or the mail," she said.

National statistics point out seven out of ten foreclosures don't seek help from a qualified counselor — a statistic foreclosure prevention counselors are trying to change.

THERE ARE OPTIONS

In order to reduce the risk of foreclosure, Kidd's office conducts educational workshops/clinics around the Lowcountry and provides phone and online counseling services.

"On average, seven out of ten clients who come to our office for assistance can save their homes from foreclosure," she added.

Raehn also conducts confidential sessions with clients and works with the homeowner, banks, attorneys, accountants and local Realtors to resolve the situation in the best interest of the parties involved with the least damage to his clients' credit. Options a certified distressed property expert might negotiate on behalf of clients include: forbearance (working out a payment schedule based on a future outcome such as a divorce settlement or inheritance), deed in lieu of foreclosure, loan modification, short term re-finance, reinstatement refinance, sale/rental of property and, increasingly popular "short sales."

SHORT SALES EMERGE AS POPULAR OPTION

According to industry analysts, one of the by-products of the shifting market is the rise of short sales. A short sale occurs when a bank, or mortgage company, agrees to accept less than the full balance of a loan in order to avoid foreclosure. Most people who pursue this option owe the bank more than their home is worth in today's market.

According to Raehn, short sales have emerged as one of the primary tools in the fight against foreclosure and are regularly conducted by local banks and mortgage companies. There are approximately 125 short sales listed on Hilton Head/Bluffton's MLS.

The bad news is that "short sales" can be complicated and timeconsuming. Sometimes, a Realtor trained in this type of transaction helps other Realtors who don't have experience with short sales. In order to be able to do a short sale, clients generally need to have realized their financial problem fairly early.

Raehn and Kidd stress the earlier a homeowner asks for help, the more options will be available to them.

BEWARE OF SCAMS

Raehn and Kidd do not charge clients for their services. In the event of a short sale, Raehn is paid a commission, or fee, by the lending institution. Fortunately, due to all of the recent press on foreclosure, Kidd said, more homeowners are learning help is available. Unfortunately, she said many of them are ending up in the hands of scammers.

"Many delinquent homeowners are being contacted by companies promising to ‘save their homes for a fee,'" she explained. "The fee ranges from $1,500 to $3,500 and, once the fee is paid, the scammer stops calling or notifies the client that the lender has no options for them. No fee should be paid for this type of service in South Carolina."