Without question, one of the enablers in many fraudulent mortgage lending schemes has been a crooked appraiser willing to give a property any value that the Realtor, mortgage broker, or lender wanted. The real estate bubble could not have been inflated to such a high level without the complicity of many appraisers who threw all conservatism out the window and began giving properties ridiculous values in order to help secure loans.

Now, with the housing market collapsing all around us, these appraisers have had to go back to valuing homes at more reasonable levels. However, this leaves many homeowners out in the cold, having received inflated appraisals just a few years ago and now finding out their homes were never worth that amount. What recourse, though, do these borrowers have, especially when they fall into foreclosure ?

The degree of appraisal inflation and fraud has been found to be astronomical in too many cases already. Homeowners have discovered that their home's value was inflated by up to 1,000% of its non-bubble price. The typical mortgage insured by the Federal Housing Administration (FHA) is inflated by 30-50% in order to raise prices of property on first-time home buyers and low income borrowers.

So clearly, there is a problem with a large number of appraisals, but homeowners may have trouble holding the individual appraiser or his company liable for the inflated value. However, there are a number of different claims that can be brought against an appraiser that blatantly misrepresented the actual fair market value of a home, especially if the borrowers relied on that appraisal in their decision to buy or refinance.

The most obvious claim borrowers may be able to bring against an appraiser is fraud due to the misrepresentation of the home's value. While valuing a home is sometimes just as much art as science, obviously using inappropriate comparable sales or making unreasonable adjustments to justify a higher value can be a clear case of fraud.

The only problem with this claim that homeowners may find is that the conditions may be hard to meet. For example, the borrowers will need to show all nine elements are present for a fraud claim to be made. Unfortunately, this may be easier said than done, and homeowners may want to contact an attorney to discuss the potential of a fraud case in more depth. These nine elements are the following:

• representation of an existing fact
• the fact is material
• the representation of the fact is false
• the speaker knows it is false
• the speaker intends the listener acts on the knowledge
• the listener is ignorant of the falsity
• the listener relies on the truth of the fact
• the listener has a right to rely on it
• damages are suffered by the listener

Far more promising as a claim against appraisers is state Unfair and Deceptive Acts and Practices (UDAP) statutes. This claim is also somewhat easier to make. The reliance on the misrepresentation does not have to be show, and some of the other conditions are also loosened. Homeowners should contact a lawyer or do some research on their state's UDAP laws, however, to find out all of the relevant information.

There are also a number of other claims that can be made against an appraiser, either in or out of foreclosure. Depending on the circumstances of the case, some of these include violations of state licensing laws, civil conspiracy, fraudulent concealment, and civil RICO claims. Again, it may be in the homeowners' best interests to speak with legal counsel or research these issues in depth before making a claim.

Far too many homeowners were given the most expensive mortgages they qualified for and their home values were inflated to justify the large loans. Appraisers played a role in these transactions, and many of the most corrupt may have engaged in acts that carry significant legal liability. Especially in cases where a lender pushes homeowners into foreclosure, doing some research on these issues and holding the appraiser accountable may be called for.

In all the years I have been doing title research and helping people find out what is going on with their mortgage so they can avoid foreclosure, one name keeps popping up again and again. That name is MERS, short for the Mortgage Electronic Registration System. What this company is and what it does is a bit unclear, but many homeowners have had this company attached to their mortgage somewhere along the line.

MERS functions as a clearinghouse and computer registry that was established to track ownership changes in mortgages. Originally, it was designed to make the assignment and transfer of ownership of mortgages easier, especially in bulk transactions. MERS can be the assignee of record with counties, and any future transfers are only tracked in the MERS database.

However, homeowners who have a loan that is assigned to MERS will find it difficult to determine which lender actually owns their mortgage. MERS does not give borrowers the names of the true owner of a note, and will only disclose the servicing company taking care of the mortgage. From the servicer they can learn which company or institutions owns the mortgage, though.

The status of the Mortgage Electronic Registration System, though, is somewhat unclear when it comes to foreclosure actions. At least one court has held that MERS is not a real party in interest because it has no legal or beneficial interest in the mortgage or note. It is the mortgagee, but not the holder of the loan. MERS is also not a trustee, and is considered only a nominee for the holder of the mortgage.

However, MERS claims that it has the right to foreclose on mortgages in its system under its own name, due to its status as a nominee. On the other hand, some courts have decided that, since MERS does not actually own the note Homeowners attempting to defend against a foreclosure lawsuit brought by MERS in its own name may have the best chance of success in states where the holder of the mortgage is an indispensable party to the lawsuit. Since MERS does not hold the actual paperwork, it can not show that it owns the mortgage. The entire prospect of a company that does not own a mortgage suing for foreclosure may be an indication of a wrongful foreclosure, as well.

In nonjudicial foreclosure states, MERS may also have trouble enforcing a power of sale clause in a deed of trust. It does not actually own the deed of trust, so may not have the authority to begin foreclosure proceedings against borrowers. Especially since the company claims not to have any beneficial interest in the debt, there may be no ability to start foreclosure on a property.

As more homeowners find themselves in foreclosure, more cases will be defended in court, and the Mortgage Electronic Registration System may be forced to define what its actual status and interests are in a note. Unfortunately, the company's status is quite a bit unclear right now, and even in foreclosure notices, MERS defines itself differently from sentence to sentence.

Over the past few months, I have been taking more courses on how to survive in the absence of government services or specialized health care during a period of civil unrest caused by a natural disaster or severe economic collapse. One of the more interesting classes, and one which provided a lot of useful information for homeowners, was on how to protect against an invasion of a home by a violent criminal.

The most important concept I learned was that of managing perceptions and the nature of the typical home invader. The type of person robbing a home is often cowardly and hoping to rely on brute force. If he was hardworking, he would have a job. And if he was a master criminal, he would be knocking off a casino, bank, or richer target than the average private residence -- in essence, someone breaking into a home is looking for an easy score.

This is why the first line of defense in protecting against such an event is simply making a property look like it is well prepared. Dummy cameras can be put up that look intimidating to the average criminal but may not be recording anything at all. In addition, it is easy to purchase or print out a fake sign indicating a property is protected by ADT Security, Brinks, or another security company.

A few signs and dummy cameras may be enough to deter most lazy criminals, who would rather move on to the next house and not risk the possibility of setting off an alarm or being caught on film. This can also be done with abandoned buildings in a community hit hard by foreclosures in order to create the appearance of well-defended properties, which criminals may pass over if they were trying to squat or steal.

But the doors of a house can also be upgraded or defended. Most doors to homes are build of wood but have a hollow core which is easier to kick in. A solid core door with a one-inch deadbolt can make it much more difficult to break in. In addition, door hinges should have at least four holes for screws and it is a good idea to use three-inch screws in the hinges. Most doors come with two-inch screws, and simply upgrading them makes it more difficult to break down a door.

Doorknobs are weak points of many homes, as the knobs are of low quality and can easily be picked or forced through. Most hardware stores have Grade 1 or 2 knobs that are resistant to twisting, prying, lockpicking, and other forced entries. The deadbolt can also be upgraded from a standard model to include beveled casing and a latch mechanism on the bolt to prevent it from slipping under force.

Unfortunately, many people will remember to secure their doors and knobs but have no problem leaving windows open even if they leave to go run errands. This presents a perfect opportunity for invasions, as the screens can be pushed up and the windows forced further open. A simple trick is to use wood dowels to prevent the window from being opened all the way, and homeowners can get into the habit of opening windows no more than six inches or so.

Mini blinds are also a great deterrent of home invasions if they are kept down while the homeowners have left the house. Burglars forcing their way through windows with mini blinds have often found it more difficult to get out of a tangled mass of blinds than to force the window open in the first place. While they are not pretty decorations for a house, they can be a useful security measure.

While there are many methods to secure a home and a community against a drastic deterioration in the quality of life, homeowners should take more precautions against being robbed. Squatters and other non-government criminals are using foreclosed homes as bases for taking advantage of people, and the situation may continue to get even more precarious as foreclosure rates push more people into the streets.

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When home prices were rising every year, it was a much simpler matter to avoid foreclosure. Homeowners who fell behind on their monthly payments just listed the property on the open market and it sold a few days or weeks later for more than they paid for it. But with high foreclosure rates and a recession, property values have been dropping precipitously.

This is making it more and more difficult for homeowners facing a financial hardship to sell to avoid foreclosure. Two methods of saving a home during the bubble, refinancing and selling high, have been almost entirely eliminated as the collapse of the mortgage lending industry has dragged down house values.

Despite (or because of) all of the economic stimulus and corporate bailout packages the government has put into place, home prices are still falling across the country. Every region of the nation experienced falling median home prices in January of 2008, and there is little sign of recovery in the real estate market yet.

Thus, homeowners and anyone attempting to help people stop foreclosure may need to adjust their expectations in regards to home values. Few new homes are being built relative to a couple years ago, and the inventory of houses and foreclosures already on the market will need to be sold before prices begin to rise again.

One of the symptoms of a bubble in stocks, real estate, or any other asset is rapid price appreciation in the absence of fundamental changes in the economy or asset itself. Is there any doubt now that homes increasing in value by 20-30% a year for nearly a decade was an artificial bubble that could not last forever?

Depreciation of prices is one of the few good aspects of the bursting of a bubble or a recession, from the perspective of consumers and homeowners. As home values fall from the artificial bubble level, more buyers will be willing to purchase homes again, and banks will be willing to lend money on properties that are not falling in value by the day.

Of course, this will make it more difficult for those already in homes in some parts of the country to save them to avoid being foreclosed on, but this may be better for their long term financial goals. No one wants to struggle to pay $600,000 in principal and interest on a home worth only $150,000.

And foreclosure is not the end of the world. By the time a consumer's credit has begun to repair in 2-3 years, home prices may be much more affordable. If the bank is unwilling to allow a short sale or a loan modification, homeowners deep underwater may be better off letting the house go and renting for the next few years.

But the unrealistic expectation that home values are still at 2006 levels, and government efforts to keep them at that level, are continuing to destabilize the market. Because of this intervention in the housing market, sellers are keeping prices artificially high, hoping the government solves their problem. Buyers, though, are uncertain and not buying.

Appraisers use sales of homes that were made as arms-length transactions where neither the buyer was desperate to buy nor the seller was desperate to sell as a basis for comparing other similar properties in an area and estimating fair market values. A foreclosure property does not meet these criteria because of the nature of the legal process that the house is undergoing and the extra inducement that sellers have to find a buyer before they run out of time.

Houses in foreclosure are typically classified as distressed properties, which means that there is something wrong with their physical or legal condition that induces the owners to sell for less than the fair market value of the property. In some cases, this might mean a condemned house that the government has ordered repaired or taken down, one that has been severely damaged by a natural disaster, or one that has fallen into disrepair as a result of homeowner neglect in upkeep.

In such cases, the buyers of a distressed house are able to offer the sellers less than what the property would sell for if it was in a fairly decent condition. But these types of houses are also difficult to compare to other houses in the geographic area that are in better condition or where the owners have no added reasons to unload the property.

Foreclosure cases work slightly different compared to a house that is falling apart or damaged, but the lack of time many people have to sell before losing the home to a county sheriff sale indicates that the buyers have the upper hand in negotiating a beneficial price in order to complete the sale before the eviction. The current owners may not really want to sell the house to stop foreclosure, but have run out of other options that would have allowed them to keep the property.

This is one reason that properties in foreclosure often sell for less than their fair market value or the current market value of similar properties, even if there is nothing physically wrong with them. Appraisers know that the sellers may not even have wanted to sell, which can easily skew comparable valuation data.

Properties owned by banks after a foreclosure auction has taken place are only a little different. In these types of cases, banks may not take care of the houses which then fall into disrepair quickly, or vandals may strip them for any useful resources like copper pipes and electrical wiring, for instance. Banks also do not want to own these properties as they are a drag on the balance sheet and are often willing to entertain lower offers from real estate investors or buyers willing to fix up the properties.

But again, these types of sales are not between a disinterested buyer and a disinterested seller -- in most instances of foreclosure, the seller is willing to unload the property for just enough to make it worth their while and attain their goal of either avoiding foreclosure or unloading an asset that generates no profits. Owners want to sell to save the house and their credit from foreclosure, while banks just want to unload foreclosure properties from their balance sheets and get back to other lending activities.

Thus, foreclosure properties are not good candidates for comparable sales used in appraisals, except for possibly comparing sales of other foreclosed homes. Appraisers would much rather use home sales that were not completed under duress, because a certain home was condemned, sales between family members, or foreclosures. The values have too great a tendency to become distorted as one party to the transaction has more power and a better negotiating position than the other.

There are many issues and possibilities that homeowners need to be aware of when they fall behind on their mortgage. Foreclosure laws, general timelines, how and when the sheriff sale will be conducted, and what options are available to help them are just a few of these important issues. With so many local real estate markets declining in value, though, numerous manipulated or downright fraudulent practices are being discovered on a daily basis. No issue has been more contentious than that of overvalued properties that were highly leveraged by banks who knew the homeowners would not be able to pay for them for the long term. One of the most important items homeowners should have when attempting to avoid losing their homes to foreclosure is an accurate valuation, so they are aware of any sudden decrease in the value of their homes.

There are numerous reasons to receive an accurate value, both in terms of finding out how to fight foreclosure legally and through more common methods. An overvalued appraisal that was done by a lender during a refinance may indicate fraudulent inducement of debt, which means the bank gave the homeowners a loan that the bank knew would never be able to be paid back. There are numerous examples in the news and online of homeowners who cashed out equity in order to do repairs or continue their consumption lifestyle, and they found out their properties had gone way up in value, according to the bank's appraiser.

However, now that they are facing foreclosure, these same homeowners have found out that those appraisals were only done in order to give them as much money as they qualified for, based on very loose lending guidelines. With the tighter lending policies now being practiced by banks, coupled with numerous other foreclosures across the country, these artificially inflated values have dropped drastically in some areas, sometimes by 40% or more. This makes it almost impossible for homeowners to find some solution that will stop foreclosure, because, even considering a down payment of 20%, they will owe more than the home is worth. The bank will have to accept less than what they are owed if the foreclosure victims attempt a loan to stop foreclosure or selling the house.

Having an unbiased, accurate value of their property will also allow homeowners to determine what options they are qualified for, and how much the bank stands to lose on the mortgage if it goes all the way through foreclosure and is sold at sheriff sale. Properties typically sell for far under the market value at the foreclosure auction, and banks that have made loans far higher than the market value can lose more than half of the original loan amount. Homeowners attempting to work out payment arrangements with the bank will have a stronger negotiating position if they know that the bank has so much at stake.

Of course, knowing the true current value of their homes will also give homeowners a better idea of whether or not the property is worth saving at all. If they purchased the home to live in and keep, then it may be worth trying to work out a loan modification or apply for a foreclosure loan from a different mortgage company. However, if the house was purchased primarily as an investment that has lost a significant portion of its value in a few short years, with no short-term recovery in sight, the foreclosure victims can examine the possibility of giving up the house and dealing with the financial consequences later. Especially if the bank is not willing to work with them, it may be better to move on, rather than trying to stop foreclosure despite an uncooperative bank.

Overvalued appraisals were, unfortunately, quite a common occurrence in the pre-bust real estate market. With investors caring about the quality of the loans they purchase, and lenders attempting to give mortgages that will not quickly default, accurate appraisals are now being sought. These are exposing many of the worst practices of the boom, as home buyers, real estate agents, mortgage brokers, lenders, and appraisers colluded to give homeowners the most money they could qualify for, whether or not the home was actually worth that much. Small starter homes quickly rose in value, and everyone became an investor, looking for the lowest monthly payment right now, rather than taking a more stable, although higher, payment. Having an accurate estimate of the value of their properties can give these homeowners the tool they need to begin finding out the truth of what kind of loan they were given, how they played into the hands of these commission- and profit-seeking companies, and the fact that they are left with the mess and the danger of losing their homes. But an accurate valuation will also help foreclosure victims start making realistic plans about what they can do to save their homes, or whether they are even worth saving at all.

Although many properties that are currently in foreclosure have little equity or are actually upside-down (the homeowners owe more on the loan than the home is worth), a significant number of homeowners have a large equity position in their houses. But when the bank forecloses and attempts to bring the property to a sheriff sale, foreclosure victims often find out two of the most troubling truths about the foreclosure process. Banks are allowed to eat up the equity in the property throughout the process, and properties often sell at the trustee sale for far less than the homeowners expect.

In general, when a homeowner has a large amount of equity in the property, they have more options to stop foreclosure than if they did not have the equity. Qualifying for a foreclosure loan is often much easier if the property has more than 25-30% equity. Although these loans can be quite expensive, they allow for a short-term solution whereby the homeowners will pay off the previous mortgage, start paying a new loan on-time and save their home. Another option that is enhanced with a large equity position is selling the property outright. In this case, the foreclosure victims can lower the price of their home down to the minimum, enticing buyers who are looking for a deal. Although the sellers may walk away with little or no proceeds from the sale, they will have paid the loan in full and avoided any tax consequences from a short sale.

When the property has significant equity and the homeowners are unable to work out a solution to avoid foreclosure, though, there are three considerations that must be taken into account. First, as soon as the loan goes into foreclosure, the mortgage company will begin accelerating late fees, interest, court costs, and attorney costs, as well as any other miscellaneous charges. This quickly begins to eat away at any equity the homeowners may have had, and the longer the house is in foreclosure, the higher these fees can go. Homeowners who are unable to put together a plan to stop foreclosure quickly may find that they are locked into the home, because they owe so much that there are no options left.

The second consideration relates to the property being sold before sheriff sale. Once the house is sold, any proceeds of the sale over and above that necessary to pay off the mortgage and associated closing costs will go to the sellers. In this case, the equity that they have left is paid to them through the sale. Combined with the lender's acceleration of the loan, though, it is important that homeowners list the property for sale immediately and attempt to find a buyer as quickly as possible. Starting with a low price is sometimes better than starting high, as the acceleration of fees will eventually make it necessary for the homeowners to raise the price, just to be able to pay off the loan and walk away with nothing.

Finally, if the homeowners are unable to use their equity to qualify for a loan to stop foreclosure or sell the house, there is little chance they will get any proceeds from the sheriff sale. By this point, the mortgage company will have added in as many fees and costs as they legally can, so it is unlikely the property will be auctioned for an amount that will pay off the loan in full. In addition, the lender itself is usually the only bidder at the sale, and their maximum bid is often less than what is owed, or exactly what is owed, which leaves the homeowners with nothing. Even worse, if the house sells for less than what is owed, there is the possibility of being sued after the foreclosure for a deficiency judgment (although this rarely happens in reality).

In the rare instance when a bidder does offer more than what is owed on the loan, though, then the homeowners will receive the proceeds from the sale. If there is any money left after property taxes are paid, the first mortgage is paid in full, and any other liens (second mortgages, civil judgments, etc.) are cleared off, the former foreclosure victims can claim their proceeds. Very often, the county courthouse will not inform the homeowners that they are due any money, so it is up to the foreclosure victims themselves to keep track of the outcome of the sheriff sale. Even a few thousand dollars can help after foreclosure, either in terms of finding a new place to rent or beginning an emergency fund and savings plan.

In the end, the bank does not directly have any rights to the equity in a property that is being foreclosed. However, they will do as much as legally possible in order to eat away at the equity, in order that they will be able to claim the proceeds from the sheriff sale. If homeowners want the equity in the house to remain theirs, they need to come up with a solution to the foreclosure as quickly as possible, and utilize the resources available to them while they still have time. Once the sheriff sale comes closer and the payoff creeps higher and higher, foreclosure victims will often run out of options to stop foreclosure at exactly the time they run out of time to save their homes.

Many homes that are now going into foreclosure were purchased with no money down and, therefore, have no equity when the lender begins the foreclosure process. Other home buyers, though, put down large amounts to receive lower interest rates and build up the equity in their homes. However, they are now facing foreclosure due to a financial setback. When the home goes through foreclosure, the down payment will often be eaten away by accelerated interest, court costs, attorneys fees, and late fees; although having the extra equity may also help homeowners stop foreclosure before the situation is too far gone.

When properties go into foreclosure, the acceleration clause in the mortgage paperwork allows lenders to begin adding interest and fees in order to increase the total amount necessary to reinstate the loan or pay it off in full. This is to provide the bank with some of the lost profits that will result from the foreclosure, as opposed to having the loan paid off in full throughout the life of the mortgage, or paid off through a refinance or sale of the property. Banks also want as high of a payoff as possible, in case the property sells for a substantial amount at the sheriff sale, where they can take the largest portion of the sale proceeds. Homeowners typically see their mortgage balance grow by several tens of thousands of dollars during foreclosure, as the bank adds in numerous legitimate and junk fees.

These fees are primarily responsible for the complete lack of equity in the property by the time of the sheriff sale. Even homeowners who put down 10%, 20%, or more will find that this money has simply been eaten up by interest added to interest added to late fees and court costs. It is also not uncommon for homeowners to owe more on the home than it is worth. This situation ensures that the bank will receive all of the proceeds of the sheriff sale, even while taking a loss on the total amount that they are owed through the foreclosure judgment. Also, foreclosure victims who are upside-down in their homes will find it very difficult to put together a plan to stop foreclosure, as they have no equity.

This makes it a very serious decision for homeowners to make when considering how much of a down payment to make. Obviously, a higher down payment allows for more protection of the home with higher equity, and often results in a lower interest rate for the term of the loan. However, if the homeowners do not have access to more liquid assets, such as an emergency fund in a bank account, a temporary financial setback can push them into foreclosure, where their equity will quickly disappear. Having both as much equity as possible and a reasonable emergency fund will provide homeowners with the best deal on their mortgage and the best insurance to contain the damage of an unforeseen hardship.

No matter how high a down payment a home purchaser makes at the time the mortgage is signed, there is no easy way to access this equity in the event of a financial hardship. Lenders will be reluctant to provide a loan to stop foreclosure, and the acceleration of the mortgage will continue to eat up the homeowners' down payment and remaining equity. This is why a large down payment is only a good idea in conjunction with easily accessible funds that can quickly be converted to cash. Without an emergency fund and with the erosion of equity due to the foreclosure, homeowners will quickly run out of options that could have saved their homes from foreclosure.

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.

There are a lot of bad ideas and disinformation floating around in regards to transferring title to a property to stop foreclosure. It seems like such a simple solution on its face: transfer the property to someone else's name and the bank will suddenly find itself foreclosing on a property that is no longer owned by the original homeowners paying the mortgage. Some sources even recommend this tactic to foreclosure victims for the purpose of saving the home or avoiding the damaging effects of foreclosure on one's credit. But this solution will not result in any beneficial situation for homeowners and can actually put them in a worse situation.

When a homeowner in foreclosure transfers ownership of the property, they lose control of the house. They give the legal rights to the property away, and can not sell the house, refinance it, or even give the lender a deed in lieu of foreclosure. Many of the options to avoid foreclosure are unavailable once the foreclosure victims no longer own the house, unless they get permission from the new owner for whatever plan they decide to work on. Retaining ownership of the property for as long as it is in foreclosure is a vital part of retaining control of what happens during the foreclosure process.

Even though a homeowner can transfer ownership of the property, though, there is no way to transfer responsibility for paying the mortgage. Homeowners who do this will find that they no longer control a property that they still have a loan on, and that the loan is still in default and that the lender is still suing them to take the property. Transferring ownership does not affect the responsibility to find a solution to foreclosure, as it does not affect the homeowners who promised to pay back the mortgage loan. Some mortgages will allow a third party to assume the loan, but this still requires approval by the mortgage company and will not stop foreclosure unless the new party becomes current on the loan by paying the defaulted amount.

Transferring ownership would also not affect the bank's ability to sue for a deficiency judgment. Mortgage companies will sue the debtor on the loan, rather than the owners of the property, so they will come after the parties signed on the mortgage in the unlikely event of a deficiency judgment. However, it is important to keep in mind that banks rarely sue for deficiency judgments, because they know that homeowners in foreclosure do not have a lot of extra cash to pay another judgment. In fact, suing former homeowners often costs the bank too much in terms of time and court fees, and they have already experienced a loss on the sheriff sale of the property (which creates the deficiency in the first place). It is simply not worth their time to attempt pursuing more money they will not be able to collect.

One final danger of transferring ownership of a property in foreclosure arises when foreclosure scam operators persuade unsuspecting homeowners to transfer the title. They convince homeowners that transferring ownership will stop the foreclosure, and the former foreclosure victims will be able to start making payments to the scammer, until they have repaired their credit and can refinance. Too often, though, these schemes result in homeowners paying "rent" to the scam operator while the bank is still pursuing the foreclosure, wasting thousands of dollars on a solution that they thought was legitimate. The foreclosure scam will collect the payments until the homeowners are evicted, never using the money for any purpose beyond their own personal uses, and move on to another family facing the loss of their homes.

It is almost never a good idea to transfer ownership of a property while facing foreclosure. Unless the property is being outright sold, either through a conventional sale or a short sale, homeowners need to retain the most control of the property that they possibly can. Signing over the deed to anyone precludes a number of solutions that may be used to stop foreclosure, and transferring ownership can make homeowners easy victims to predators. Gaining as much foreclosure advice as possible will help homeowners understand when, if ever, to consider transferring ownership of their property and if they are becoming the potential victim of a foreclosure scam. As a general rule, though, foreclosure victims need as much control as possible in order to come up with the best solution to save their homes.

Many homeowners find themselves in an uncommon situation when they are on the deed of a house that is going into foreclosure, but they are not listed on the loan. As can be expected, these foreclosure victims are some of the most unnerved by the prospect of losing the house and having their credit scarred because they happened to be listed as an owner of the property. However, depending on all of the circumstances, the mortgage company may not be able to affect this homeowners credit negatively, although every homeowner in this situation has an urgent need to seek out foreclosure advice and understand how the process works in more detail.

But most homeowners in this situation will receive a court notice in the mail informing them of the current foreclosure lawsuit. They may even be required to appear in court, even though they are not signed on the loan. The courts do this, though, in order to inform every party that has any ownership interest in the property of the pending foreclosure litigation. Other lienholders on the property will also receive similar notices, and any of them can attempt to work with the homeowners to pay off the defaulted amount or put together a similar plan to stop foreclosure.

The homeowner that is listed on the deed but not the loan may have some responsibility to pay the loan if it is part of a marriage. In the same way that a spouse's income can be claimed and he or she can be required to pay separate maintenance or alimony, the same theory may apply to the house. The marital property will count as belonging equally to each spouse, unless it was acquired before the marriage. If the property was purchased after the marriage, then the couple may be considered as each owning half of the property. Of course, this situation may require a consultation with an attorney, especially if a divorce was the cause of the foreclosure.

The mortgage company, though, may not be able to damage the homeowner's credit, unless they have sufficient information to report to the credit bureaus. They will be simply unable to report the foreclosure if they do not know enough about the individual, such as a birth date or social security number. Banks are not supposed to be able to report accounts that they are not able to verify, and just a name and address may not be enough information. Of course, they will already know the name of the homeowner, having taken it from the deed, as well as the address of the property. But if the lender is missing the SSN or birth date, they may not have enough information to report a negative account to the credit agencies. Homeowners facing this type of situation should pull their own credit, though, just to make sure that the late payments and foreclosure are not reflected on their credit.

Most foreclosure situations are complicated and require unique solutions in order to save the home. In cases where an owner of the property is not a co-signer on the loan, though, the foreclosure can become a bit more difficult to solve. The homeowner who has defaulted may not want to inform the other owner, so a court notice may be the first unpleasant news the owner receives. In any case where this is present, though, it is the best idea for all of the owners to work together to find a way to stop foreclosure and avoid the possibility of the mortgage company ruining the credit of every owner listed. As we have stated before, the possibility of solving a foreclosure increases when communities and families work together, rather than hide the problem from everyone else.

One of the most important actions a homeowner in foreclosure can take is to get a valid, legitimate valuation for their property, as well as find out what liens are on the property. No matter what option the foreclosure victims use to save their homes, they will need an unbiased, third-party assessment of their home, and this can mean the difference between having a reasonable solution to foreclosure and being turned down at the last minute.

The main reason for the homeowners to obtain a fair valuation of their property is to make sure that no predatory lending or mortgage fraud took place in the original loan, and to prevent it from happening if the homeowners apply for a new refinance to stop foreclosure. Inflated appraisals have become one of the reasons cited for the housing bubble of the past four years, when appraisers artificially increased the value of a home, in order to help the loan applicants qualify for more money and the real estate and mortgage brokers to gain more commissions. Having a true valuation of a property will help homeowners determine how much equity they truly have in their homes, and what options they have to be able to use it.

A title search is an even more important tool that homeowners have when fighting to avoid foreclosure. This document will show them exactly how much their yearly taxes are, so they know if they have overpaid any amount to their lender for escrow. A lien and title search will also help the foreclosure victims determine if there are any other liens on the property that they are not aware of. We have found a number of homeowners in foreclosure may have child support liens, federal tax liens, or other judgments against the house that they did not know about. These liens have to be paid off if the homeowners refinance or sell their property to stop foreclosure, so it is important for them to be aware of these issues.

Possibly the most important reason to have a title search performed, though, is just for homeowners to make sure that they are still the legal owners of their home. There are a lot of horror stories about foreclosure victims signing over the deed to their homes when being pressured by a foreclosure scam to sign documents without reading them. If a homeowner finds out that they are not the owners of their home any longer, they may find that they have no way to prevent the foreclosure from making them homeless, unless they can have the deed reversed and put back in their names.

There are a number of places online and locally that offer these types of services to homeowners, but the most important issue is that the foreclosure victims just find someone who can do the research for them and present an objective view of their property. Every value is partly subjective, and title searches can miss some information that may not be readily available, but it is important that homeowners research as many options to stop foreclosure as they can, as well as research as much about their own homes as is reasonable and search out relevant foreclosure advice that will help them further understand how best they can save their homes.

As the housing market slows, the widespread problem of inflated appraisals has begun contributing to further decreases in home values

Although we have been familiar with the problem of inflated appraisals for some time, the trend seems to be growing worse by the day. More and more clients who call us have been the victims of over-inflated appraisals. When the illegal appraisal is discovered, it is usually too late by then to hold anyone accountable, especially if the homeowner is now in foreclosure. Saving the home is the top priority – anything else comes after that.

Why do appraisers inflate appraisals? The main reason is money: the appraiser gives the loan officer whatever value is needed for a loan, so the loan officer will use the appraiser again and again, inflating the value of numerous properties. But when the homeowners attempt to refinance, if they use a different mortgage company, the legitimate appraiser will value the property at its actual (not inflated) value. This may cause a significant decrease in value, sometimes to the point where a client owes more on the mortgage than what the property is worth. Obviously, this can cause significant problems.

And the main problem with the inflated appraisal? There may be no accountability on any entities’ part. The lender can blame the loan officer for submitting a bad appraisal, the loan officer can blame the appraiser, and the appraiser can blame the market, location, timing, etc. Appraisers generally do not make enough money to be worth a lawsuit, as well.

The problem has become so vast that even mainstream news outlets have begun to address the widespread situation. James Hagerty and Ruth Simon of The Wall Street Journal report that, “As the housing market cools, Americans are confronting a problem that was easy to ignore during the boom: Inflated appraisals of home values.” When home prices were increasing at high rates (over 10% per year in some areas), the value would catch up to the inflated appraisal. But the slowing housing market has caused some home prices not only to fail to catch up to the appraisal, but fall far below the appraised value.

For victims of foreclosure, this means that two valuable options for saving the home are immediately eliminated: selling the home, or refinancing. As the article explains, “For sellers, that can mean being forced to drop their asking prices. Some people hoping to refinance, meanwhile, may be unable to lock in new loan terms because they have less equity in their homes than they thought.” In fact, Jacquie Doty of Freddie Mac says that inflated appraisals may lead to more foreclosures.

Another contributing factor to the problem is that most home buyers just want the home, as long as the process is as smooth and easy as possible. Bankrate.com states that “Many homeowners don't think about how loans get done, just whether they're approved.” Overlooking the appraisal and just focusing on owning a home is a huge mistake to make. To protect themselves from the consequences of inflated appraisals, the article states that “Borrowers should also get a rough idea of their property's worth before shopping for loans. They can contact local real estate agents or visit one of several registration-required Web sites, including Domania.com andHomegain.com, for such estimates.” Also, always ask for a copy of the appraisal the lender is using when applying for a mortgage. The right to receive the appraisal is granted under federal law.

According to another article from The Wall Street Journal, “Some lenders are getting pickier about the appraisers they do business with -- a policy that is easier to enforce now that refinance activity has slowed.” This means that as more appraisers who inflate appraisals end up on lender blacklists, properties will be appraised for their true values. When conducting a real estate transaction, the article suggests that “homeowners should request that the bank uses a 'designated' appraiser and not simply one who meets state licensing standards.”

However, the issue of inflated appraisals put the mortgage and real estate industry in a Catch-22. A cause of concern exists in the housing market if inflated appraisals are not used. Namely, if property values are estimated lower, then the housing market may continue to slow. The lending industry has caused its own financing problem by contributing to an already growing housing bubble and then assisting in the decrease in home values by no longer accepting inflated appraisals.

The potential effects of this could be devastating to homeowners in hardship situations. For example, consider if a lender first accepts an inflated appraisal and gives a purchaser a loan for more than the value of the home. If the borrower then experiences a hardship and falls into foreclosure, they may try to refinance the loan. But with a new, legitimate appraisal, the homeowners may end up owing too much to qualify for a refinance. Then the lender will either have to take a loss by accepting a lower payoff amount because the home is worth less than originally thought, or they will have to take a loss by selling the home at a sheriff sale.

Either of these choices puts the lender in a bad situation, which would not have occurred if the borrower had not fallen behind. They may be less willing to work with the homeowners, push them further into foreclosure to cut their losses as quickly as possible, and accelerate more and more fees to try to obtain a deficiency judgment against the borrowers.

If you are a homeowner who suspects an inflated appraisal, you may want to call an independent appraiser yourself and have the value of your home estimated. If that value and the amount of your loan are far off, you may have been a victim of mortgage fraud. In this case, refinancing may no longer be an option and you may not even be able to sell the home if you wanted to. You are effectively locked into your home.