Dan's Papers - January 30, 2009 - Learning to Forestall Foreclosures

As our country tries to work its way out of a worsening recession, Elizabeth Capozzoli, a real estate broker at Town & Country, noticed that even the tony East End is no longer impervious to the financial pitfalls that have hit the rest of the United States.

More and more residents of the Hamptons are having a hard time keeping up with their mortgage payments, she says, putting them in danger of losing their homes. "There are so many people out here in trouble," Capozzoli said. "People are falling behind and not saying anything about it until they're three months behind and it's too late to do anything."

For this reason, Capozzoli reached out to Robin Long, of Fier & Long PC Attorneys at Law, and Victoria Hohman, a Manhattan Mortgage broker, to create a series of free seminars to educate the public on their options if they find it difficult to make their mortgage payments. The first of this series was held on Jan. 15 at the Hampton Bays Public Library, with upcoming seminars planned for a yet-to-be determined location in Amagansett and another at HBPL.

One of the most important things Capozzoli hopes people took away from the seminar was that the earlier a homeowner seeks help, the better. "We can help them if we know what's going on," she said. "We want to educate people on what they can do before they fall behind." If they contact their bank when they anticipate they could have trouble making payments, homeowners could restructure and reformat their payment plan.

However, people are often nervous about the stigma that comes with the term "foreclosure" and maybe don't speak up about financial hardships until it's too late. "The word scares people," Capozzoli said. "There's a stigma that you can't pay your bills. They're embarrassed."

Also, if homeowners really find themselves in trouble, rather than letting their house go to foreclosure, they should opt for a short sale. A short sale is when the sale of a house falls short of the balance owed on a loan, but the bank or mortgage lender agrees to the lesser price because of financial hardship. A short sale has a better effect on your credit rating than a foreclosure, but many people are unaware of this. After a short sale, your credit can be salvaged in nine to 18 months and you'll be able to purchase another homeowner's short sale after that.

However, if you opt for a short sale, Capozzoli says, you should hire a real estate broker who is certified to handle such a transaction, as she is, though there aren't many of them. "It's a different process than a regular sale," she said. "You can't just make an offer on a short sale home. It's not a regular sale. These homeowners are facing foreclosure, so you have to get the bank in a contract quickly." Also, you should probably hire an attorney well versed in short sales, because they "know how to talk to people about it. They've got to be a strong negotiator."

People should also realize that they don't have to pay a real estate broker, attorney or anyone else handling their short sale any fees, since they will eventually be paid by the bank, Capozzoli says.

For more information about upcoming seminars on preventive measures for homeowners possibly facing foreclosure, call Capozzoli at 631-288-3030.