DFI Urges Consumers to Take Action Now Before they have Mortgage-Related Problems

Oct 13, 2007

(San Francisco, CA) The Department of Financial Institutions (DFI) is urging consumers to take steps to avoid mortgage-related troubles than can result in home foreclosure.

Don’t wait! Do this today!

  1. Open and respond to all mail from your lender. Contact your lender immediately. Financial institutions can be contacted in various ways including toll-free numbers, email, online forms, and mail. Some institutions have information on their Web sites, which is helpful to customers who are hesitant to call and talk to lenders directly.
  2. Contact a HUD-approved certified housing counselor; you can find one in your area by visiting the HUD Web site http://www.hud.gov/offices/hsg/sfh/hcc/hcs.cfm. Housing counselors can provide advice, options and resources and help homeowners find free legal services and ultimately negotiate better financing.

Financial institutions recognize that keeping homeowners in their homes is often the best way to mitigate credit losses, preserve customer relationships, maintain stable neighborhoods, and minimize the detrimental effects vacant properties can have on crime and property values.

U.S. Treasury Secretary Henry M. Paulson, Jr., recently stressed the importance of helping able borrowers stay in their homes. “Foreclosures are costly and painful for the homeowners. They are costly for mortgage servicers and investors. They can have spillover effects into property values throughout a neighborhood creating a downward cycle we must work to avoid,” stated Sec. Paulson.

Generally, payment plans are in the long-term best interest of both the financial institution and the borrower. DFI has reminded its licensees, state banks and credit unions, that existing regulatory guidance and accounting standards do not require immediate foreclosure on homes when borrowers fall behind on payments.

Note: In the case of servicemembers on active duty, servicers must adhere to the special considerations for the sale, foreclosure, or seizure of their property. A link is provided below for the Servicemembers Civil Relief Act.

The Department of Financial Institutions will help you find out who regulates your lender if you believe the lender has violated the law or if you need assistance finding contact information for lenders and/or information about financial institution regulators. Visit the DFI Web site www.dfi.ca.gov and click on Consumers..

Once you have contacted your lender, you should take advantage of the resources available to you regarding mortgages, your rights, about legal services, etc. The following resources will help you increase your financial knowledge.

Other resources:

Learn about your mortgage rights by visiting the Federal Housing Administration Web site at http://www.fha.gov/foreclosure/index.cfm.

Consult an attorney before signing any papers or contracts. To find an attorney, call the California State Bar Association’s Lawyer Referral Program at http://calbar.ca.gov/state/calbar/calbar_generic.jsp?cid=10581&id=15049 (Information is available in English and Spanish). If you do not think you can afford a lawyer, locate free legal services in your area, by visiting the Law Help’s website at http://www.lawhelp.org/ca/ and click on “Housing”.

California’s Consumer Home Mortgage Information website – “Where to get help with an existing mortgage” http://www.yourhome.ca.gov/default_en.asp. (Information is available in English and Spanish)

Housing and Urban Development (HUD), Help For Homeowners Facing The Loss Of Their Home http://www.hud.gov/offices/hsg/sfh/econ/econ.cfm (Information is available in English and Spanish)

A special edition of the FDIC’s Consumer News (Summer 2007), http://www.fdic.gov/consumers/consumer/news/cnsum07/, provides “51 Ways to Save Hundreds on Loans and Credit Cards” and includes financial tips related to mortgages:

  • Refinancing: Tips for Mortgages and Other Credit
  • Home Loans: How to Keep Costs from Going Through the Roof
  • Borrower Beware: How to Avoid Fraudulent or Deceptive Deals

Servicemembers Civil Relief Act, http://www.occ.treas.gov/Consumer/servicemember.htm

Call or visit the Web site of NeighborWorks Center for Foreclosure Solutions, 1-800-995-HOPE or http://www.nw.org/network/home.asp.

DFI supervises over 700 state financial institutions. The Department is responsible for administering state laws regulating state-licensed financial institutions: banks, credit unions, industrial banks, trust companies, offices of foreign banks, issuers of travelers’ checks and payment instruments (money orders), and money transmitters. DFI reports to Business, Transportation & Housing Agency Secretary Dale E. Bonner and Gov. Arnold Schwarzenegger.