Foreclosure Consultants vs. Housing Counselors... Which Way Should Homeowner's Go?

A recent blog posting in the Baltimore Sun has me thinking.

Jamie Smith Hopkins – writer of the Real Estate Wonk – posted a story about the dangers of paying foreclosure consultants to create workout solutions. In her opinion, homeowners should reach out to certified, non-profit housing counselors to get free advice and assistance instead of paying for help. In the story, Bill Gruhn, chief of the attorney general's consumer protection division, says, "We have several suits currently pending against people who were purporting to offer foreclosure rescue and in fact took the houses," He also states that homeowners should list their property on the market with a Realtor instead of entertaining an investor proposition.

It is imperative in these days and times that homeowners have the most education and information possible to make the correct decision about their property. Although housing counselors provide a great resource for pre-foreclosure families, not all housing counselors are trained well enough to provide the information homeowners need to weigh all the options they have available. In addition, we are all hearing about the lack of counselors available to those in need due to the increase in pre-foreclosures.

I agree that there are foreclosure consultants who are not working in the homeowner’s interest. There are also “consultants” that have agency with investors and only work to feed properties to those interests. However, this is against the law – SB761 was initiated to regulate foreclosure consultants and provide structure to investor sales and protection for the property owners. This is the information homeowners need more education about – the rights and protections they have under the law.

There are also investors whose sole purpose is to scam a homeowner out of their property. However, this is not always the case. When Mr. Gruhn says that homeowners are better off selling their home on the market, this is not always an option. There are investors who will buy a property in as-is condition and provide a solution that a market sale would not.

It is important that homeowners have the education necessary to empower them to face their foreclosure situation. When this is in place, a homeowner can utilize the services of a housing counselor more effectively and create a plan that will truly help. They will also have the savvy to deal with any third party that offers services or assistance. If not, then going to a housing counselor, sufficiently trained or not, will be a waste of time.