What are the Different Types of Foreclosure Prevention Services?

Foreclosure prevention services generally consist of public or private enterprises designed to help homeowners work through the foreclosure process with the least amount of disruption to their families or to prevent or postpone foreclosure. This industry is populated by a combination of socially minded enterprises that offer free foreclosure prevention services and for-profit companies. The companies that try to offer foreclosure prevention services to make a profit might have shifted their focus from mortgage lending or brokering to foreclosure prevention or, having perceived a need, might have established a foreclosure prevention service simply because such services have been in demand and have become commercially viable. The homeowner who is concerned about avoiding foreclosure has important decisions to make not just about the foreclosure process itself but about where to find appropriate assistance.

In the United States, for example, publicly funded foreclosure prevention services, such as the Making Home Affordable Program sponsored by the Department of Housing and Urban Development (HUD), are available to any homeowner whose home is threatened with foreclosure or whose financial difficulties might lead to foreclosure. These programs offer several plans by which a homeowner can take advantage of a government-sponsored loan modification program if the homeowner and the mortgage meet certain criteria. Similar programs are available in countries throughout the industrialized world. Foreclosure laws in many jurisdictions share some similarities, but there are often important variations that require a knowledgeable foreclosure prevention service to address them, and particular jurisdictions might require mediation prior to allowing foreclosures to go forward. In those cases, foreclosure prevention services often represent homeowners during the mediation process.

Publicly funded and approved foreclosure prevention services comprise the largest percentage of these services, but numerous private companies offer similar services, often requiring a payment from the homeowner or, in some cases, a percentage of the homeowner's savings from any modification negotiated by the private foreclosure prevention service. Among the private foreclosure counselors are law firms specializing in residential mortgage-related matters and mortgage professionals who have shifted their business from making mortgages to preventing foreclosures. In this case, the homeowner must weigh the advantages of using a for-pay foreclosure prevention service against those of a publicly funded service.