IN this dense and congested city, nirvana usually translates into bright, light-flooded spaces and eye-catching vistas. The real estate ads promise it all: “Brilliant light!” “Dazzling river view!” “Light and bright!”

But a few people didn’t get the memo. Some New Yorkers seek dim, dark spaces that admit little sense of the throbbing city just outside their doors. Maybe they work nights and need darkness and quiet so they can sleep during the day. Maybe they’re writers or composers or computer programmers and need to be able to concentrate. All these people seek some version of the cork-lined room in which Proust wrote so many of his greatest works.

In 2011 landlords once again got the upper hand as prices rose and vacancies dwindled. Multiple applications even made a comeback late last summer. All signs say landlords are likely to keep that advantage for a long time. In certain neighborhoods, rents are setting new records, exceeding the heights of 2007. Some landlords say that in extreme cases, eager renters have even bid up rents.

The demand in some buildings has become so intense that there are waiting lists bearing the names of dozens of potential tenants. This was unheard of during the downturn.

Ana Morse, who moved into a three-bedroom at the Solaire in Battery Park City with her husband and two young children last month, put their names on a waiting list last fall, specifically for an apartment in the building’s M-line on a high floor. The family passed on a third-floor apartment that came up in October, but when one on a higher floor became available, “I said I’d be right over with a check,” she said.

With fewer new buildings scheduled to open this year, inventory for luxury rentals will remain tight, helping to keep prices up at the high end. This pressure will inevitably trickle down to the lower end of the market.

Those buildings that have hit the market have pushed luxury to new levels. Hardwood floors have replaced the long-ubiquitous parquet, and washers and dryers in apartments have become de rigueur. To compete for top rents, some landlords are undertaking expensive apartment renovations in older rental buildings. Even 10-year-old properties are being subjected to face-lifts.

“Everything at this point is going in landlords’ favor,” said Gary L. Malin, the president of Citi Habitats, one of the city’s largest rental agencies. “Although we’ve suffered like the rest of the country, our rental market didn’t perform like anywhere else. The lull was really a very short-term blip.”

Mr. Malin and other brokers said that rental prices had been buoyed in part by tighter mortgage lending, which has discouraged many potential first-time buyers from entering the sales market. “There definitely is a larger segment of frustrated buyers who are deciding to stay in rentals than there were a few years ago,” he said, adding that by expanding the pool of renters, these would-be buyers are helping to keep vacancies low and rents high.

Rents in traditionally coveted neighborhoods like the West Village and Chelsea have hit new heights. But records are also being set in areas that are not as well traveled, including the financial district and Midtown West, where new rental towers have helped pull up average prices.

According to Citi Habitats data, the city’s priciest studios can be found in Chelsea, where the average rent is $2,332 a month; and the West Village claims the most expensive one-bedrooms, $3,278 a month.

But the financial district is not far behind, getting record rents for its one-bedrooms, at an average of $3,255 a month, and its two-bedrooms, at $4,575 a month.

The opening of New York by Gehry at 8 Spruce Street, “raised all ships,” said Nathan Berman, the chief executive of Metro Loft Management, which owns and manages about 1,700 apartments in the financial district.

With three-bedrooms commanding $12,000 a month and one-bedrooms listed at more than $5,000, Mr. Berman said, 8 Spruce “has validated the financial district as an area that can get rents and the type of tenant that would ordinarily be somewhere else in the city.” So even though financial district rents overall are still a little shy of the stratosphere, Mr. Berman said, “because 8 Spruce is achieving those rents, it allows us essentially to start raising rents across the board.”

LOOKING for a mortgage that will retire when you do? Or maybe you want to time a refinancing so that the loan is paid up when the kids head off to college. There are a number of lenders that would be happy to oblige.

Customized mortgages aren’t new. But industry experts say they are seeing more and more borrowers opt for fixed-rate loans with terms other than the standard 30 or 15 years, especially when it comes to refinancings.

Last year, nearly 17 percent of all refinanced mortgages were with “other length” fixed-rate loans, according to the Mortgage Bankers Association, which noted that in August, September and October, the share was 20 percent. Most of those “other length” loans were in 20-year mortgages, though loans are also available for 10, 25 and 40 years, and even for “oddball” terms like 23 or 12 years.

Michael Fratantoni, the association’s vice president for research and education, called the 20-year mortgage “a new phenomenon” and said it had “become the third-favorite product.”

Despite this increased popularity, some borrowers aren’t aware that they could take out a 20-year mortgage, said Jason Auerbach, a divisional manager of First Choice Loan Services in Manhattan. Lenders usually offer home loans in five-year increments, he said. JPMorgan Chase, for example, lists on its Web site fixed-rate mortgages in 10-, 15-, 20-, 25-, 30 and 40-year terms.

The shorter terms are especially valuable to people refinancing after paying down their 30-year mortgage for five or seven years, Mr. Auerbach said. If they take a 20-year mortgage, they can reduce their interest rate — and the term — and possibly even get a monthly payment the same or slightly lower than before.

The 20-year mortgage is becoming so prevalent, Mr. Fratantoni said, that banks are starting to sell them off to investors or in the secondary mortgage market.

Meanwhile, if you want to match your loan term to a life event and it’s an unusual number of years, like 17 or 23, expect to do some digging. Those loans have limited availability and their price — the rate or fees — could be higher, Mr. Fratantoni said.

“You can get some oddball amortization — you just have to ask for it” at a smaller bank, credit union or specialty lender, said David Boone, a first vice president for residential lending of Provident Bank in Jersey City. His mortgage team recently made a home loan with an eight-year amortization, which was aimed at a borrower close to retirement. Many customers seeking to refinance ask for odd loan terms to avoid increasing the length of their repayment schedule, he noted.

Of course, you could also create your own 23-year mortgage: for example, by obtaining a 25-year mortgage and then determining how much extra you need to pay each month if paying it off two years earlier. This approach could work with biweekly loan payments too; typically, these will reduce your payoff by five to seven years, Mr. Auerbach said.

Before you decide, get your mortgage professional to run different amortization tables so you can compare the payment and other details. Ask which terms come with reduced interest rates. These vary; some lenders step up the rate. For instance, someone getting a 12-year term will very likely receive the 15-year mortgage rate, Mr. Boone said.

Explore the loan options in the context of your other goals and timelines, said Debra L. Morrison, a financial planner with Trovena in Roseland, N.J. Ask yourself and your partner: When do I expect to retire? When could I become debt-free?

It’s important that you continue to fund your retirement accounts, too, and not focus solely on a short-term mortgage. If you rustle up an extra $400 a month in income, split the extra payments between your mortgage and a 401(k) or other retirement account, she said.

“A free-and-clear home is a wonderful thing for a lot of people,” she said.

TWO more glass skyscrapers are being added to the growing collection of towers on the waterfront in Long Island City in Queens.

The rental towers are part of East Coast, a project being developed by one of the city’s most prolific builders, TF Cornerstone. When completed in early 2014, East Coast will consist of six skyscrapers clustered around the giant Pepsi sign on the East River waterfront, with almost 2,800 units.

The East Coast collection already includes 47-20 Center, a tower with 498 rentals built in 2006, and the View, a condominium building with 185 units at 46-30 Center, finished in early 2010. One of the new buildings, a 42-story tower at 46-15 Center Boulevard, will open next month. The building is angled so that every one of the 367 apartments has at least a small view of Manhattan, and most have sweeping vistas of the city skyline. A second tower, at 45-40 Center, with 32 stories, has 345 apartments and should be renting by June.

A third tower, with 820 rental apartments, at 45-45 Center, is already under construction, along with a 1,000-car parking garage and a fitness and recreation center with 50,000 square feet of outdoor space. The recreation center will have a great lawn, two tennis courts, a beach volleyball court and a children’s playroom, among other amenities. It will be open to all residents of East Coast buildings, though each building also has its own small fitness center.

Ground has not yet been broken on a fourth tower, at 46-10 Center, which will have 586 rentals, and will be on the waterfront in front of 46-15. Rents in 46-15 Center will start at $2,000 a month for a lower-floor studio apartment; $2,600 for a one-bedroom; and $3,350 for a two-bedroom unit, said K. Thomas Elghanayan, the chairman of TF Cornerstone. Rents in 45-40 Center, the tower opening in June, will be a bit higher, and that building will also have three-bedroom apartments for families, he said.

A branch of the popular coffee bar Sweetleaf will be opening in the retail space at 46-15 Center.

The East Coast development has largely been a test of the New York City housing market, which has remained relatively stable despite the recession and national housing crisis. More specifically, it has also been a test of Long Island City’s appeal to potential buyers and renters, especially families.

“This product is as luxurious as anything in Manhattan,” Mr. Elghanayan said, pointing to hardwood floors and kitchens with high-gloss black cabinetry and quartz countertops. Most of the units have a terrace or balcony, and the building has a landscaped common terrace.

“The rooms, the views, everything is right,” he said, “but people just have to wrap their heads around the idea of coming to Queens.”

The 185-unit condo building in East Coast, called the View, is only about 75 percent sold, “but we’re holding our price,” said Sofia Estevez, an executive vice president of TF Cornerstone. She said company principals believe that the remaining units will sell out at $850 to $1,000 a square foot once the entire East Coast development is completed.

The average price of a condo in the neighborhood is about $750 a square foot, said Eric Benaim, the president of the Long Island City real estate firm Modern Spaces.

An important component of the neighborhood for families will be a 662-seat school for kindergarten through eighth grade, now under construction adjacent to 46-15 Center. And an intermediate and high school will be built just south of East Coast at the Hunters Point South megadevelopment.

The neighborhood also continues to add restaurants, retail services and activities, Mr. Elghanayan said. New dining options include Alobar Restaurant at 46-42 Vernon Boulevard and the Mexican restaurant Skinny’s Cantina at 47-05 Center.

Residents have a craft beer bar, Alewife Queens, at 5-14 51st Avenue, and the comedy club Laughing Devil opened in December at 47-38 Vernon.

More restaurants are in the works, said Mr. Benaim, who lives in the neighborhood. A burger joint called Petey’s, which has a branch in Astoria, will open in coming months on Vernon, as will a spinoff of the Greenwich Village bar Corner Bistro, and a Vietnamese restaurant by the owners of the Thai restaurant Tuk Tuk, he said.

SOMETIME this fall ground will be broken in Astoria, Queens, on Hoyt Plaza, a rental building with 34 units, from studios to three-bedroom penthouses, with amenities that include an expansive lobby, a gym, a laundry room, a pool, terraces and a rooftop garden.

That might not seem unusual in many neighborhoods in New York, but Hoyt Plaza is a departure for Astoria, a neighborhood mostly known for its Greek cuisine and as the home of Steinway & Sons.

Architectural renderings of Hoyt Plaza suggest a scale heretofore unseen in the neighborhood. The glass and brick building will be 11 stories high, benefiting from recent rezoning that allows new developments to rise above the previous maximum of six stories. Hoyt Plaza, which is expected to open in two years, is being developed by Giannola Realty, which has also built two other rentals, Hoyt South and Bridge Side. The buildings are within five minutes’ walk of each other in the westernmost reaches of Astoria, near the foot of the Robert F. Kennedy Bridge.

Joseph Giannola, the company’s vice president and co-founder, said monthly rent at Hoyt Plaza would be slightly more than at the original buildings. Bridge Side has 27 units (studios rent for $1,500 and two-bedrooms are $2,200) and Hoyt South has 19 (studios are $1,800, one-bedrooms $2,200 and two-bedroom penthouses $3,200 to $3,500).

Before going into real estate, Mr. Giannola, who has lived in Astoria for almost 50 years, worked as a hairdresser at 42nd and Lexington. Most of his clients didn’t live in Manhattan, he said, and they came to him because they were unhappy with the services in their own boroughs.

“I said to myself, ‘Why can’t I do this type of work in my neighborhood?’ ” Mr. Giannola said. In 1970 he opened Joseph’s Hair Place, which still operates a few doors down from his rentals.

The hair salon and the rental buildings are just part of a puzzle that Mr. Giannola is assembling in Astoria. The area is known for its wealth of dining options, but around the Giannola buildings, restaurants and places to commune are few and far between. So Mr. Giannola and his brothers Anthony and Vito have opened two storefront restaurants within the last year: Twirlz, a frozen yogurt shop, and Basil Brick Oven Pizza, featuring pizza made with fresh ingredients and baked in a wood-fired oven.

“That’s why we not only try to provide nice apartments,” Mr. Giannola said, “we tried to build something unique for our tenants.”

Brokers say the Giannolas’ presence has improved the area, cosmetically and socially.

“They wanted to bring up the community,” said Luca Di Ciero, the president of NY Space Finders. “People appreciate it.”

With business booming, Mr. Giannola says he plans to expand the dining areas in both restaurants. There is also talk of opening a yoga studio.

Mr. Di Ciero said the Giannolas’ rentals raised the bar for other developers in Astoria. “They weren’t just cookie-cutter-shaped layouts,” he said. “They were one of the first to mount the cable outlet in the wall so you could have a flat screen. They put a gym in. A lot of buildings I know have the room to do that, but they didn’t go the extra mile.”

Mr. Giannola said that his tenants were willing to pay “that extra dollar” (his rents were about 10 percent over the market average) for higher-quality construction and finishes. “I looked at so many places and said, ‘No, no, no,’ ” said John Gaspar, a production manager who has lived in Hoyt South for eight months and plans to move into Hoyt Plaza when it opens. “Places I looked at in Manhattan comparable to this are $4,000 a month. I pay $1,900 and I can see the Chrysler Building.”

After it opened seven years ago, Bridge Side was fully rented in six weeks; Hoyt South, which opened in January 2010, filled up just as quickly. Mr. Di Ciero said he expected a similar response to Hoyt Plaza.

The presence of such developments hints at a growing interest in Astoria. Near La Guardia Airport and 20 minutes from Midtown by car or public transportation, the neighborhood is becoming more of a destination, said Steffan Olausson Partridge, a real estate broker who has placed clients in Hoyt South.

Mr. Giannola, who said the only time he had been away from Astoria was the two-year period he spent serving in Vietnam, expressed the hope that more people would come to know the pleasures of his neighborhood.

“Why would you want to go live in the city?” he said.

Q I live on the top floor of a co-op. I recently reported a ceiling leak. Then there was a larger roof leak and it damaged my TV. The board says I am responsible for all damages within my apartment, including the TV. Fixing roof leaks is the building’s responsibility, and I reported the problem, so is this correct?

A Andrew Berkman, a Manhattan co-op and condo lawyer, said that under most proprietary leases, the co-op is responsible for structural elements, including the roof, of the building. Therefore, and particularly because the writer reported the problem, the leak and the damage it caused should be the responsibility of the co-op. Mr. Berkman suggested that the writer report the damage to his or her insurance company, providing a copy of the notice to the managing agent, and request that the agent forward the claim to the co-op’s insurance carrier.

A Bank Loan for Capital Repairs

Q Can a condominium association get a bank loan for capital repairs? I read that this was possible in Connecticut, but is it in New York as well?

A Steve Troup, a Manhattan co-op and condominium lawyer, says a condo in New York State is able to borrow money from a bank or other lender if its bylaws so provide. “If permissible,” he said, “the bylaws will provide whether the board has the power to do this alone, or whether unit owner approval is required.” If approval is required, the bylaws will indicate whether a simple majority will suffice, or a “supermajority” of two-thirds or three-quarters of the vote is required.

Lender Says No to Co-op Sublet

Q I want to sublet my co-op apartment in Chelsea, and I know that paperwork must be submitted to the management company to get approval of my subtenant. The co-op board also requires a letter from the bank stating that it approves. But the bank said it would allow a sublet only if I was called up for active military service, died or had an extreme medical emergency. Because I bought the unit to be “owner-occupied,” it says it can restrict my ability to sublet. Is this right?

A “The co-op corporation is correct in stating that it will not allow the sublet without the lender’s consent,” said Adam Leitman Bailey, a Manhattan real estate lawyer. But a “recognition agreement” between the lender and the co-op contains language to the effect that the lender’s approval shall not be “unreasonably withheld.” Mr. Bailey said the writer should check the “security agreement” that he signed with the lender at the closing to determine whether the lender may restrict subleasing.

Next Time, Don’t Forget the Key

Q I got locked out of my unit while moving, and the landlady had her nephew come by to let me in. Now she is charging me a $50 “lockout fee.” The fee isn’t allowed for in the lease, so can she collect it? I’d rather give her a box of chocolates and a “thank you” card.

A David Kaminsky, a Manhattan lawyer who specializes in landlord-tenant matters, said that if the landlady had genuinely incurred a cost, she would be entitled to recover the amount incurred due to the fault of the tenant. But absent a lease clause addressing the issue, the landlord cannot charge an arbitrary amount as a “lockout fee.”

Shrinking the Escrow

WHEN you choose a fixed-rate loan for a home purchase or refinancing — as more than 9 out of 10 people currently do — only one part of the monthly mortgage statement is ever likely to change: the escrow amount.

But with home values sinking, and many people filing property-tax challenges as a result, the monthly escrow could possibly decline a bit.

The escrow amount, which is added to the principal and interest of the monthly mortgage payment, is typically adjusted annually, and often in December or January, as lenders review for overages or shortages. Some lenders review the escrow account on the anniversary of the mortgage closing.

Escrow collection is set up before a mortgage closing and based on property-tax bills and the homeowners’ insurance, including lender-required polices like flood coverage, according to Peter Graubard, a real estate lawyer in Manhattan who often represents Wells Fargo and other banks at home closings.

Homeowners would do well, however, to assess their own escrow statements, industry experts say, as mistakes may sometimes occur.

There can be errors from the start, especially if the property is in an area with several taxing authorities and one of them is overlooked, said Michael G. Barone, a real estate lawyer at Abrams Garfinkel Margolis Bergson in Manhattan. “They’re only escrowing for two of the three taxes owed,” he said.

Other mistakes may be made later on: the lender or mortgage servicer may have missed a tax payment or allowed the balance to grow beyond limits allowed under the Real Estate Settlement Procedures Act. The federal law allows lenders to keep a cushion of up to two months’ total escrow payments.

One way to avoid any problems is to pay your homeowners’ insurance and property taxes yourself. Mr. Graubard says borrowers can request to do so before the mortgage closing or by contacting the customer service department of a lender or servicer.

Some lenders charge a one-time fee to forgo an escrow, typically around a quarter of a percentage point of the loan balance, or $500 on a $200,000 mortgage, according to Jeff Lipes, a senior vice president of Family Choice Mortgage in South Windsor, Conn., and the president of the Connecticut Mortgage Bankers Association.

Many homeowners, meanwhile, are filing property-tax grievances to reduce their assessed valuation and tax payments, since many towns and municipalities only reassess properties every five to seven years. (Appeals are generally due from March through May.)

Glenn Newman, the president of the New York City Tax Commission, said there had been steady growth in the number of successful residential tax appeals, partly because of declining property values. In 2011, approximately 3,888 condominiums, co-ops and rental buildings accepted offers of tax reductions totaling $1.95 billion; in 2010, there were 2,526 acceptances and reductions totaling $982 million. (These numbers include appeals from unit owners as well as building boards and management.)

Even if your home’s value has decreased, however, your taxes may not fall, because some cities and towns are raising millage rates, or the rate at which property taxes are calculated, to preserve local services.

After a successful appeal, your lender may continue with the same escrow arrangement — at least until the next tax bill arrives, and possibly until the annual review. “You could be paying more money into the escrow account than you need to pay,” Mr. Graubard said.

If you want the amount to be decreased based on newly reduced taxes, go to the lender or servicer’s customer service department and make the request, presenting documentation of the lower taxes. “It’s up to the homeowner to get the information to the bank,” Mr. Barone added.

Published: January 26, 2012

The earthquake last August would not have been covered by most renter policies, but damage from routine weather events — wind, rain, heavy snow, lightning — typically is. So are losses related to fire, smoke, vandalism or theft.

Renter’s insurance also includes liability protection, so if someone was injured at your home and sued you, your legal expenses and any court award would be covered, generally up to a $100,000 limit. Coverage often provides living expenses should you have to move out of your apartment — say, because of a fire.

Renter’s insurance is less expensive than many people realize: a basic policy costs about $300 a year for around $50,000 worth of property protection. Many renters who go without are under the mistaken impression that their landlord’s policy covers their possessions.

An exception to that, he added, can occur if the landlord was “aware of a prior hazardous condition, failed to correct it in a reasonable time frame and your property was damaged.”

Renter’s insurance does not cover losses caused by floods — at least, not flooding resulting from water rising up in the streets (as opposed to your neighbor’s bathtub overflowing through your ceiling).

For flood coverage, you need a separate policy issued by the National Flood Insurance Program. And some private insurance policies also exclude hurricanes, Mr. Capuano said. Luckily for many policy holders last year, Tropical Storm Irene was not a hurricane by the time it reached New York. In addition, renter’s policies often have a deductible — meaning, for example, that the tenant would pay the first $250 or so toward replacing a stolen television before insurance coverage kicked in.

Policies differ in whether they offer replacement coverage, which pays the full cost of replacing an item, or actual cash value.

“Say you purchased a sofa 10 years ago,” said Loretta Worters, a vice president of the Insurance Information Institute, a nonprofit sponsored by the insurance industry. “Today, to buy new, maybe that sofa would cost $3,000 or $4,000. With actual-cash-value coverage, if it’s a 10-year-old sofa, they’re taking the value to be maybe $500.”

To help renters calculate how much coverage they need, the institute offers a home inventory tool at www.knowyourstuff.org. A room-by-room inventory may determine that you need more than the $50,000 or so that the basic policy offers. And while you’re at it, take photos of expensive items; they may be useful if you ever have to file a claim.

The New York State Department of Financial Services has a consumer guide to shopping for homeowner’s and renter’s insurance. It includes price comparison tables for the largest insurance providers. And Allstate has developed a free “Digital Locker” mobile app that lets you create and store an inventory of your possessions.

But while you are comparison shopping, or if you have a policy you have never bothered to read, you should make sure you understand what is not covered by a particular plan.

With most policies, there are limits on how much coverage is offered for jewelry, watches, fine art, musical instruments, guns, cameras, silverware and computers. Jewelry is typically capped at $1,000, although you can purchase a rider or floater to get more coverage. A professional appraisal may be required.

Another area that can surprise people who work at home is the standard $2,500 limit for equipment used for a business. That may not be enough for a graphic designer with an expensive computer and scanner. And using a computer for both business and Facebook updates can complicate a claim..

“You’re always going to have a shade of gray because most computers used today are for personal and business purposes,” said Jeff Calderon, a product line manager with Allstate. “If you have a home-based business, you should talk to your agent and explore the differences and limitations between a personal policy and a business-type policy.”

Similarly, personal property covered at home might not be as well protected if lost or damaged elsewhere. For instance, coverage for a laptop or other items stolen from a hotel room may be limited.

So what happens if you need to file a claim?

“You should immediately notify your company if you have a problem,” said J. Robert Hunter, the director of insurance for the Consumer Federation of America. “They should send an adjuster within a day or so, and probably within 30 days you should be able to settle.”

Mr. Hunter recommends taking notes — and names — on every conversation you have with the insurance company. If your claim is denied or you are offered less than what you think is fair, ask for a detailed explanation.

“Once they’ve told you why they’re not paying your claim or they’re not paying you fully,” he said, “they can’t come up with a new reason.” If you think you are not being treated fairly, you can file a complaint with the state Financial Services Department.

“We’ll do our best to assess whether the company is acting appropriately,” Mr. Capuano said. “If they’re not, we’ll go to bat for the consumer.”

Living near a vacant home doesn’t have to mean putting up with overgrown grass and unshoveled snow. Does your community use these eight common local laws, programs, and regulations to force owners to maintain vacant homes?

With the foreclosure crisis, you may have noticed a vacant home or two on your block. Rather than see the home free-fall into disrepair, push local officials to take action before the untended house lowers the value of your own home.

Here’s a list of common vacant-home laws, rules, and programs. Call your local elected official’s office to find out what your community has in place and how you can get those laws enforced:
•    Special assessments charged to owners of vacant homes to cover the cost of added police and fire protection.
•    Mandatory fire, safety, or code inspections of vacant homes.
•    Laws forcing a foreclosing lender to maintain vacant homes during the foreclosure process—especially important in states where foreclosure takes a year or more.
•    Rules that let your local government make repairs to vacant homes and charge the owner for the work.
•    Vacant-home registries listing contact information for owners of vacant properties.
•    Housing courts that hear cases filed against owners of vacant homes.
•    Programs that transfer vacant homes to community development corporations, housing nonprofits, or government housing agencies.
•    Property codes that make owners of vacant homes secure their properties and add exterior lights.

Mariwyn Evans has spent 25 years writing about commercial and residential real estate. She’s the author of several books, including Opportunities in Real Estate Careers, as well as too many magazine articles to count.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.

With foreclosure rescue scams widespread as more homeowners fall behind on mortgage payments, be smart if you seek help.

A record high 2.8 million properties were hit with foreclosure notices in 2009, putting even more Americans at risk of facing foreclosure rescue scams. Homeowners who fall behind on mortgage payments need to tread carefully when seeking assistance, since foreclosure rescue scams come in many guises. A day spent researching legitimate options, from a mortgage modification or principal forbearance to a short sale or deed-in-lieu, could keep you from becoming a scam victim.

Foreclosure rescue scams run rampant

Homeowners facing foreclosure are prime targets for scam artists. The U.S. Federal Trade Commission identified 71 companies running suspicious foreclosure rescue ads, and the Better Business Bureau counts foreclosure rescue rip-offs among its top 10 scams. Understanding how these scams work can help you avoid becoming a victim.

The variations are seemingly endless, but one popular foreclosure scam involves a representative of a so-called foreclosure rescue company promising to negotiate a deal with your lender. The rep, vowing to take care of everything, will instruct you not to contact your lender, lawyer, or credit counselor during the supposed negotiations. The more brazen ones will even tell you to pay your mortgage directly to them.

Once you pay an upfront fee or hand over a few months’ worth of mortgage payments, the scam artist will disappear. You’ll be left with an emptier wallet and a mortgage that’s in even deeper trouble because no deal was cut and no payments were made on your behalf. According to John Riggins, chief executive of the Fort Worth, Texas, office of the Better Business Bureau, upfront fees can range from $500 to $5,000.

Rip-offs come in many forms

A bankruptcy foreclosure scam can involve a promise to fend off foreclosure in exchange for an upfront fee. Instead of getting you legitimate relief, the fraudster will pocket the fee and secretly file a bankruptcy case in your name. The scam may seem to work initially, because a bankruptcy filing will stop foreclosure proceedings temporarily, but they’ll resume. Compounding your problems, a bankruptcy can mar your credit report for 10 years.

Another common scam, called the bait-and-switch, results in a scam artist taking ownership of your home. You sign documents supposedly for a new loan that will make your mortgage current. What’s really happening is you’re signing over the deed of your house. In this scenario you would still owe on your mortgage but no longer own the home.

In a rent-to-own scheme, you’re told to surrender a home’s deed as part of a deal that lets you stay put as a renter. The scam artist, perhaps claiming to be able to refinance at a better rate with you off the title, promises to sell the house back to you in the future. However, terms of the deal may make it all but impossible for you to repurchase the home, or the scammer may get you evicted by raising the rent beyond your means. Either way, you end up losing the home while remaining on the hook for the unpaid mortgage.

Look out for red flags

Being aware of the warnings signs can protect you from foreclosure rescue scams. Red flags include:
•    Demands for high upfront fees.
•    Guarantees to stop a foreclosure.
•    Instructions to make mortgage payments to someone other than your lender.
•    Pressure to sign over a deed.

Legitimate foreclosure counselors won’t put on a full-court press, nor will they guarantee that you won’t lose your home to foreclosure. What they will do is review your financial situation and offer up options. Foreclosure counselors approved by the U.S. Department of Housing and Urban Development won’t charge you a fee either.

Legitimate ways to get foreclosure help

There are a number of legitimate ways to contend with foreclosure. If you’ve missed mortgage payments, start by getting in touch with your lender. Ask to speak with someone in the Loss Mitigation Department and explain your situation.

Your lender may be able to arrange a repayment plan, called a special forbearance, based on your current economic circumstances. The lender could even give you a temporary reduction in your monthly payment or suspend payments for a period of time.

With a principal forbearance, the lender will reduce the amount of your mortgage, thus reducing your monthly payments. However, the amount of the principal reduction doesn’t disappear. Rather, it’s tacked on to the end of the loan, effectively creating a balloon payment.

A federally facilitated mortgage modification could also help. The Making Home Affordable modification program pays lenders to re-work loan terms and lower monthly payments. Be prepared to gather lots of paperwork and undergo a trial modification.

If all else fails, you may need to give up your home. If so, look into the federal Home Affordable Foreclosure Alternatives program. HAFA offers lenders financial incentives to opt for a short sale or deed-in-lieu rather than a foreclosure. In a short sale, a lender agrees for a home to be sold for less than the outstanding mortgage, and then considers the debt paid off. In a deed-in-lieu, a homeowner turns over the home to the lender, and the mortgage is closed.

Donna Fuscaldo has written about personal finance for Dow Jones, the Wall Street Journal, and Fox Business News for more than a decade. Like many homeowners, her mortgage is precariously close to being underwater.

Visit Houselogic.com for more articles like this. Reprinted from HouseLogic.com with permission of the NATIONAL ASSOCIATION OF REALTORS®.