Facing foreclosure can be overwhelming and confusing. Everywhere we turn there seems to be a self professed "foreclosure defense" expert. Often times, people will receive piles of mail from different services and different stories from sources thought credible. When you're facing foreclosure, speculation and rumors are not enough. You need to speak with a licensed attorney who can evaluate your specific situation.
WHERE DO YOU GO FROM HERE?
One, you should contact a local attorney that handles a high volume of foreclosure defense cases. Two, regardless of what your bank says, you must respond to the Court within twenty days of being served. Three, you need to come up with a plan based on your intent to keep the home, or move on.
THE FOLLOWING INFORMATION ADDRESSES SOME OF THE MISCONCEPTIONS RELATED TO MORTGAGE FORECLOSURE:
1) Applying for a loan modification, short sale, forbearance, or other relief with your lender will NOT STOP A FORECLOSURE SALE;
2) Almost all "trial period" loan modification programs are opened ended, and do not require or promise that you will receive a loan modification;
3) A Deed in Lieu, without proper stipulations or language, may result in collection calls down the road, as the debt is sold to a third-party several years later.
Several home owners in north & central Florida are now facing foreclosure and have little or no idea of how to react to a mortgage foreclosure. A standard answer to the foreclosure lawsuit has three major parts to it:
1) A statement admitting or denying the allegations made in the Complaint;
2) A list of defenses to the foreclosure lawsuit;
3) A list of affirmative defenses and/or counter claims. Sometimes there is a section called “Counter Claims” which acts like a counter-lawsuit, suing the lender for its own violations of the law. The are many possible solutions: Loan Modifications, Affirmative Defense, Short Sale, Deed in Lieu, Refinance, Reverse Mortgage, Bankruptcy, and more. Below is an explanation.
Foreclosure Defense - Sale Postponements
Our advocacy often turns to helping Homeowners who need more time to come to a resolution and get an approved workout with the Mortgage Company. In many instances the Mortgage Company will agree to postpone the sale for you to sell the house in a short sale, make other arrangements, or establish funds.
The Reinstatement amount is the total amount that is past due including late fees and Attorney costs. This amount will get your Mortgage caught up immediately. Because of your financial circumstances in the past, you may be facing a sizable amount of past-due fees, including back payments, late fees and legal expenses.
Credit Help
We understand that if your mortgage payments have become delinquent in most cases so have other creditors. Creditors in some cases may cause you more grief than Lenders. Sentinel wants to help you correct your credit issues completely and efficiently.
Partial Claim (For FHA Home Loans Only)If you have an FHA Loan, we will be able to start discussions with your lender for a Partial Claim. This strategy is only available on FHA loans. Working together with The Department of Housing and Urban Development (HUD), your lender will agree to help you with a one-time payment.
Foreclosure Defense - Second Mortgage IssuesYou may not only have arrearages with your first mortgage, but also outstanding issues with a second mortgage or home equity loan. We can help you with these financial difficulties as well.
Deed-in-lieu of ForeclosureThe deed in lieu of foreclosure offers several advantages to both the borrower and the lender. The principle advantage to the borrower is that it immediately releases him/her from most or all of the personal indebtedness associated with the defaulted loan. The borrower also avoids the public notoriety of a foreclosure proceeding and may receive more generous terms than he/she would in a formal foreclosure.
Important Information!!You do not want to submit all of your personal information to a lender without it being reviewed by an Attorney who can evaluate your case. Prior to contacting your lender an Attoorney can review and revise a modification agreement to ensure that you are receiving the proper treatment and a long term financial solution.
The most common way of resolving a loan default is to work out a plan or "Repayment Plan" which will let you repay part of the delinquency each month, along with you regular monthly installment.
Loan Modification:Everyone seems to talking about loan modifications under President Obama's Housing Bills. See our loan modification page for more information.
Short Sale:A short sale is a sale of real estate in which the proceeds from the sale fall short of the balance owed on a loan secured by the property sold. In a short sale, the lender agrees to discount a loan balance due to an economic or financial hardship on the part of the mortgagor. This negotiation is all done through communication with a bank's loss mitigation or workout department. The home owner/debtor sells the mortgaged property for less than the outstanding balance of the loan, and turns over the proceeds of the sale to the lender, sometimes (but not always) in full satisfaction of the debt. In such instances, the lender would have the right to approve or disapprove of a proposed sale. Extenuating circumstances influence whether or not banks will discount a loan balance. These circumstances are usually related to the current real estate market and the borrower's financial situation. A short sale typically is executed to prevent a home foreclosure, but the decision to proceed with a short sale is predicated on the most economic way for the bank to recover the amount owed on the property. Often a bank will allow a short sale if they believe that it will result in a smaller financial loss than foreclosing as there are carrying costs that are associated with a foreclosure. A bank will typically determine the amount of equity (or lack of), by determining the probable selling price from a BPO (also known as a BOV or through a valuation of an appraisal. For the home owner, advantages include avoidance of a foreclosure on their credit history and partial control of the monetary deficiency. A short sale is typically faster and less expensive than a foreclosure. In short, a short sale is nothing more than negotiating with lien holders a payoff for less than what they are owed, or rather a sale of a debt, generally on a piece of real estate, short of the full debt amount. It does not extinguish the remaining balance unless settlement is clearly indicated on the acceptance of offer.
Deed in Lieu:Defined. Basically, Deed in Lieu is similar to a voluntary repossession. You are signing over the deed or “title" to your property and the lender agrees to cancel the mortgage. In other words, the typical deed in lieu of foreclosure is a consensual transaction – you have complied with a long list of requirements placed upon you by the lender, they have evaluated your facts and circumstances and, after great deliberation, a long time and a little bit of luck, they agree to take back the real estate instead o suing you! Typically the lender draws up the Deed in Lieu of Foreclosure Agreement which must be signed by the grantor / homeowner, witnessed by two people and notarized. Upon execution, the deed in lieu must then be delivered to the grantee / lender. The deed is also typically recorded at the local clerk of court in the public records.
The process, however, isn't as always as clean-cut as it may appear. For instance, the lender typically reserves the right to seek a deficiency judgment against you, the borrower / homeowner. Once the lender takes possession, the property (i.e., REO) will be put up for sale. Unless otherwise stipulated in the Deed in Lieu of Foreclosure agreement, the lender may come after you for the unpaid debt.
Affirmative Defense - Foreclosure Defense:The defenses section of the Answer is the section where the defendant-borrower states the reasons why the lawsuit should never have been filed because the plaintiff-lender is "flatly wrong." Each defense only needs to be a short and plain statement of the defense raised, unless fraud is one of the defenses, in which case the specific grounds of the fraud must be stated. The following are all possible defense to foreclosure:
1. Due Process;
2. Rescission;
3. Lost Notes;
4. Mortgage Electronic Registration Systems Inc.
5. Force-placed Insurance;
6. Lost Payments;
7. Failure to Accelerate the Note;
8. FHA-Insured Loan;
9. Accepting Payments After Foreclosure;
10. Truth-in-Lending and HOEPA Violations;
11. Fraud, Abuse, Collusion;
12. Fair Debt Collection Practices Act;
13. Failure to Attach Note and Mortgage to Complaint;
14. Incorrect Notice or Service.
While these defense should not be carelessly applied, Sentinel Law can assess your situation and determine whether your situation may call for one or more of these affirmative defense.
BankruptcyBankruptcy allows individuals or businesses ("debtors") who owe others ("creditors") more money than they're able to pay to either work out a plan to repay the money over time or completely eliminate ("discharge") most of the bills.
How does bankruptcy stop home foreclosure?If your home is currently in foreclosure, or headed there, filing bankruptcy under Title 11 of the United States Code prior to the foreclosure sale will stop the sale. Chapter 13 bankruptcy will also allow you to pay your monthly mortgage payment and the payments you fell behind on, through a Chapter 13 Payment Plan that we file for you at the beginning of your case. Depending on your situation, you may be able to eliminate all of your unsecured debt through a Chapter 13, or pay back only what you can afford to pay back to your unsecured creditors. The foreclosure process varies from mortgage company to mortgage company. Each lender has different criteria and guidlines for dealing with a margin of loss. You typically have approximately 90 days from the time you are served before your house is sold. However, this is not always the case. We advise you to contact a lawyer as soon as possible after you are served to stop the home foreclosure process and devise an appropriate strategy based on your situation.
RefinanceThis is the act of replacing an existing mortgage loan with a different mortgage loan, usually one that benefits the home owner. The benefits from acquiring a new home loan to replace your existing home loan are usually attributed to a lower interest rate. Let's assume you purchased your home last year. Interest rates for a conventional 30 year fixed mortgage were 6.20% and today they are 6%. This would equate to .2% savings in interest rate on your mortgage loan. A .2% savings in interest rate doesn't sound significant but in fact for every $100,000 this would equate to approximately $150 a year in savings. Often times, mortgage refinancing is done to save a significant amount of money. There are specific lenders that specialize in mortgage refinancing so their specialists can help. As with anything, beware of refinance companies offering outrageously low interest rates. Be sure to read all the fine print and ask questions. In rare occasions, a family facing foreclosure may be able to qualify for a refiancing.
Reverse Mortgage:A "reverse" mortgage is a loan against your home that you do not have to pay back for as long as you live there. With a reverse mortgage, you can turn the value of your home into cash without having to move or to repay the loan each month. The cash you get from a reverse mortgage can be paid to you in several ways:
- all at once, in a single lump sum of cash;
- as a regular monthly cash advance;
- as a "creditline" account that lets you decide when and how much of your available cash is paid to you; or as a combination of these payment methods.
No matter how this loan is paid out to you, you typically don't have to pay anything back until you die, sell your home, or permanently move out of your home. To be eligible for most reverse mortgages, you must own your home and be 62 years of age or older.
The Home Equity Conversion Mortgage (HECM) is FHA's reverse mortgage program which enables you to withdraw some of the equity in your home. The HECM is a safe plan that can give older Americans greater financial security. Many seniors use it to supplement social security, meet unexpected medical expenses, make home improvements and more.
Additional options include various assumptions by third-party lenders or investors, and possible repayment/reinstatment hybrid plans.
SCAMS TO BE AWARE OF:Equity skimming. In this type of scam, a "buyer" approaches you, offering to get you out of financial trouble by promising to pay off your mortgage or give you a sum of money when the property is sold. The "buyer" may suggest that you move out quickly and deed the property to him or her. The "buyer" then collects rent for a time, does not make any mortgage payments and allows the lender to foreclose. Remember that signing over your deed to someone else does not necessarily relieve you of your obligation on your loan.
Phony counseling agencies. Some groups calling themselves "counseling agencies" may approach you and offer to perform certain services for a fee. These could well be services you could do for yourself, for free, such as negotiating a new payment plan with your lender, or pursuing a pre-foreclosure sale. If you have any doubt about paying for such services call a HUD-approved housing counseling agency. Do this before you pay anyone or sign anything.
