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What is Mortgage Foreclosure?
A homeowner who fails to pay their mortgage for 90 days has defaulted on their mortgage. The lender will generally send out a notice of default at this time. In most cases, this is a prerequisite for filing a foreclosure lawsuit against the homeowner. In the lawsuit, the lender will attempt to remove the homeowner and sell the property. The lender may also sue the homeowner for any shortfall between the amount of money the homeowner still owes the lender and the amount of money the lender receives after the home is sold at auction or the fair market value at the time of the auction. This is called a deficiency. The time it will take for a lender to file the foreclosure lawsuit can vary, but the current trend is towards filing sooner, rather than later. The clock can run very quickly and a homeowner must be prepared to take action quickly, once they have defaulted. If you have been sent a default notice, the time to act is now! At Vanstone Law Firm, we can advise you immediately on what needs to be done. Time is not on your side if you go it alone. The lenders can move very quickly if you are not represented by counsel or fail to respond to a foreclosure lawsuit.
What can you do if you are in default?
There are several options for a homeowner who is in default. Choosing a strategy depends on the circumstances of the default and the homeowner’s goals, as well as external factors that might not be in the homeowner’s control. The worst thing a homeowner can do is nothing. The potential options would include: fighting the foreclosure if the lender engaged in improper conduct; seeking a loan modification; attempting a short sale; requesting a deed in lieu; and if a lawsuit has been filed seeking a consent judgment preferably with a waiver of any deficiency.
How do I fight a foreclosure action?
An experienced foreclosure defense attorney can raise a plethora of defenses to a foreclosure lawsuit. The attorney can also bring counterclaims against the lender if there is evidence that the lender mishandled the loan either deliberately or accidently during the inception of the loan or at any other time during the life of the loan. It must be noted that most of these defenses and potential counterclaims do not often lead to a homeowner outright defeating the lender. That is very rare. In other words, the chances of having your mortgage completely forgiven and gaining title to the home without any further payment is miniscule. However, such defenses and counterclaims can lead to allowing the homeowner a significant amount of time in the home to work toward their goal. They can also lead to compromises such as the lender agreeing to meet the homeowner’s goals where they otherwise might not have.
What is a loan modification, and will I be eligible to obtain one?
A loan modification is a restructuring of an existing mortgage. It is designed to enable the homeowner to remain in the home. The way a loan is modified various tremendously depending on numerous factors. Some examples of these factors are: the remaining life of the loan; the reason why there was a default; whether or not the homeowner has previously modified the loan; the debt to income ratio of the homeowner; the homeowner’s current income and ability to pay; the policies and procedures of the owner and servicer of the loan; whether the loan is an FHA loan or owned by Fannie Mae or Freddie Mac; the length of the loan; and how much is still owed on the loan. At Vanstone Law Firm, our staff works with lenders every day and we are aware of the nuances associated with loan modifications depending on these factors and others. Having Vanstone Law Firm in your corner is a huge advantage when attempting to obtain a loan modification.
A loan can be modified in several ways. Often, but not always, the monthly payment will be reduced. This can be accomplished by using different tactics such as extending the length of the loan to as long as 40 years, lowering the interest rate, reducing the amount owed, or a combination of any or all of these. Principal reductions are rare, while extension of the length of time is very common, and reducing the interest rate is somewhat common. A lot of these tactics depend on the factors mentioned above, as well as other factors. Again, Vanstone Law Firm deals with these factors every day.
While it is possible for a homeowner to obtain a loan modification without the assistance of a law firm, it is generally very difficult. The process can be very complicated, and lenders can be difficult to speak with and when one does, they often give conflicting information. A common practice that lenders use is called dual tracking. This is where the lender gives the homeowner the sense that everything will be ok and they are working towards a loan modification while they are simultaneously proceeding with a foreclosure lawsuit. If the lawsuit is not handled properly, the lender can take a judgment against the homeowner without really giving the homeowner a legitimate chance at a loan modification. At Vanstone Law Firm, we stay on top of these lenders and hold them accountable. We keep proof of everything we send them on your behalf and follow up with them constantly to check on the status of your modification application. We will keep you updated on the progress of the application and let you know if any additional documentation is required.
What is a short sale?
If the property is worth less than the amount owed to the lender, the homeowner might consider a short sale. A short sale is where the homeowner lists the property for sale at a price below the amount owed to the lender. The purpose of doing a short sale is that the homeowner gets out from underneath a debt without owing the lender any money. In order to accomplish a short sale, the lender must agree to take the amount the property sells for in full satisfaction of the debt. Lenders are often willing to do this because it saves them time and money when compared to proceeding through the courts and auctioning the property (often to themselves) then having to resell the property.
As with loan modifications, it is essential to have a good foreclosure defense attorney handling the case while the homeowner’s real estate agent attempts to sell the property. This is true for several reasons but mainly due to the fact that the lender could successfully foreclose before there is time to conduct the sale. If that happens the homeowner loses the property and could be liable for the shortfall between the amount owed and the price the house sells for at auction or the fair market value of the property at the time of auction. Vanstone Law Firm will also review the contract for sale to make sure the lender is not able to pursue the homeowner for any shortfall once the sale is completed.
What is a deed in lieu?
A deed in lieu can be an effective tool when the homeowner simply wants to walk away from the property without owing any additional money to the lender. As with a short sale, this option would only be considered if the property is worth less than the amount owed on the loan. A foreclosure defense firm can negotiate with the lender in an attempt to obtain a deed in lieu of foreclosure. Again, if a lawsuit has already been filed, a foreclosure defense attorney is essential so that they can defend the foreclosure action while attempting to negotiate with the lender.
What is a consent judgment?
A consent judgment is where the lender has filed a foreclosure lawsuit and the attorney for the homeowner contacts the attorney for the lender and works out an arrangement where the lender is able to take a judgment in exchange for waiving any potential deficiency and/or allowing the homeowner to remain in the property for an agreed upon time frame. Often, the homeowner has attempted and failed at some or all of the other tactics described above and simply wants some additional time to move out of the home and make sure they will not be liable for any additional monies. In some cases, the lender will pay moving expenses to the homeowner. As part of this process, the homeowner’s attorney can request relocation fees/moving expenses from the lender which will often help the homeowner to get set up in their new residence.
Summary
In summary, there are many options that might be available to a homeowner who has defaulted on their mortgage. A highly experienced attorney is essential in order to properly analyze your potential options and pursue your goals. If you choose Vanstone Law Firm, we will be there with you every step of the way, no matter which option you choose.
My Firm Can Make the Difference in Your Case
Alyssa A. Vanstone of Vanstone Law Firm is committed to offering the best representation that she can offer. Her approach to your defense will depend on where you stand in the foreclosure process. You may be pre-foreclosure, meaning a foreclosure lawsuit has not yet been filed against you, or post-foreclosure, meaning you have received notice of a pending foreclosure lawsuit.
In either situation, an active defense can aid in the process of negotiation by helping the lender(s) avoid the expense of continued litigation. Because time is such a critical element in strengthening your foreclosure defense, we encourage you to schedule a free evaluation as soon as possible.
Schedule a Free Consultation
Regardless of the specific circumstances that you face, and no matter the nature of your case, you need to speak with someone who has the experience, passion, and determination to guide you through these troubling experiences.
Fax: (941) 217-8291