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FAQ's List
- What is a foreclosure?
- Foreclosure is the process whereby a lender files suit on its mortgage in order to obtain title to a property. The suit, if successful, will foreclose the title and interests of the owner and others and may result in a sale on the courthouse steps. When a borrower misses payments, the lender may file a complaint instituting a foreclosure suit. The complaint will be served upon you in person by a process server. This service starts the clock running. To avoid a default, a borrower must respond within 20 days of being served. The suit will then be litigated until a judgment is rendered and a courthouse sale is ordered. Once the courthouse sale is ordered, the property will be sold and the proceeds applied to pay down the debt owed to the lender. If the proceeds are not sufficient, the lender may seek a deficiency judgment against the owner. See #4 below - “What are the steps I can expect in a foreclosure?”
- What is a loan modification?
- Loan modifications are changes to your loan that might reduce your monthly payment and enable you to keep your home. Modifications such as reduced interest rate or an extended maturity or both will reduce your monthly payment but leave you with the same principal balance. Reductions of the principal balance itself may be necessary or advisable if your property has dropped in value. You should discuss with your attorney your circumstance to determine the loan modification best suited for you. Foreclosure and negotiations for a loan modification are two separate processes. Do not mistake one for the other. If your home is in foreclosure, negotiations for a loan modification will NOT by itself stop or slow the foreclosure process. To stop or slow the foreclosure process during negotiations, your attorney should obtain a written agreement from your lender or your lender's attorney to that effect. Without a written agreement, you or your attorney must continue to respond to the foreclosure suit in order to protect your interests during any negotiations.. You or your attorney may start negotiations with your lender for a loan modification at any time, before or after foreclosure proceedings have commenced. If foreclosure has not yet been filed, you may elect to use a mortgage broker or credit counselor to assist you in negotiations. Once foreclosure is filed, regardless of negotiations, you must protect yourself, a mortgage broker or credit counselor can continue negotiations but only an attorney can represent and protect your interests in court.
- Where can I turn for help?
- If your home is in foreclosure, DO NOT DELAY! Talk with an attorney as soon as possible. You will be at a distinct disadvantage, until you have your own attorney that knows the process and can protect your interests. If your home is not yet in foreclosure, talk with your lender directly about a lower payment, or a modification. Talk with an attorney, mortgage broker or credit counselor to better understand your options. An attorney will be able to advise and represent you in both loan negotiations and foreclosure matters, if or when a foreclosure is filed. Remember, negotiations for a loan modification will not stop or suspend any foreclosure suit. If or when you are served, talk with an attorney as soon as possible.
- What are the steps I can expect in foreclosure?
- The foreclosure process will follow a normal litigation process unless you fail to respond to the complaint. The normal process will allow you to stay in your home while your attorney argues your issues and tries to negotiate a loan modification. If you fail to respond to the complaint, your lender may seek an accelerated “Default Judgment” and sale. You may shorten the time and the opportunity to re-negotiate your loan and the sale of your home may take place as soon as 3-4 months. Below are brief descriptions of the steps in each of these processes. 1. Late payments – Talk with your lender beforehand to find out what they might offer. Talk with an attorney as early as possible. Once the complaint is served upon you, you only have 20 days to respond. 2. Complaint – Once you are served, you must file a motion or an answer with the court within 20 days. A letter is not sufficient. DO NOT DELAY! If you do not file timely, you may lose your home sooner than you hope. 3. Default and Sale – If you do not file timely, lender will move for an early default and sale and may also obtain a deficiency judgment. You may be evicted anytime after sale without any further notice. Borrowers that fail to respond timely will lose the opportunity to remain in their home while they attempt to modify their loan or reach a settlement. ACT PROMPLTY and you may remain in your home while your attorney defends your case. 4. Motions, answers, defenses, claims and discovery – Your attorney will determine what, if any, strategy, motions, answers, defenses, claims and discovery may be appropriate for you. These actions and their results, time and expense may prompt more meaningful loan modification or settlement discussions with your lender. 5. Hearing or trial – Your lender will seek a summary judgment or trial quickly. Your attorney will again determine the basis and the arguments for your responses. If summary judgment can be avoided, then the matter will be set for trial. The time and expense of appeal may again prompt more meaningful loan modification or settlement discussions with your lender. 6. Judgment – After the hearing or trial, the judge will render his decision or judgment. You will have 30 days in which to appeal any decision. A bond may be required to stop any sale. If an appeal is appropriate, the time and expense of appeal may again prompt more meaningful loan modification or settlement discussions with your lender. 7. Sale – If no appeal is filed, a court ordered sale date will be set, as early as 20-35 days after judgment. You may be evicted anytime after sales without any further notice. 8. Deficiency – Your lender may seek a deficiency judgment against you if your home eventually sells for less than what you owe, including interest, attorney fees and costs. If so, you may have to consider bankruptcy or other options.
- I have just been served, what should I do?
- If you have been served, DO NOT DELAY! You and your attorney only have 20 days to file with the court a motion or an answer. A letter of conversations with your lender or the lender's attorney in NOT sufficient. Loan modification discussions by credit counselors, mortgage brokers or others, anyone other than an attorney are NOT sufficient. Gather the following information and talk with an attorney as soon as possible. a) What are the circumstances that led to my foreclosure?...loss of job, interest rate hike, spike in monthly payment, decline in property value, other? b) What are my current payments for principal, interest, taxes, insurance and association fees and what can I afford if I want to try and modify my loan and keep my home? c) Do I want or need an adjustment in interest rate or a reduction in principal or both to stay in my home? d) What is the current value of my home compared to the mortgage balance and what is the current market rent for similar home in my community? DO NOT DELAY! Talk with an attorney as soon as possible.
- What if I do nothing and do not respond?
- If you do not file a response timely, your lender will move for an early default and sale and may also obtain a deficiency judgment. You may be evicted anytime after sale without any further notice. Borrowers that fail to respond timely will lose the opportunity to remain in their home while they attempt to modify their loan or reach a settlement. ACT PROMPTLY and you may remain in your home while your attorney defends your case. Failure to respond may also result in a deficiency judgment against you that may cause problems down the road. We strongly recommend that you consult with an attorney to fully understand the options available to you and and the impact these decisions may have.
- What can I expect in the complaint?
- The Complaint contains the lender's allegations regarding your note and mortgage and your failure to make monthly payments and the judgment or remedies sought by your lender. The complaint must be served upon you personally by a process server. If you receive a copy by mail or posted to your front door, speak with an attorney immediately as that service of process may not be valid. Service starts the clock running and you and your attorney only have 20 days to file with the court a motion or answer. The Complaint may seek (a) a judgment against you on your note for unpaid principal and interest and, to the extent permitted by the note, attorney fees and costs (b) a foreclosure and sale of your property to pay the judgment in full, a “deficiency judgment” against you that enables your lender to issue collection of any deficiency against you or other assets you might have.
- What defenses or counterclaims are available to me?
- Defenses and counterclaims will differ based upon the individual circumstances surrounding your loan. Do not be unrealistic. You borrowed the money, you can not make the payments, and may lose your house. Sometimes, the most your attorney can do is try to keep you in your home while seeking the time and leverage that might prompt more meaningful loan modification or settlement discussions with your lender. To evaluate defenses and counterclaims available to you, you should gather the following information to discuss with your attorney: a) What were the circumstances surrounding your original loan, purchase, down payments, interest rates, adjustments, appraisals, lender or broker involvement, etc.? b) What were the circumstances surrounding my loan application, loan documents, conversations, disclosures, representations, fees and costs, threats or pressure to close, etc? c)What were the circumstances after closing through today, payment history, letters, notices, correspondence, changes, loan transfers, servicing agents, etc? d) What contacts or correspondence, if any, have you had concerning lender contacts, missed payments, work-outs, modifications, defaults, foreclosure, etc.?
- When will I have to move out of my house?
- Before a judgment and sale date can be obtained, your attorney will represent your interests, discovery, motions, hearings, etc. that may take several months. Your attorney should keep you advised on a monthly basis as to motions, hearings, discovery etc. so that you can have ample time and advice on the critical decisions and time frames that will establish the sale date and your eventual move date. Once the lender has obtained a judgment and order for sale, the lender will advertise the sale date for your property. If no appeal is filed, a court ordered sale date will be set, usually 30-45 days after judgment. You may be evicted anytime after sale without any further notice.
- What is a deficiency judgment?
- A “deficiency judgment” is the unpaid balance of the judgment after the sale of your home. Most lender documents contain provisions that entitle the lender to recover interest, attorney fees and costs if the lender is the prevailing party. If the lender obtains a judgment, these amounts are added to the judgment and will be paid from any property sale proceeds or, if such proceeds are deficient, will be added to any deficiency judgment. The amount of the “deficiency judgment” will be established through the sale process. If your matter is settled or if your loan is modified, the treatment of any past due payments, interest, attorney fees or costs should be addressed therein. If the lender is successful in foreclosure, then your property will be sold to the highest bidder “on the courthouse steps.” Your lender may, but is not required, to bid its judgment at any such courthouse sale. If the winning bid exceeds the judgment, the lender will be paid in full and you will be paid any excess. If the winning bid is “deficient”, i.e., does not meet or exceed the judgment, then the lender may seek a “deficiency judgment” against you for this deficiency. If the lender was the winning bidder, then the ultimate sale by the lender may be used to establish the deficiency. A “deficiency judgment” may be pursued against you or any other assets that you may have.
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