I am behind on my mortgage payments, what do I do?

Don't ignore the problem. It will only make your situation worse. The further behind you become, the harder it will be to defend your rights or reinstate your loan and the more likely that you will lose your house. Prioritize your spending. After healthcare, keeping your house should be your first priority. Contact us immediately for a free consultation concerning Foreclosure Defense, Bankruptcy, Short Sale (when you sell the property for less than is owed on the Mortgage),or possibly a Loan Modification.

I am in foreclosure, what options do I have?

There are many options for you to pursue during the pre-foreclosure and foreclosure process. Below is a list of such possible options.

• Do Nothing (this really is no option)
• Foreclosure Defense
• Short sale
• Bankruptcy (Chapter 7 or Chapter 13)
• Loan Modification / Loan Restructuring
• Reinstatement Plan
• Repayment Plan
• Loan Refinance
• Loan Forbearance
• Pre-Foreclosure Sales
• Deed-in-Lieu of Foreclosure

Should I open and respond to all mail from my lender or lender’s attorney?

The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notice of pending legal action and important dates. Your failure to open the mail will not be an excuse in foreclosure court, and ignoring these notices will only make the situation worse. In many States the Foreclosure Complaint is not required to be served upon the borrower / Homeowner to be valid. Some States allow for public publication which effectively serves the complaint upon the borrower. Before responding, contact us immediately for a free consultation. Your lender will have an attorney working for them, so should you.

I have just been served with a summons and foreclosure complaint. What do I do?

YOU MUST RESPOND IN WRITING AND/OR SERVE AND FILE AN ANSWER AND AFFIRMATIVE DEFENSES WITHIN 20 DAYS OF BEING SERVED WITH THE COMPLAINT in most parts of the Country. Your best bet is to hire a local Attorney that specilizes in Civil litigation with hopefully a specialty in Foreclosure Defense. Once you have been served you will do yourself a favor by not listening to the bank, especially the false hope they may offer. Any delay may make the situation you are in worse, and if a borrower or homeowner fails to do anything at all, the situation may become the worst case scenario possible. Contact us immediately for a free consultation. The mortgage foreclosure process will absolutely have serious, long lasting ramifications that you may have to deal with in the future such as; garnishments, deficiency Judgments, potential liens on assets and garnishing bank accounts. And remember that Judgments can normally follow regardless of the State in which you reside. It’s absolutely in your best interest to take action now!  Your decision to participate now may preserve, protect and safeguard valuable legal rights affecting your future income, credit worthiness and income tax consequences. Contact us immediately for a free consultation.

If I do nothing, what will happen?

A default and default judgment will be entered, and the clerk of the court will auction your property, usually within 25 to 30 days from entry of a final judgment. Remember that a Judgment can be issued for twenty years and renewed thereafter. Having an outstanding Judgment can prevent you from receiving credit and the purchase of another home. This is serious business.

Should I use a foreclosure prevention company?

Watch out for foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney or a trusted real estate professional.

Will the foreclosure process affect my credit score?

It is hard to say exactly how many points your credit score will drop due to a foreclosure. There are numerous factors that affect your credit score. It does appear though, that loss mitigation options that do not result in the completion of the foreclosure are better for your credit score depending on which credit bureau you are looking at.  However, Fair Issac Corp. (FICO) has been quoted as saying that loss mitigation options have the exact same negative effect on a person's credit score.  This is so because Fair Issac Corp. has done very little analysis distinguishing loss mitigation options vs. foreclosures, and as a result of ignorance they treat loss mitigation options and foreclosure all the same.  However, Transunion, Equifax and Experian have a little more detailed credit scoring system, so they may account for loss mitigation options.  However, a benefit of short sales and other loss mitigation options is that borrowers will generally face a shorter waiting period before they can obtain another mortgage.  Many lenders primarily make loans that they can sell to big mortgage players Fannie Mae and Freddie Mac.  Fannie Mae generally will not buy loans made to borrowers involved in a short sale in the past two years. That's shorter than the four-year wait time if you have a deed in lieu of foreclosure on your record, and the five-year wait time if you have a foreclosure on record.  Typically, any late mortgage payments are viewed as a negative mark. Generally, negative marks will remain on a credit report for 7 years. The impact on credit scores diminishes over time though. Loss mitigation efforts and foreclosure are definitely better than a bankruptcy, as the filing of a bankruptcy is viewed by the credit reporting industry as an attack against all trade lines across the board, whereas a mortgage foreclosure is only an attack against a single trade line, your mortgage lender. Typically it is considered positive to work with the lender performing a Short Sale rather than allow the borrower go through a Foreclosure.

What if I file bankruptcy?

A bankruptcy will temporally stop the foreclosure. A chapter 13 bankruptcy may allow you to make up the arrearages and reinstate your mortgage, over a period of time, usually 5 years. It means you make a regular payment and part payment each month until you get caught up. In a chapter 7, you will have to pay back the arrearages much quicker than 5 years, the foreclosure will continue. The general rule is bankruptcy negatively affects your credit score for 10 years, but sometimes the creditors on a chapter 13 will voluntarily remove it after 7 years to encourage people to file a 13 rather than a 7.

Are their income tax consequences as a result of a foreclosure?

It usually depends on whether or not your home or property has equity and what type of loan it is. If there is no equity, it is likely that the property or home will be sold for less than the mortgage amount owed. The Internal Revenue Service will consider debt forgiveness by the lender as income, and the borrower may also have income in the form of capital gains from the sell or transfer as well. Current Law allows for no tax liability on the borrowers primary residence. However, there are several ways to offset this gain or income such as offsetting income and capital gains with losses, being insolvent at the time of the transfer and bankruptcy. CONSULT WITH AN ACCOUNTANT. These rules are complicated and you are advised to make a thorough examination of your personal financial situation with an experienced tax professional.

After the property is auctioned by the court clerk, do I have to get out?

Yes. The sheriff’s office will physically evict you and remove you and your personal effects from the property, this can usually occur in as little as 10-15 days. The Federal Government has certain programs now available to allow you to rent the property from the lender depending on who owns your loan. This is a quick changing area which you are advised to consult with a professional in your area to confirm the various programs available.

What can an experienced and knowledgeable lawyer do?

File an answer to the complaint containing affirmative defenses. The process of civil litigation can take upward of twelve to eighteen months or more in today’s environment. An experienced attorney can be retained to provide Foreclosure Defense, Short Sales or some other form of loss mitigation.

In the answer, is a denial of the lender’s complaint all I need to do?

Usually not. You must state all affirmative defenses, otherwise they may be waived or may be may not be sufficient to stop the foreclosure process. This is complex litigation that should be handled by an experienced attorney.

What are affirmative defenses?

They are special defenses which must be specifically alleged, such as truth-in-lending violations, usury, fraud and other specific types of improper conduct by the lender, which may defeat or partially defeat the lender’s claims.

Why are affirmative defenses different than just an answer with denials?

The lender has a sufficiently more difficult burden to obtain a “fast” or summary judgment of foreclosure when affirmative defenses are filed.

Can an attorney just delay the case without justification?

No. An attorney cannot cause delay solely for that purpose. But, in the full exercise of your legal rights, delay may result as a by-product of a proper defense, often caused by the plaintiff not properly and promptly responding to your attorney’s rightful demands.

If I get a lawyer, does he automatically get more time to file an answer?

No, the 20 days continues to run. If a default is taken against you, it will pose, at a minimum, difficulties in getting the default set aside and allowing your attorney to use the defensive arsenal otherwise available on your behalf.

If my property is sold by the court clerk, what price will it bring?

Usually much lower than fair market value, most of the time it is sold for the total amount of the mortgage, or less.

Will I get any of the sales proceeds?

Only if there is a surplus (if the property is sold for more that what is owed in total to the plaintiff and all other mortgages and liens on the property).

If the property is sold for less than the total owed, can the lender collect the difference?

Yes, once the Lender obtains a deficiency judgment.

Can I sell the property and get my money out?

Yes, you can sell or refinance so long as the lender is paid prior to the foreclosure sale date.

I have lots of other questions; can I call the judge or the court for advice?
No. Judges, judicial assistants (judge’s assistant), court clerks and sheriff’s department employees cannot practice law or give you legal advice. They can only point out the existence of certain procedures, but cannot tell you how to follow them or how effective they will be.

Do I have the right to reinstate? (Bring the mortgage current)

Not always, unless your mortgage or mortgage note specifically gives you this right. However, many mortgage lenders often voluntarily consent to reinstatement.