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Foreclosure Rescue Questions  back to top

How does foreclosure work and how can you stop the process?
You as a homeowner or property owner have many legal rights which protect you both when you purchase the property and if for whatever reason you are at risk to lose it.

There are many legal and financial options available to you to immediately stop the foreclosure process which may save your home and allow you to re-set yourself financially. They include, identifying rights violations committed against you during the loan process, re-negotiation with lenders and loan modification programs, bankruptcy protection, short sales and other options.

Consumer legal rights are outlined within the federally regulated Fair Debt and Collection Practices Act to protect borrowers. They are very strict and they are often violated by the lenders. Attorneys specializing in this type of law can identify and outline numerous legal and financial options which more often than not exist.

What are my legal rights?
Federal and State governments have passed laws protecting the rights that you have as a borrower that lenders must strictly adhere to during the process when they made the loan to you in the first place. Many times the legal rights of borrowers are violated during this process which they may be totally unaware. This is why it may be very important to have legal representation when you are facing foreclosure.

The Federal government also has enacted certain laws that protect the rights of the borrower that lenders must strictly comply with when collecting on outstanding debts which are found in the Fair Debt and Collection Practices Act.

One of the most frequently occurring violations was committed when lenders made interest only loans or negative amortization loans within the last two to seven years. For example, the fees charged at a residential real estate purchase or refinance closing must be the same as those provided to the borrower by the lender in the Good Faith Estimate. If the two do not match, the bank may have violated the Real Estate Settlement and Procedures Act (RESPA).

Another statutory requirement is that lenders properly calculate the Annual Percentage Rate (APR) and inform the borrower of same. This rule is outlined in the Federal Truth-in-Lending Act. If the APR is off by more than $100 over the life of the loan, the bank may have violated the Truth-in-Lending Act. There are many other Federal and State statutes that lenders must comply with and which they violated in many cases and against many borrowers during the boom years.

How does foreclosure work?
This differs from state to state and is governed buy the laws of that particular state. Florida for instance has many laws in place to protect the borrower and the laws can be very advantageous making it much more difficult for a lender to foreclose. Florida is a "Judicial Foreclosure State." The process is:
Step 1 - The lender files a complaint or lawsuit detailing the debt owed and the intent to re-claim the property used to secure the loan.
Step 2 - The homeowner will be personally served notice of the complaint, and will have the opportunity to be heard before the court. 
Step 3 - If the court finds the debt valid, and in default, it will issue a judgment for the total amount owed, including the costs of the                 foreclosure process.
Step 4 - After the judgment has been entered, a foreclosure sale date is set. The foreclosure sale is an auction, open to anyone, and is held                 in a public place.

How much time does the foreclosure process take?
In general, the process can take between 3 months to a year and in some cases as much as two or more years. If you have legal counsel to protect your rights the foreclosure process generally takes much longer. This can allow you extra time to get back on your feet financially. During this process there are many legal and financial options which are available to you which many times save clients from losing their house. An attorney has many more options to stop the foreclosure process immediately and can insure that all your legal rights are protected.

How long does it take to stop the foreclosure against me?
Depending on the course of action, it can happen within hours of the hiring of our law firm.
 
There were some pretty exotic loan programs people offered to borrowers since 2001. What happens if I was less than accurate on some financials and I now need a loan modification?
Normally, loan modifications are based on current financial statements. The bank and lenders understand that people's financials are constantly changing, especially now as we experience a volatile market. Lenders decide whether to approve a modification by looking at the details of the borrower's current financial statement.

There are a number of "Foreclosure Rescue" firms out there saying they can help homeowners in distress. Are they legitimate? How does a homeowner protect themselves from these companies? How do you know who to work with? What are some of the claims/programs to look out for?
The best option is to hire a law firm who is trained to protect your legal rights. You have numerous legal and financial options available including loan modifications, bankruptcy, legal foreclosure defenses and short sales.

A growing number of real estate agents, mortgage brokers and other real estate professionals are popping up left and right and are now offering loan services. Coincidentally, many of these same people were making loans or selling properties during the real estate boom. Now the market has slowed considerably, these same people are now offering these services to the public, and in many states this is illegal. Lawyers can protect your legal rights, are versed in the laws and can represent you in court. Beware of the "quick buck artists" who guarantee results. It is inappropriate for an attorney to guarantee results. A great number of "Loan Modification Companies" are operating illegally..
 
What are some other options available to homeowners who see that they will not be able to continue making payments before they are "officially" in foreclosure?
Forbearance. Your lender has the ability to arrange a repayment plan which would be based upon your current financial statement.

Loan Modification. This will help you catch up by possibly reducing the monthly payments to a more affordable level. You may qualify if you have recovered from a financial problem but your net income is less

Short Sale. This will allow you to sell your property and pay off your mortgage loan to avoid foreclosure.

Deed-in-lieu of foreclosure. You may be able to voluntarily "give back" your property to the lender. This won't save your house, but it will help you avoid foreclosure and it will improve your chances of getting another mortgage loan in the future. The prospects of obtaining a deed-in-lieu of foreclosure are greatly enhanced by legal representation as the law firm will negotiate the terms of the exchange with the lender. Legal representation is always critical for your protection as well. Our firm has witnessed banks try to pull "fast ones" on unwitting borrowers by agreeing to accept a deed from the borrower but then not following through with the satisfaction of mortgage or closing of the related promissory note. A law firm can keep the bank honest.


Once the bank starts the foreclosure process, do the options change for the homeowner?
This depends on your particular situation. Our attorneys have extensive track records in working with banks to reinstate loans once foreclosure has started. You may be allowed to reinstate or make the loan current by paying a lump sum or making scheduled payments to your lender over a given amount of time. Once the foreclosure process starts or is imminent it is imperative for you to get legal representation so you can assess your legal and financial options. You undoubtedly have many more options than you think. There are legal measures in place including but not limited to bankruptcy which can immediately stop the foreclosure process.

How many people in foreclosure that you know have decided that it doesn't make financial sense to keep paying for an upside down property and stop paying? If I decide to do that is there any way I can avoid a foreclosure on my credit?
Due to the downturn of the current real estate market, there are many homeowners who have stopped paying their mortgage because their property has become upside down. An "upside down" property is when the money owed (mortgage) is greater than the fair market value of the home. This situation generally happens when there is a real estate market decline, the homeowner refinances more than 100% of fair market value, or an equity line is added that is close to or above the fair market value. Once you stop making payments on your mortgage it is only a matter of time before the foreclosure process begins. The best option is to consult an attorney specializing in this area who can avail all of your financial and legal options to you.


Does foreclosure affect my credit score?
Yes. This is one reason for you to avoid foreclosure at all costs.


Can I stay in my home during the foreclosure process?
Most people facing foreclosure have the ability to save their property and stay in the home. A homeowner has several options which include but are not limited to a loan modification or filing for bankruptcy. When facing a foreclosure, it is best that you consult with an attorney to discuss these options and decide which is best for your situation..

Loan Modification Questions and Short Sale Questions   back to top

What is a loan modification or loan mod?
A Loan Modification or Loan Mod is a permanent change in one or more of the terms of a mortgagor's loan, allows the loan to be reinstated, and results in a payment the mortgagor can afford. Through loan modification we can, depending on the specifics of your situation, reduce interest rates, eliminate penalties and late fees, restart your loan for you with more affordable terms and in some cases reduce the amount of principal you owe

How do I know if I qualify for a loan mod?
You must be able to demonstrate to your lender that you have suffered a financial hardship that has made your current mortgage payment unaffordable. You must also be able to prove to your lender that if given the new lower modified mortgage payment you will be able to afford to maintain it now and in the future. Our trained legal staff has extensive experience in working with lenders to accept loan modifications and can complete this

What are lenders willing to do to help me?
Loan modifications typically involve a reduction in the interest rate on the loan, an extension of the length of the term of the loan, a different type of loan or any combination of the three. A lender might be open to modifying a loan because the cost of doing so is less than the cost of default. Loan modifications are on a case by case basis.

If I get a loan mod, is there usually a large sum they want up front?
Each case is a little different. We will negotiate with the lender to get you the terms you can afford. There are times when the lender will require a portion of what is owed on the mortgage up front before they proceed.

Are there any pitfalls in trying to get a loan modification myself?
Many times when individuals try to negotiate a loan modification by themselves lenders will generally proceed with the foreclosure process during these negotiations. Attorneys have many legal options available to protect your legal rights during this process and many times are able to stop this process. There are legal measures that can be taken to immediately halt foreclosures. Speaking with our legal representatives will provide you the various options you have.

Is this something that I can do myself? Why should I hire an attorney/professional?
There are several reasons why you should request the assistance of an attorney. We have extensive experience negotiating with banks and legal entities. We protect your legal rights during this process. The banks have a legal team of attorneys to protect their legal rights. Why shouldn't you?

What is a short sale and how can it save my home?
A short sale is a process where a bank or lender agrees to accept less money than what is owed on a mortgage by the borrower. This is a common practice used by our lawyers to avoid the foreclosure process for our clients.

A lawyer can legally negotiate with lenders to accept less money from a borrower to avoid having to go through the lengthy and expensive foreclosure process. It costs lenders a lot of time and money to foreclose on a property, fix it up and then re-sell it. Many times lenders would rather negotiate with us so they do not have to foreclose


Bankruptcy Questions   back to top

What is bankruptcy and how can it help me?
Bankruptcy is a measure of legal protection enacted by the Federal Government which allows overburdened borrowers the ability to establish a new financial start. Bankruptcy immediately stops the collection process, prevents wage garnishments and prevents property from being repossessed and immediately stops the foreclosure process giving you time to re-group financially.

What are the tyes of Bankruptcy?
The two most utilized types of bankruptcy for individuals are Chapter 7 and Chapter 13. Each allows different ways to protect the consumer. A bankruptcy lawyer is versed in these laws and can outline all of the options available to you depending on your unique circumstances.

Depending on the type of bankruptcy some debts that can be totally eliminated including credit card debt, unsecured debt, judgments, mortgage loans and medical bills.

Am I looked down upon if I file bankruptcy?
Once a social stigma, bankruptcy is now accepted practice for indebted people to lessen their financial burden. The bankruptcy laws are designed for the protection of the consumer. Bankruptcy permits borrowers, who have become overextended financially, the ability to eliminate and restructure their debts in order to give them a fresh start.

Many times events within your control and ones that you have no ability to control may have caused or contributed to your financial hardships. Bankruptcy is absolutely nothing to be ashamed of. In fact it may give you peace of mind and eliminate stresses and pressures in life that were once there.

What are the benefits of bankruptcy?
Benefit 1 - After filing of bankruptcy, creditors are generally barred from debt collection by what is called the automatic stay in bankruptcy.                     Creditors' telephone calls stop, debt collection stops, car repossessions stop and mortgage foreclosures and other law suits are                     stopped. Some of these actions are stopped permanently when the discharge of debts is issued, but others are only stopped                     temporarily even if the discharge of debts is eventually issued.
Benefit 2 - Most consumer bankruptcy cases end with the issuance of the discharge of debts. The discharge extinguishes most credit card                     debt and medical debts as well as many other types of debt.
Benefit 3 - Each individual debtor filing for bankruptcy can exempt certain property from the claims of creditors. Exemptions are discussed                     elsewhere at this web site.
Benefit 4 - Repayment plans can allow you to pay back your loans with better terms and over time.

Will I lose my house or vehicle if I file a bankruptcy under chapter 7 or chapter 13?
Many individuals who file a bankruptcy under chapter 7 or chapter 13 will not lose their house or vehicle because of the bankruptcy filing. You will lose your house or car if there is a mortgage or vehicle lien on those items and you fail to keep the payments current or fail to properly insure those items. You are allowed to protect from the bankruptcy process a certain amount of equity in a house or car through what are called bankruptcy exemptions. For many of the individuals filing for bankruptcy, these exemptions are adequate to allow an individual filing for bankruptcy to keep his car or house.

Is my pension safe from the bankruptcy process?
Depending on the value of the pension, and the legal manner in which the pension is held, your pension may or may not be exempt from the bankruptcy process, depending on what other property you own and what claims are against you and your spouse. A consultation with a lawyer qualified in bankruptcy will be required to adequately answer that question under the facts of each case.

What debts will be eliminated by a bankruptcy?
If everything proceeds well with your individual bankruptcy, you will receive a discharge of debts from the bankruptcy court at the end of your bankruptcy. A discharge of debts will generally extinguish credit card debt, medical bills, unsecured loans and many other types of debt. A discharge in bankruptcy will generally not relieve you of paying a mortgage or car loan if you keep those items. A discharge of debts will also generally not relieve you of paying alimony, child support, student loans, taxes, fraud claims, criminal restitution and driving accidents caused by drugs or alcohol. In certain limited cases, income tax may be eliminated by a discharge of debts.

If I file for bankruptcy, is my credit ruined forever?
No. If you otherwise keep your credit clean after the filing of bankruptcy, your credit will be largely rehabilitated in about two years after you receive the discharge of debts in bankruptcy. If you have kept your credit clean since the bankruptcy filing, your credit will probably be better in two years after the issuance of the discharge than it would have been had you not filed for bankruptcy, but retained your unpaid bills.

If I file for bankruptcy does my husband or wife have to file bankruptcy, too?
No. Nonetheless, it is often wise for both husband and wife to file a bankruptcy together if both have significant joint debt, other than on mortgages and car loans. If they both owe on a credit card debt, and only one spouse files for bankruptcy, the credit card company will demand payment from the spouse not filing for bankruptcy.