What is a Foreclosure?
How long does the Foreclosure process take?
Do I need to save all the documents the bank has been sending me?
I am behind on my mortgage but I have not yet been served foreclosure papers, when will this happen?
I just got served Foreclosure papers, what next?
What happens if I do nothing?
What is a deficiency judgment?
Can my foreclosure really be defended when I have not been paying my mortgage?
Why shouldn’t I just refinance?
How can I save my home, when I can’t afford it?
Can I surrender my home without having to pay more money to the bank?
My home is worth way less than I owe on it, will that hurt me?
What is a 1099?
My home is worth way less than I owe on it, will that hurt me?
Where does a foreclosure sale/auction occur?
Can anyone buy my home at a foreclosure sale?
What happens if no one buys my home at a foreclosure sale?
Is there a way to stop the bank from calling and sending me letters?
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What is a Foreclosure?
A foreclosure is basically just the lawsuit that your lender files against you, when you are no longer making your monthly payments. In Florida, this process is all done through the courts. First the bank will serve you with foreclosure papers, and eventually (without the proper defense) they can sell your property at an auction and evict you off the premises.
How long does the Foreclosure process take?
This varies per county, and is especially so today, as the courts are overwhelmed at the moment with the large increase in foreclosures. This will also vary greatly depending on if you are represented by an attorney, and who your lender is represented by. The larger counties are tending to take a longer time, than smaller counties. A better approximation of this can be given at a consultation, but it is still very hard to determine. Generally if the lender does everything timely, and the court can respond quickly, from the time you stop making your payments you most likely have at least eight months before your home is sold. One reason for this is because the lender will generally serve you after four months from the date of your first default. Then you are given certain time limits to respond to everything the lender files with the court.
Do I need to save all the documents the bank has been sending me?
Yes, you should save everything, and give it to your attorney. You should even document every conversation you have with the lender. This can help in many ways. First, there are many state and federal laws protecting consumers today, and if a creditor violates any of these laws you could potentially have a lawsuit against them. Second, if you choose to pursue an option, such as loan modification, it is always good to show the court all the efforts you have made in completing this modification. You may also need to show this when working with your lender, as most likely every phone call you make will be with a different person.
I am behind on my mortgage but I have not yet been served foreclosure papers, when will this happen?
You will most likely be served about 4 months after the first payment that you miss.
I just got served foreclosure papers, what next?
From the date you are served you have 20 calendar days to respond in writing to the court and opposing counsel. This includes Saturdays, Sundays and Holidays, so you need to act quickly. Additionally, if you do not plead certain defenses at this point, they could be waived completely, meaning you cannot use them to save your home. This is why as soon as you receive foreclosure papers, or even before hand, you should contact an attorney as soon as possible.
What happens if I do nothing?
If you do nothing, your lender will eventually get a default judgment from the court and be able to sell your home at an auction, and essentially evict you from the premises with only a 3 day notice. If the auction results in a price less than what you owe the bank, you could also be responsible for a deficiency judgment.
What is a deficiency judgment?
A deficiency judgment is what you still owe the lender after they sell your home, because the sale price was less than what you owed the lender. This is quite common today because of the inflated real estate prices a few years ago, followed by the collapse of the real estate market. For example, say you bought your home for $200,000, but today it is only worth $120,000 so that is all that anyone would bid at the foreclosure sale. Therefore, you still owe the lender $80,000. So the $80,000 is your deficiency judgment. The lender can begin collecting this by garnishing your paycheck, so you want to try and avoid any kind of deficiency judgment. A deficiency judgment can be avoided in a few different ways.
Can my foreclosure really be defended when I have not been paying my mortgage?
Yes, there are many different ways to defend a foreclosure. For example there are certain documents and procedures that lenders need to follow when bringing a foreclosure action as per federal and state law. There are also procedures that need to be followed as outlined in your mortgage contract. Furthermore, some mortgages are required to follow the HUD guidelines and are required to pursue foreclosure prevention methods prior to bringing forth a foreclosure action. Failure to comply with any law or contractual obligation is a defense. Additionally, in bringing forth a foreclosure action the lender has to have the original note, or try and properly establish the note. Failure to produce the note, or properly reestablish the note, prevents final judgment of foreclosure. Eventually, if the lender who is suing is your actual lender, and you have defaulted, there will be a foreclosure, however, during the foreclosure defense, we generally try and figure out an alternative solution to keep you in your home if that is what you wish to happen.
Why shouldn’t I just refinance?
Refinancing may still be an option for many people. However, the issue with refinancing is that the lender will generally require that you have some equity in your home. Equity just means that you need to owe less on your home than your home is worth. Unfortunately, because of the current real estate market most of the homeowners who cannot afford their mortgage payments anymore do not have any equity in their home, and therefore do not qualify to refinance their home. However, this is not a requirement for loan modification.
How can I save my home, when I can’t afford it?
Because of the economy today and the inflated real estate prices just a few years ago, many people are upside down on their mortgage, and can’t afford to keep up with the payments. Today lenders are approving loan modifications more than ever, because as of 2008 they are now permitted to do so with 45% more loans than they were prior to 2008. There is also the option of filing Chapter 13 Bankruptcy and catching up on your payments through a Bankruptcy plan. Whichever option fits you the best is the one we will help you pursue.
Can I surrender my home without having to pay more money to the bank?
This is possible, but will require careful negotiations with the bank and prior approval. The ways of doing this are though a short sale, a foreclosure sale, or a deed in lieu of foreclosure. Whichever option fits you the nest, is the on we will help you pursue.
What is a 1099?
A 1099 is a tax form you are required to complete should you be successful in a situation such as a short sale or a foreclosure sale with no deficiency judgment. This is because the IRS treats the money you saved in these situations as income, that you have to pay taxes on. For example, if you owed your lender $200,000 and short sold your house for $150,000, you have to pay taxes on the $50,000 that you saved. It is possible to avoid this tax consequence through a Bankruptcy, but that is not common. ****HOWEVER, if the house was your primary residence then you should not have to pay on a 1099. You should discuss this further with an attorney to see if you can avoid paying taxes on the money you saved.
My home is worth way less than I owe on it, will that hurt me?
This is the situation with just about all foreclosure cases; otherwise a regular sale or refinancing would be in your best interest. Therefore, it does not hurt you anymore than any other foreclosure proceeding. It can lead to a deficiency judgment; however, this can be avoided in certain circumstances, and is an issue that arises in just about all foreclosures.
Where does a foreclosure sale/auction occur?
At the courthouse in the county in which the real property is located.
Can anyone buy my home at a foreclosure sale?
Yes, including the lender, or even the bank.
What happens if no one buys my home at a foreclosure sale?
The bank then owns it, and will generally serve you with an eviction notice to leave the premises. Once you receive this notice, you generally have 3 days to vacate the premises.
Is there a way to stop the bank from calling and sending me letters?
Yes, as soon as you retain an attorney the bank is required to direct all their calls to the attorney. The attorney you retain is the one who will notify the lender’s attorney of this. However, should the lender continue to call you should inform them you have retained counsel. Make sure to document any and every time your lender attempts to contact you, as doing so subsequent to retention of an attorney can create potential claims that you could have against the lender.
Should you have any further questions, please feel free to Contact Us for a FREE consultation.