Monday, December 22, 2008

Stopping Foreclosures


You have fallen behind in your mortgage payments and you wonder how long it will be before the mortgage company or bank sends you a notice that they are foreclosing on your home. How long do you have before you are evicted? How can you save your house? Who do you call? What do you do?

I had a biology professor, who was also the football coach, who was fond of saying:

"When in danger
When in Doubt
Run in Circles
Yell and Shout!"

You may feel like doing that but if you are worried because you haven't made all of your payments and are behind more than 1 month, I recommend a different course of action. Some of the suggestions will seem like common sense BECAUSE THEY ARE. That does not mean that everyone pays attention.

1. Figure out why you are behind. That may be simple as "I missed a month of work because of my accident and had no money coming in" or as complex as "I've been falling behind a little each month, and now that the credit cards want more and I am paying higher minimums, I am even further behind". Knowing why you have fallen behind is critical to not losing your house, as I will explain as we go along.

2. As soon as you know that you are going to miss a payment, determine when you can make it, "for sure", and call your mortgage company/bank and let them know. Your file will be noted which will let a collector know that you are being responsible and are aware of the fact that the missed payment is a problem. By telling them a "for certain" date that the payment will be made and making that payment, you will eliminate needless calls and letters to you and let the lender know that you are doing your best to manage your money and have every intention of honoring the mortgage terms and keeping your home

3. If you suffer a work layoff or lose a job, or if you have a two-income household that has suddenly become one income, and believe that you are going to start to fall behind, call the lender and let them know. They may be able to give you additional time, grant a one-time forbearance, and move the payment or maybe even two payments to the end of the loan, so you can get caught-up, or make other arrangements. As this is being written, there are some mortgagees who will do hardship loan modifications because of layoff

4. Assuming that the above issues have been dealt with, or you have gone beyond the point of anticipating a default in payment and have missed 2 or 3 or them, expect to get a "Notice of Default" from the lender.

5. Every state has its own rules, but there are some big commonalities. The Notice will state how much is owed to get caught up, including interest, late fees, actual costs (such as an attorney's fee, a title report, possibly a real estate tax document from the city or town, etc.) and the missed principal payments. In Massachusetts, once that Notice is given, it MUST allow the borrower 90 days to cure the default, and during that period the lender can take no action against the borrower. Other states have differing time period, but almost all have one to give a borrower a chance to catch up. ONCE THAT NOTICE IS RECEIVED, THE CLOCK IS TICKING. In reality it has been right along, just more quietly.

6. If your state is a "Non-Judicial" foreclosure state, such as is the case with Massachusetts, there DOES NOT have to be any court proceeding to foreclose on your property. You gave the lender the right to foreclose, for non-payment and other things, in your mortgage document itself. There are legal requirements, set up by state statute, but a Court hearing is not one of them. This means that you probably WILL NOT have your day in Court to plead your case to a judge. In most situations it may not matter, but if there are irregularities in the mortgage process, or if there are documents showing the lenders right to foreclose that have not been put in the public record as the law requires, you NEED a Court to stop the process. If a foreclosure is imminent, CALL AN ATTORNEY. Most will give you some basic advice of what to do, without charge.

7. If you believe that your mortgage is not what you thought you were getting/buying, and the payments went up faster and higher than you were promised they would, contact the LOSS MITIGATION department at the lender/servicer. If you have a legitimate case, you may find that a modification, to get your payments reasonable and deal with the back payments that are owed, can be accomplished without outside intervention. If you have no luck, DO NOT WAIT - GET HELP.

8. If you believe that something is wrong with the mortgage, and for that matter even if everything appears to be okay, GATHER ALL OF THE DOCUMENTS YOU RECEIVED AT YOUR MORTGAGE CLOSING -PURCHASE OR REFINANCE. Anyone who will be helping you will want to see the paperwork you were given, both signed and unsigned. If you do not have a copy, call the attorney or company who did the closing and ask for a copy. You have a right to the documents, but if you were given a copy at closing, you might have to pay a copy cost for the second set.

9. Once you know that there is a problem in making timely payments, prepare a realistic list of your MONTHLY EXPENSES, such as mortgage, auto insurance, gasoline, electricity, heating fuel, food, clothes, car payment, etc. Then, prepare a list of your income. Include all sources - wages from employment, child support, alimony, food stamps, any form of disability income, unemployment compensation etc. Be certain that the figures are accurate and that you can supply documentation for every item you claim as income, or as an expense. The reason for this preparation is that the lender will want that information, along with your most recent taxes, as it considers any request for a modification or forbearance agreement. You do not want to wait one minute longer than you have to in starting the process, so get ready ahead of time.

10. If you DO NOT have luck with direct contact with your lender, call an attorney who handles debt problems. The attorney may have experience in bankruptcy, or real estate, or debtor/creditor work-outs, or a number of other classifications. Just ask when you call as to whether the attorney deals with mortgage problems. In all likelihood, if your mortgage is delinquent, other bills are also, especially credit cards, if you have any. Have that list ready when you speak to the attorney or the person doing intake.


11. Think long and hard what sacrifices you are willing to make to keep your home. You will probably have to devote ALL non-essential income to catching-up on mortgage payments

12. You may be advised that the only way to save the house is through filing for Bankruptcy Protection and opting for a Chapter 13 Debt Repayment Plan. The Bankruptcy laws are in place to protect people who get behind in payments/"get over their heads' in debt. Assuming you are not trying to cheat creditors by hiding assets (fraud) or running up bills purposely, knowing that you are going to file bankruptcy, IT IS YOUR RIGHT TO USE THE LAW TO PROTECT YOU AND YOUR FAMILY.

I will post telephone number s of various organizations which are available nationwide, which can direct you to a local or federal agency to help with a loan modification. AS OF THIS DATE THERE IS NO FEDERAL BAILOUT FOR BORROWERS - JUST THE BANKS. (see prior posts)

Author's Copyright by Richard I. Isacoff, Esq - December, 2008

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