Friday, May 14, 2010

The Sale is Over - My House is Gone!

The first step in reversing a foreclosure is to prevent it in the first place. Makes no sense but it is true. Very few people (almost none) lose a house to foreclosure without knowing it is going to happen. This is true in a state like Massachusetts which does not require a Court hearing before a foreclosure sale, or one like Connecticut where there is a Court required mediation before any sale can take place. The first clue that there might be a foreclosure sale is that the homeowner HAS NOT PAID HIS/HER MORTGAGE FOR A NUMBER OF MONTHS!

Hire a lawyer and if you do not know who to call, call the State Bar Association. Or go to or call a Housing Agency or go to a Court and ask someone in the Clerk's Office what to do, especially if there is a Housing Court where you live. Do whatever you can (legally) to stop the sale.

Okay, the sale takes place and the Lender buys back the house. What now? How have I managed to reverse a sale or actually 4 or 5 of them (one pending now)? The secret, which really is just good lawyering, is to understand the process; from the time a loan application is completed - the origination process, closing, recording of the documents, servicing (sending bills and collecting monthly mortgage payments), all of the steps in the actual foreclosure process, and, critically, WHAT HAPPENS AFTER THE SALE!!

In almost all States, there is a short period after a sale takes place for the homeowner and borrower to contest the validity of the sale. It may involve going to a Court, or registering the opposition at the place recording the Land Records or filing a grievance with a special Board; but there is a way to contest the proceeding. This step is important because it stops the process in its tracks. Stop the Foreclosure Deed from being put on record. Remember the purpose of the sale is for the Lender to get money - that is why it is called a foreclosure SALE. It get incredibly more difficult to reverse the sale if there is a second transfer to another buyer.

Do not forget that the lender which has your mortgage ordered the sale. Call them as soon as possible after the sale. You may have to wait on hold for an hour but so what! It's your home. Get to the foreclosure department at the lender, which may take another hour, but again, so what! You may be referred to the law firm or auctioneer which held the sale -call it. Do not give up until there is no one left to call. Make detailed notes of every number you called or department to which you were transferred, the name of the person(s) to whom you spoke, the length of the call, the length of the conversation, the CONTENT of your conversation, and anything else you think might be important.

The legal work really comes down to a few issues:

1. Was the sale conducted in strict accordance with the State statute - there are no federal laws?
2. Was the sale and the property properly advertised? (this is part of state procedure)
3. Were all of the steps required after the sale followed by the Lender and the "Buyer"?
4. Can you get to a Court and file a suit to prevent the deed from being recorded while things get sorted out?
5. Were you in the middle of a modification program, especially one under the Making Home Affordable program (HAMP modification), the so-called Obama Plan? If so contact the Lender IMMEDIATELY, and call a lawyer or housing agency.
6. Even though you were behind, can you make any payments to show good faith - family/friends who didn't realize the seriousness of the problem?
7. If you had previously spoken to a bankruptcy attorney CALL HIM/HER IMMEDIATELY.
8. Is the loan one owned by FannieMae or FreddieMac? If so, there is a good chance you can get the foreclosure fixed, rather undone.

There are another dozen legalities and related matters that should be examined, but the ones above will be the most critical right after the sale.

Author's Copyright by Richard I. Isacoff, Esq., May 2010

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