 Foreclosure-Loan
Modification-Bankruptcy Blog
In this section,
Attorney Svetlana Kaplun addresses typical
questions our firm has received from our clients, or come
across from homeowners related to
foreclosure,
foreclosure
defense,
loan
modification and
bankruptcy topics.
The information contained in the
blog section is for
informational purposes only, and should not be construed as
a legal advice on any subject matter.
Please read our full disclaimer or
contact the Law
Office of Svetlana Kaplun, P.C. by telephone at 718-444-1115
for more information.
|
Reply
Date |
Post Date |
Topic |
Question |
Response |
Location |
|
May. 8, 2013 |
May. 8, 2013 |
Garnishing of Wages in
a
Foreclosure
Link on Blogger.com |
I am several months behind
on my mortgage payments in an "under water" residence.
If
foreclosure begins, will my wages be garnished? |
The only way for
garnishment to take place is if the bank wins
foreclosure action and then brings another lawsuit
to obtain a deficiency judgment against you. If they are
successful, they have to find a way to get the money
from you and then garnishing wages is an option. You can
try to fight the foreclosure. You can try to get a
loan
modification or a
short sale.
Foreclosure should be your last resort. If it takes
place, however, please note that some banks today waive
lawsuits for a deficiency judgment. So, while it is
possible down the road, it is not certain that it will
happen. |
Brooklyn, New York |
|
May. 8, 2013 |
May. 8, 2013 |
Taking out a Mortgage
after Filing for
Bankruptcy or Losing a Home to
Foreclosure
Link on Blogger.com |
My home was included in a
bankruptcy that I filed a couple of years ago. When
I recently tried to purchase another home, I was told
that I have to wait for approximately three years after
the
foreclosure process and the fact that my home was
included in a bankruptcy is irrelevant. What makes the
matters worse is the fact that my initial lender sold my
mortgage to another bank, which didn't start working on
my foreclosure yet. Can you please confirm that I indeed
have to wait for three years after the completion of
foreclosure to buy a new home or I can do so because my
home was included in the bankruptcy? |
Once you file for
bankruptcy, your credit is damaged and needs time to
repair before a lender will extend credit to you again.
It is easier to get a credit card a couple of years
after the bankruptcy than getting a new mortgage. It may
take longer than three years. Bankruptcy takes
7-10 years to go away from your credit report. It is a
slow process to build it up but it is possible, mainly
through obtaining new credit, which you will timely
repay in the future. |
Brooklyn, New York |
|
May. 1, 2013 |
May. 1, 2013 |
Destroyed Property Now
in
Foreclosure: Rebuild or Walk Away?
Link on Blogger.com |
We are in the early stages
of
foreclosure on our home as my wife has been laid off
for a while. We have payments in arrears with an
attorney,
who helped us get a
loan
modification on our mortgage, but our home was
destroyed in a fire and is now a total loss. We got a
payment from the insurance company, so I would rather
rebuild our home than walk away. My wife is starting
another job in a month. Will the bank move forward with
the foreclosure or allow us to rebuild our home? |
If you are not paying the
mortgage, the bank may start a
foreclosure action. You can try to get a
loan
modification to avoid foreclosure. However, if you
now have the money to reinstate the loan (i.e. pay back
the arrears and get current on the mortgage payment),
the bank will be happy to get its money back. Once the
loan is reinstated, you no longer in danger of
foreclosure and I don't see a reason why you shouldn't
be able to rebuild your home unless it is not feasible
for you for some other reason. |
Brooklyn, New York |
|
May. 1, 2013 |
May. 1, 2013 |
Compliance with Bank's
Financial Information Requests in
Short Sale
Process
Link on Blogger.com |
We were in a
short sale
process with our lender and now they transferred our
loan to another lender. The new lender says we have to
start the short sale process all over and provide
extensive financial information, which was provided in
part to the original lender. Is this legal and if so, I
only plan to provide limited information and state that
we filed
Chapter 7
bankruptcy in 2011 for much of the questions. |
Short sale
process can be rather complicated and must be approved
by the bank. If your servicer has changed, you must now
comply with new servicer or short sale will not be
approved. If you filed for
bankruptcy, there is nothing shameful here and
should be disclosed. The bank usually pulls your credit
report and will be able to see it anyways. Every bank
has their own process for short sale and I am not sure
what it is that this particular bank is asking of you in
this case but most of the time they just want to get an
offer similar to the market value of the property to
approve the short sale (also unaffordability of current
mortgage). |
Brooklyn, New York |
|
Apr. 17, 2013 |
Apr. 17, 2013 |
Allowing a Deeded Home
Go into
Foreclosure
Link on Blogger.com |
My son and his wife were
in financial trouble several years ago and, in order to
help them out, they deeded the home to my wife. She
obtained two mortgages on the home which they took care
of until their divorce. My son currently lives in the
home with his child and is making most of the mortgage
payments but he will be moving soon. My wife passed
recently and the property went to me through her estate.
The mortgage, however, needs to be
refinanced since I did not enter in. The house is
underwater by tens of thousands of dollars and I can't
afford to make the payments and need to get rid of it.
What would happen if I let the house go back to the
bank? Would it affect my credit since I am not on the
mortgage? |
No, it wouldn't affect
your credit. If you know you can't afford to keep the
property, it is the wisest solution to contact the bank
and
negotiate surrendering the property to them. The
bank will usually consider a
deed-in-lieu of
foreclosure if you can't find a buyer for a
short sale
and if the property is vacant. Regardless, you have
options. You just have to explore them to avoid the
lengthy and stressful
foreclosure process. |
Brooklyn, New York |
|
Apr. 2, 2013 |
Apr. 2, 2013 |
Can the Bank Put a Lien
on my Primary Residence for a Deficiency Judgment on my
Foreclosed Investment Property?
Link on Blogger.com |
I currently have an
investment property that has been in a
short sale
for several years and I am unable to sell it. When I
took out the mortgage for that property, the home was
appraised to about double of the mortgage amount I was
requesting. I had several offers, but my bank keeps
changing the price of the home after the bid was
received. After Hurricane Sandy, this home ended up in
foreclosure. My question is can the bank put a lien
on my primary residence due to the foreclosure process
that is going on with my investment home? |
Foreclosures take a while. In order to put a lien on
your primary residence, the bank first has to foreclose
on your investment property and then sue you for a
deficiency judgment and only then, if they prevail, they
have to find a way to get the money owed to them and can
put a lien on your other home. This is such a lengthy
process that it may take years. Also, you can fight
foreclosure and try to mitigate your damages in advance.
If you can't do a
short sale,
you may be able to do a
deed-in-lieu of foreclosure or cash for keys.
Contact the bank and see what they would be willing to
do if you are willing to give up the property. You can
also request a settlement conference with the court
where you can try to reach a settlement with the lender
(usually bank's
attorney
appears for those conferences). |
Brooklyn, New York |
|
Apr. 2, 2013 |
Apr. 2, 2013 |
Who Has the Primary
Claim on my
Foreclosed Home: the Bank or HOA?
Link on Blogger.com |
Do we qualify for the
state or federal
foreclosure settlement? We filed for
bankruptcy a couple of years ago as the
loan
modification of our mortgage was taking too long.
Subsequently, we had a mediation to try and remedy our
situation, but the mortgage company traded or sold our
account to another lender. We showed up and were not
even notified. While we were trying to mediate our case,
our HOA had our home up for foreclosure sale within a
month. |
If HOA is suing you, their
position is subordinate to that of the mortgage company
and they have to wait for the bank to
foreclose upon your apartment/house in order to get
the money owed to them. If the money received by the
mortgage holder is less than what is owed under the
mortgage, HOA may not be getting anything at all. HOA
usually likes to expedite foreclosures because they want
the apartment with unpaid fees gone and to get a new
owner who will pay the fees. But as far as a foreclosure
conference with them, it is not mandatory but they will
often appear for settlement conferences you will have
with the lender. |
Brooklyn, New York |
|
Mar. 11, 2013 |
Mar. 11, 2013 |
Do Charged off
Mortgages Fall under the Mortgage
Forgiveness
Debt
Relief Act?
Link on Blogger.com |
Our home was
foreclosed on several years ago. We had two
mortgages with the same lender. The bank charged off the
second mortgage and back-dated it for the same month as
the foreclosure for the first mortgage. Is this charged
off second mortgage something we should be concerned
about or does it fall under the Mortgage
Forgiveness
Debt
Relief Act? |
When the loan is charged
off, it is generally just written off as a loss by the
lender. It becomes unsecured and in most instances,
lenders sell charged off loans to collection agencies
for pennies on the dollar. Collection agencies will make
money even if they settle with you for a penny more.
It's a matter of bargaining. In your case, however, the
property was already
foreclosed on. It is very unlikely that they will be
going after you other than for deficiency judgment
(which lately has been waived by most lenders). Some
charged off loans can be
forgiven under the
federal program but then it would state that and you
would likely receive notice of that. I doubt anyone
would retroactively be forgiving this loan on the
property that was foreclosed on. If no one is bothering
you, then just don't worry about this loan. |
Brooklyn, New York |
|
Mar. 11, 2013 |
Mar. 11, 2013 |
Appeals in
Foreclosure Cases
Link on Blogger.com |
If the Plaintiff wins a
foreclosure case against me in Summary Judgment, can
I still appeal? How long do I have to appeal? |
Generally, the time to
appeal is 30 days but even if the Plaintiff wins on
Summary Judgement, Plaintiff still has to win on his/her
next motion--Judgment of
Foreclosure and Sale (JFS). Unless JFS is granted,
the bank cannot foreclose on the property. If you think
your argument is weak on the merits and you would like
to enter into a settlement, start negotiating with the
bank in advance or contact a
professional attorney to do it for you. Don't wait
until it is too late. |
Brooklyn, New York |
|
Mar. 4, 2013 |
Mar. 4, 2013 |
How Does the Bank Evict
Holdover Tenants following a
Foreclosure?
Link on Blogger.com |
We received a notice to
quit after our home was sold at an auction due to a
foreclosure. We did not vacate the property within
the three days. What happens next? We are looking for a
place to live, but have not moved yet because we need
additional time to find a place. A neighbor claimed that
since we received a notice to quit the Sheriff could
come any day and physically remove us or lock us out. If
an unlawful detainer notice is filed, shouldn't we be
served with a copy and given the opportunity to respond
before the Sheriff can do this? Shouldn't the Sheriff
have a judgment? |
Once the property is
foreclosed upon and you remain on the premises, you
become a holdover tenant and if you don't leave
voluntarily, the bank will have to bring a
Landlord/Tenant action against you to get you evicted.
You have to be served with the papers and you should
have an opportunity to appear in court. Since evictions
can be quite a lengthy process, banks often tend to
offer some money to holdover tenants just for them to
agree to leave and save the time and expenses on
Landlord/Tenant process. |
Brooklyn, New York |
|
Mar. 4, 2013 |
Mar. 4, 2013 |
Can the Bank Evict me
from my
Foreclosed Home without any Legal Process?
Link on Blogger.com |
We have been working with
our bank on a
loan
modification for over a year. When we recently came
home, all of our belongings were in the garage and
workers were in the house painting. We were given no
notice of a sale nor were we given eviction papers. The
workers also changed the locks, although we still have
access to the property. We filed papers with the
Attorney General to stop any
foreclosure action. We are missing some of our
valuable personal belongings and some of our property
was damaged. We did not abandon the property. We were
considering changing the locks back and making them
evict us as the Sheriff was not notified. What can we do
to stop the foreclosure action right now and get the
workers out who are using the services we pay for? |
Were you in
foreclosure? Foreclosure is a long, legal process
and even while you are trying to
modify
the loan, foreclosure process can still occur unless
the loan is in a trial plan or permanently modified.
However, the court must first grant the Judgment of
Foreclosure and Sale, the bank then has to advertise the
sale in the newspaper for the next month and afterward,
the sale property is sold off at an auction and goes to
the highest bidder (most often to the bank itself). If
someone is still occupying the property, the bank cannot
just come in, change the locks but would rather have to
evict the holdover tenant through Landlord/Tenant court.
Unless the property was vacant, I can't imagine someone
getting so confused as to assume the property is not
occupied. Being that the process takes quite some time,
it is possible that it is not contractors from the bank
who are occupying the property but someone who noticed
that the property has been vacant for some time and is
taking advantage of the situation. Also, if the
foreclosure sale did indeed take place, you would need
to do a Motion to Vacate Judgment of Foreclosure and
Sale. It can be rather complicated and I would suggest
finding a
professional attorney for help. |
Brooklyn, New York |
|
Feb. 26, 2013 |
Feb. 26, 2013 |
Foreclosure after Bank's Refusal to Honor an
Executed
Loan
Modification
Link on Blogger.com |
My bank refused to honor a
signed
loan modification offer that was presented about two
years ago. We fulfilled all obligations, returned all
paperwork and made payment via cashier's check. We have
not heard from the bank and now they claim the loan
modification offer did not receive final approval and
are threatening to start the
foreclosure proceedings. We have made all payments
on time. Do we need to retain an
attorney
and will we need to sue them? |
It is very likely that
when you received a
loan
modification, it was given prior to stringent
requirements that are taking place now. Banks used to
give out loan modifications like candy and then deny
everyone. Most people then had to reapply for a loan
modification once the bank was able to verify all the
necessary documents. Have you tried reapplying for a
loan modification? It is likely that they could review
you again and grant a loan modification this time
around. If not, even if the bank commences a
foreclosure action, you have good arguments for the
court, which will most likely take your side and will
exert pressure on the bank to enforce the loan
modification or grant another one since the bank is not
acting in "good faith." |
Brooklyn, New York |
|
Feb. 25, 2013 |
Feb. 25, 2013 |
Can I File an Answer to
Foreclosure Complaint Myself?
Link on Blogger.com |
I received a summons about
foreclosure on my house. As of beginning of
this year we were accepted into a Home Modification
program (HAMP)
and have already made a couple of payments. The servicer
of our loan is telling us that this just crossed in the
mail and is a matter of formality since we are in the
trial payment period. I searched for a date and have
just realized that the motion or the answer needs to be
filed this week. I just want to file the motion. If
anything additional should occur I would hire an
attorney
to handle this. Is this something I can do myself? I
have contacted a number of attorneys to get more
information on this. |
If you are in a
HAMP
trial period, the loan will convert into a permanent
loan
modification and the
foreclosure will be discontinued by the bank's
attorneys.
To be on the safe side, you should do a simple answer
that would allow you to preserve defenses in case the
loan modification option does not work out. You don't
need to do a motion especially since you are on the path
of modifying your loan. Just keep making timely trial
payments and the loan will be modified and the case will
be discontinued. |
Brooklyn, New York |
|
Feb. 14, 2013 |
Feb. 14, 2013 |
HAMP
Loan
Modification and Credit Report
Link on Blogger.com |
Will getting a
HAMP
loan
modification be reflected on my credit report? |
Yes, if the loan is
permanently modified under
HAMP,
the bank will report that to the credit bureaus and your
credit report will state
loan
modified under HAMP or under a government program.
Initially, the credit score will drop but once you begin
making timely payments again, the credit score will
start increasing. |
Brooklyn, New York |
|
Feb. 5, 2013 |
Feb. 5, 2013 |
What's Less Costly:
Foreclosure or
Short Sale?
Link on Blogger.com |
I have a mortgage with one
bank and an equity line of credit with another bank. If
I let my home go into
foreclosure, can the bank sue me for the equity
amount? How does this work? My mortgage balance is
slightly lower than the value of my house. With the real
estate prices down, if I put my home on the market for
its market value, with all the additional fees and
closing costs, I would have to make an investment into
having it sold. |
You are better off doing a
short sale
than letting it go into
foreclosure. Foreclosure should always be the last
alternative as it will most adversely affect your
credit. Based on your description, both loans are
secured by equity in your home, i.e., if the house sells
for its market value or even less, both lenders will be
able to obtain what is due and owing to them. However,
if you are concerned about putting money out-of-pocket,
then consider a short sale since the bank will pay for
all sale-related expenses and even offer you money to do
a short sale, if the house is your primary residence.
However, to answer your question specifically, the
lender that gave you an equity line is unlikely to go
after you because based on the description you provided,
they will likely get their money (ex: if the house sells
for its market value, the first lender will get what is
owed to them, the balance will go to the second lender,
and if anything is remaining, you can even claim the
rest). |
Brooklyn, New York |
|
Feb. 4, 2013 |
Feb. 4, 2013 |
Negotiating Time with a
Bank to Move from
Foreclosed Property
Link on Blogger.com |
My house is supposed to be
authorized for
foreclosure by the court tomorrow. How much time do
I have to get my things out? I have tried
HARP
in the past and failed as I was unemployed for some
time. |
After
foreclosure takes place, the bank or whoever
purchases the property will become the new owner and you
will become a holdover tenant if you remain on the
property. Oftentimes, the bank will offer money to a
holdover tenant to leave or will have to bring an
eviction proceeding in the landlord/tenant court to get
you out. It is likely that you would be able to
negotiate with the bank that you need a certain amount
of time to leave and they will let you to avoid
additional
legal
expenses. |
Brooklyn, New York |
|
Jan. 27, 2013 |
Jan. 27, 2013 |
Stopping
Foreclosure by Reinstating the Mortgage
Link on Blogger.com |
We were served with
foreclosure papers last week, is there any way to
stop the foreclosure? We have a way to obtain the past
due amount. We thought the payments were getting
automatically withdrawn and did not receive the
notifications due to the wrong email address the bank
had for us. We tried to call the mortgage company, but
instead were told to contact the
attorney
that filed the papers. |
Request the reinstatement
amount from the bank's
attorneys,
reinstate the loan, and they will discontinue the
foreclosure action. Foreclosure is a lengthy process
and before the bank can even proceed with a residential
foreclosure, you will attend a mandatory settlement
conference, where you too will have an opportunity to
try to work out an option to save your home, i.e.,
loan
modification, reinstatement,
short sale,
etc. |
Brooklyn, New York |
|
Jan. 26, 2013 |
Jan. 26, 2013 |
Considering
Foreclosure for my Underwater Home
Link on Blogger.com |
I am considering letting
my underwater house go into
foreclosure after not being able to reach an
agreement with my mortgage holder. How long do I have
before I have to leave my house and will they be able to
put a lien on another home I just purchased? I have
tried contacting the bank that originally underwrote my
mortgage, but they refused to help me and sold my
mortgage to another bank. I tried to unsuccessfully
refinance my mortgage with that bank. My current
bank says it will
modify
my loan, but never calls me back with the
information. |
If your objective was to
get a
loan modification, try to modify it first. The banks
are so overwhelmed with all the borrowers who defaulted
on their mortgage payments, their response time can be
quite slow. Be as aggressive as you can in reaching the
bank at your own initiative if that is what you are
interested in or hire a
professional attorney who can help you with
preparing the documents. Do not let the house go into
foreclosure as it will affect you negatively in many
different ways, from affecting your credit to a
deficiency judgment. It is much better for borrowers and
the bank alike if you do a
short sale.
With a properly negotiated short sale, you will not be
responsible for the difference in the amount of debt
owed to the bank and the sale price (although there may
be consequences with the IRS). |
Brooklyn, New York |
|
Jan. 19, 2013 |
Jan. 19, 2013 |
Mortgage on my
Foreclosed Home Remained Active in Error
Link on Blogger.com |
My investment property was
foreclosed on ten years ago. The house had a first
and second mortgages on it. The house was foreclosed on
and sold, but the lender for the second mortgage was
never notified that I no longer have the house and up to
now, they were still reporting me with an active loan.
The second mortgage company has now been informed and
they are now reporting my loan as a charge off. How did
the law office
foreclose and sell my home with an active loan on it and
not inform the second mortgage company? Do I have any
recourse to go after the law firm that foreclosed on my
investment property? |
A charge off is when the
bank writes off a loan and usually ends up selling it to
a collection agency. Loans generally get charged off
when you haven't paid in a while and there is no more
equity in the home for the bank to go after. You can
look at your
foreclosure papers to notice if the 2nd mortgage
holder was put on notice by checking if their address is
mentioned there. If a mistake indeed occurred, then the
first mortgagee would need to conduct a strict
foreclosure, i.e., commencing another foreclosure action
and serving only the unnamed defendant. Otherwise, the
1st bank does not have clear title to the property and
would not be able to conduct a foreclosure sale. You
should definitely write a letter to the three major
credit bureaus, reporting a dispute of the reported
information and sending them the supporting evidence. |
Brooklyn, New York |
|
Jan. 12, 2013 |
Jan. 12, 2013 |
Can a Mortgage Become
an Unsecured Instrument after a
Bankruptcy Filing?
Link on Blogger.com |
I filed for
bankruptcy a couple of years ago. Prior to that I
asked for financial assistance on my home from my
lender, who did not respond. When the bankruptcy was
discharged, I again contacted my lender requesting to
relinquish title in lieu of
foreclosure. Still I got no response. I quit making
payments on the property later that year. About a year
later the lender contacted me. I asked again about title
in lieu of payment and was told I would need to complete
a financial statement. Since my financial health had
improved since the bankruptcy, I declined. I have not
heard from the lender in over a year except for
delinquent payment notices. Can I be held liable for any
property other than the secured property when the bank
finally gets around to foreclosing? |
A mortgaged property is a
secured property (mortgage itself is the security
instrument). When you file for
bankruptcy, a mortgage does not become unsecured
unless there is not enough equity to preserve the bank's
interest. In that case, only that portion can become
unsecured (ex: mortgage $300,000; fair market
value=$240,000; unsecured amount=$60,000). By signing a
mortgage document, you give the bank a right to go after
your home if you default on your payments. When the
property is unsecure, the creditor can still go after
that amount but they cannot go after your property. So,
if
foreclosure takes place, the bank can essentially go
after you for a deficiency judgment. Consider filling
out that financial statement to do a
deed-in-lieu of foreclosure or a
short sale.
What the bank looks for is affordability of mortgage
payments. Just because your financial situation improved
does not mean you can pay all of your arrears back and
stay current on your payments. If the property is clear
of any tenants, there is a chance that the bank would
accept a deed-in-lieu of foreclosure. |
Brooklyn, New York |
|
Jan. 3, 2013 |
Jan. 3, 2013 |
Mortgages Not
Discharged by a
Bankruptcy
Link on Blogger.com |
I have a question about
bankruptcy. After filing for bankruptcy a few years
ago, I thought my mortgages were discharged. I never
heard from the bank except when they would inform me
about how much I owe in order to catch up with my
payments, but now I am in a desperate need to understand
if and when the bank is going to proceed with a
foreclosure. How long does it take for foreclosure
to take affect? |
You should contact a
bankruptcy
attorney
so he/she could answer your questions about whether your
mortgages were or were not indeed discharged. If they
were discharged, then the trustee will be the one to
sell the properties to satisfy the mortgages (whether
partially or fully). If they were not discharged, then
you are responsible for the mortgage payments.
Foreclosure these days takes a lot longer than it
did in the past and can be a matter of months or years,
depending on when you stopped making your mortgage
payments, who the servicer is, as well as your
intentions for the home. If you do not intend to keep
the property and will not resist foreclosure, then it
takes a shorter amount of time. However, waiting for
foreclosure to take place is never advisable. If
discharge of your mortgages did not take place, please
consider looking into a
short sale
or a
deed in lieu of foreclosure. |
Brooklyn, New York |
|
Dec. 25, 2012 |
Dec. 25, 2012 |
Filing a "Pro Se"
Motion to Have a
Foreclosure Case Dismissed
Link on Blogger.com |
A
foreclosure suit was filed against me in 2010. The
home was sold through a
short sale,
with the involvement of the bank in late 2011. The price
was within 90% of the mortgage amount and the bank
waived any right to collect "shortages" in the suit they
filed. When I checked with the court recently the suit
is still active. Although there is nothing pending, no
judge assigned, etc. What language would I use in a "pro
se" motion to have the case dismissed? |
From your description, it
appears that
short sale took place approximately a year ago. At
this point, the case is sitting in court without any
activity. Because of the backlog of
foreclosure cases, sometimes, it takes banks longer
than generally anticipated to proceed with their action,
or as is the case here, with the discontinuance. Once
the property sells and the bank receives its proceeds
(short sale cannot take place unless agreed by the
bank), the foreclosure action must be discontinued and
the bank will get to it sooner or later. If you wanted
to bring a motion at your own initiative, you would have
to be the one to file for the Request for Judicial
Intervention (RJI), thus assigning a judge and then you
could bring a motion. Alternatively, you could bring an
Order to Show Cause to have the judge hear you out.
Essentially, it would be a lot of time and effort on
your part when the case is already closed. |
Brooklyn, New York |
|
Dec. 16, 2012 |
Dec. 16, 2012 |
Can
Loan
Modification or
Refinancing be Offered to the Estate of the
Deceased?
Link on Blogger.com |
My husband is listed on
the mortgage of our home only, he passed away a few
years ago, the bank will not
refinance or let me assume the responsibility for
the mortgage. I am on the title, if I let the home go to
foreclosure will I be responsible for any tax
issues. My home is under water by a substantial amount.
I tried refinancing with my current bank and other
lenders, but was denied several times as the lenders
said that I am not the original borrower on the loan. |
Situations like these are
very tricky. Your deceased husband signed the contract
(note and mortgage) with the bank, therefore, he was
the one in privity of contract with the bank. You are
not in privity of contract with the bank and you have no
rights to sign a new agreement, whether it would be a
refinancing or a
loan
modification. Only the borrower can sign the new
contract. So far, I have only witnessed one bank offer a
loan modification to the Estate of the Deceased.
Generally, that is not the case. Some banks will
consider an assumption where you take over the original
terms of the loan but you have to show qualifying
financials. This does not work if you have no income,
i.e., your income has to support the mortgage and any
arrears, if applicable. If you want to stay in the
house, the best option is to continue making payments as
before until the loan is paid off unless you are already
in default and can no longer reinstate the mortgage.
Finally, if the bank
forecloses on the home, you, personally, would not
be responsible for the deficiency. However, the bank may
go after the estate and in a case like yours, it could
affect you similarly. As of recently, many banks have
stopped pursuing deficiency judgments because it is very
hard to collect that money from people who don't have
much to begin with and lost their last assets. Whether
they choose to pursue it or not, they do not waive that
right. |
Brooklyn, New York |
|
Dec. 4, 2012 |
Dec. 4, 2012 |
Should I still be
Responsible for a Surrendered Property through
Bankruptcy?
Link on Blogger.com |
I filed for
bankruptcy over a year ago in New York State; all of
my debts were discharged. I opted to surrender my home.
I have not heard from my bank since before the
bankruptcy filing. I was unaware that I still owned the
property until earlier this year when I was cited by the
city for code violations. I fixed the problems, but do
not have the means to continue to care for this
property. It is currently unlivable. I recently received
a notice of tax sale from my county. Can I sell this
property? Will the county take it at a later date and
sell it for taxes owed? I have doubts that my bank will
ever get around to taking claim of the house. I tried to
do a short
sale and received many offers which were all turned
down by my bank. They repeatedly lost paperwork and
misdirected my calls. Once the bankruptcy went through
last year I stopped trying. |
If you surrendered the
property through a
bankruptcy, then maintenance is no longer your
responsibility. Trustee is the one who disperses the
assets and maybe there is a delay, but considering that
you willingly surrendered the property, it should no
longer be your concern. |
Brooklyn, New York |
|
Nov. 23, 2012 |
Nov. 23, 2012 |
Stopping
Foreclosure When Time is of the Essence
Link on Blogger.com |
My house has been
foreclosed upon. At no point during the proceeding
did the bank produce, in spite of legal demands made
upon the bank, an original copy of the promissory note
and Deed of Trust. It is my understanding, under New
York law, that a foreclosure cannot go forward without
the original instrument. Nevertheless, in my case,
foreclosure was allowed to proceed. I now have to vacate
the property within two weeks. Please let me know any
winning strategies to stop the foreclosure. |
Time is of the essence in
a case like this. If there are faults with the
procedural aspects of the
foreclosure process, you need to consult with a
professional attorney who would be willing to bring
a Motion to Vacate Judgment of Foreclosure and Sale. Of
course, you need winning arguments to actually get the
motion granted. It is very important to do this as soon
as possible because the more time goes by, the more
prejudicial the outcome becomes to the bank and the
chances of a favorable resolution become less likely.
Good luck! |
Brooklyn, New York |
|
Nov. 15, 2012 |
Nov. 15, 2012 |
Bringing Order to Show
Cause with Temporary Restraining Order (TRO) vs.
"Produce the Note" Suit to Postpone
Foreclosure Sale
Link on Blogger.com |
My home has a pending
foreclosure for next week. My lender is willing to
modify
my loan for a significant down payment, the full
amount of which I will only have in two weeks. They are
unwilling to extend my deadline for that long. Can I
file a "Produce the Note" suit to buy me the extra time
needed to complete the loan modification? |
Generally, when a
foreclosure sale date is scheduled, the banks are
unwilling to do a
loan
modification unless you can request to postpone the
public foreclosure sale date. Whether they will consent
or not is in the bank's discretion but they will
generally agree to it if your loan modification process
is active and likely to happen. Also, if the bank is
unwilling to do that, you can bring an Order to Show
Cause with a Temporary Restraining Order (TRO) through
the court and have the judge make a determination on an
emergency basis. Most likely, judges will grant these
petitions, especially if you can show them good faith on
your part in trying to save your home. |
Brooklyn, New York |
|
Nov. 11, 2012 |
Nov. 11, 2012 |
Negotiating with a Bank
to Avoid a Deficiency Judgment
Link on Blogger.com |
What can I expect from a
real estate
short-sale as far as deficiency judgments? I am in
the process of attempting a short sale, but am worried
the bank will allow the sale, but a judgment will remain
that can come back and haunt me years later. I've been
told that it may come down to me needing to just let it
foreclose and go to auction for a better chance of
eliminating a deficiency judgment. |
When you do a
short sale,
you can negotiate with the bank to avoid a deficiency
judgment. In this economy, most banks agree. However, at
the end of the year, you will receive notice from the
IRS regarding the debt cancelled. The amount
forgiven by the bank (difference between what you
owed and what you sold the house for) will be regarded
as income and you would have to pay capital gains taxes
on that. Speak to your accountant about rules governing
the cancelled debt. In 2012, that requirement was
waived. I am not sure if it will be extended through
2013 and so on. However, if you do not short sell your
home and the bank
forecloses, then the bank can come back after you
for the deficiency judgment in this case as well.
Short sale is more favorable than foreclosure. |
Brooklyn, New York |
|
Oct. 21, 2012 |
Oct. 21, 2012 |
How to Reverse an
Unlawful
Foreclosure?
Link on Blogger.com |
I have a problem with
foreclosure/eviction. I am being evicted from my
home that has been in the family for many generations. I
was never served with a foreclosure sale notice and was
not notified that the property was in foreclosure. When
we found out, we have been trying for several years to
get a payoff amount so we could refinance but no one
would give it to us. Now we are being evicted. Can you
help? We want to keep and buy our property but there is
no one willing to work with us. |
You have to get a
knowledgeable attorney who will bring a Motion to
Vacate the Judgment of
Foreclosure and Sale. If you can prove that you were
never properly served and foreclosure took place
unlawfully, the court can reverse the original decision.
Generally, if that happens, the bank will then have to
recommence the foreclosure procedure and start from
scratch. You can win some time in trying to either
reinstate the loan or try to
modify
the loan to save your home. The trick here, of
course, is winning on reversal of the judgment (time is
of the essence here). |
Brooklyn, New York |
|
Oct. 4, 2012 |
Oct. 4, 2012 |
Can the Bank Garnish a
Senior Citizen's Retirement Income in the Process of
Recovering a Deficiency Judgment from a
Foreclosure?
Link on Blogger.com |
I co-signed for a mortgage
for one of my kids and they are now in a
foreclosure. What can the bank do to me if
foreclosure goes forward? I am a retired senior citizen
and I have a mortgage with no equity. I have a military
service retirement income and a social security income.
Please let me know what I can do. |
Since you co-signed, you
are financially obligated under the note and mortgage.
You will be a named Defendant in the lawsuit and if
foreclosure goes through and the bank tries to
recover a deficiency judgment for the amount owed to the
bank after the foreclosure sale takes place, the bank
will be seeking how to actually recover that money. Your
pension and retirement income cannot be touched. You
have a home without equity but the bank can still record
a lien against it in hope of recovering its money when
you decide to sell your home. You can't sell your home
with a lien on it. If you keep living there, then the
lien will just stay there but you can continue to live
in your house. If your kids have assets, the bank may go
after their assets instead. If your kids are not
planning to fight to save their home, then they might as
well do a
short sale or a
deed-in-lieu of foreclosure to avoid the deficiency
judgment. |
Brooklyn, New York |
|
Sep. 30, 2012 |
Sep. 30, 2012 |
Can Banks
Foreclose Over Two Missed Mortgage Payments?
Link on Blogger.com |
My bank is threatening me
with
foreclosure over two missed payments. We have been
in contact with them to try to work it out but we got
nowhere. Can they start foreclosure over two missed
payments? They told me that they would not accept
any more payments unless we paid the full amount of
missed payments. |
The bank likes to threaten
a lot but their words are often empty threats. In order
to start
foreclosure, they first have to send a notice of
missed payment(s) and the amount due and 90-day letter
stating that if balance is not paid, they can start
foreclosure. Until you get this letter(s), foreclosure
process cannot begin and if it does, it is defective.
Whether you can get a
loan
modification depends on the bank/servicer. You can
go on MakingHomeAffordable website to see which
servicers participate in
HAMP.
If you get a loan modification, your missed payments
will be added to unpaid principal balance and you won't
even feel them in your payments over the years. It may
be too soon though to discuss a loan modification since
banks generally wait until three missed payments. |
Brooklyn, New York |
|
Sep. 22, 2012 |
Sep. 22, 2012 |
The Bank is Enforcing a
Deficiency Judgment Against Me, What Can I Do?
Link on Blogger.com |
I just went through a
foreclosure and now the mortgage insurance company
wants the difference of tens of thousands of dollars
from me as this was the difference between what I owed
and what my home was sold for at foreclosure auction.
Can they access my bank account? I do not have a job
right now and am attending school. |
Yes, but first the bank
has to sue you to get a judgment against you and then
try to either garnish your wages or your bank account or
your tax refund or put a lien on your property if you
own another home to satisfy that deficiency. If you know
you are anticipating being sued, it is best to appear in
court and try to work it out and maybe settle for a
lesser sum than to wait until a default judgment is
granted against you and the bank will look for a way to
seize your account. |
Brooklyn, New York |
|
Sep. 17, 2012 |
Sep. 17, 2012 |
Attempting a
Short Sale
After the Motion for Default Has Been Filed
Link on Blogger.com |
If a
foreclosure process is in progress and owner has
failed to file a pleading within the time required by
law and a motion for default has been filed by the bank
for the purpose of accelerating the foreclosure process,
can the property owner attempt a
short sale? |
Generally, until the
foreclosure sale is scheduled or the property has
already been sold, the borrower under the loan can
attempt
loss mitigation options to avoid foreclosure sale,
including the
short sale option. However, from the question, it is
not clear at what stage the foreclosure process is in.
If the borrower did not file an answer and the bank is
proceeding with the borrower being in default, it may be
possible for the borrower to file a motion for late
answer. If you show a reasonable excuse for lateness,
the court may grant it (ex: you were not properly served
with summons and complaint, hence you did not know about
answering the complaint). If it is too late for that, it
is best to contact the bank's
attorneys'
office to inquire if short sale option is still
available. Since everyone benefits more from short sale
than foreclosure, they will oftentimes work with you to
do the short sale and not schedule the foreclosure sale. |
Brooklyn, New York |
|
Sep. 9, 2012 |
Sep. 9, 2012 |
HAMP
2.0 for Homeowners, Who Defaulted on Their
Loan
Modifications
Link on Blogger.com |
I previously had a
loan
modification under
HAMP.
After my spouse lost her job, we could not afford even
the modified payment. We are back on our feet now but
the bank has refused to work with us again and
constantly tells us we are in active
foreclosure. Is there any way we can try to save our
home? We don't have the money to reinstate the loan. |
In June of 2012,
HAMP
2.0 came out, a new federal program designated to
help people like yourself who previously had a HAMP
loan
modification but then defaulted or people who
defaulted during the 3-months trial period. If you have
not submitted the documents after June 1, you should try
to resubmit your paperwork now. The bank actually uses
25% of your gross monthly income (as opposed to 31%
under HAMP) to determine if you are eligible for a loan
modification. |
Brooklyn, New York |
|
Sep. 1, 2012 |
Sep. 1, 2012 |
Undecided between
Foreclosure and
Short Sale
Link on Blogger.com |
I am facing
foreclosure on my home. My spouse passed away a few
years ago, my home has not sold and I have not been able
to pay my mortgage for a number of years now. My
mortgage company refused to allow me to do
deed-in-lieu of foreclosure, and my realtor knows
that I am trying to do a
short sale.
I know I can’t save my home, and I am wondering what I
can do to make the foreclosure process any easier on
myself. Do I need to hire a
lawyer
to get me through the foreclosure process? |
It depends on what you are
trying to accomplish. If you want the bank to take away
your home as soon as possible, then don't fight
foreclosure and the bank, in due time, will be
allowed to foreclose on your home by the court.
Alternatively, if you want to stay in your home as long
as possible, then you should get an
attorney
who will attempt to fight foreclosure and thus prolong
the process and maybe give you the necessary time to do
a short sale. |
Brooklyn, New York |
|
August 28, 2012 |
August 28, 2012 |
Foreclosure,
Short Sale
or
Deed-in-Lieu on a Vacant Property
Link on Blogger.com |
My home was put up for
sale multiple times in the last few years with no
success. I have
refinanced my mortgage in the past and I am current
on my payments, however I have not lived in that home
for many years because of work. I am paying a mortgage
on a house I don't live in. I need to know the best
course of action to get out of this situation, so that I
can buy a house closer to work. I am at the point of
walking away from it, however I have a great credit
history and I don't want to take that big of a hit on my
credit score. What is the best option for me:
foreclosure,
short sale
or
deed-in-lieu of foreclosure? |
Foreclosure is always the last alternative. You can
either try to do a
short sale
or a
deed-in-lieu of foreclosure if the property is
vacant. Otherwise, under
HAMP
2.0, you can try to get a
loan
modification on the mortgage, to make payments more
affordable, rent it out and essentially use the rent
money to pay for the mortgage. However, all these
methods will negatively affect your credit score but not
nearly as badly as foreclosure. Also, while you have
good credit, it is better to purchase a new home now
while you still can but you need to be able to show
affordability for two mortgages in order to get another
mortgage. You can show the listing agreement for this
property in question so the bank at least knows that it
is a matter of time until you sell this home. |
Brooklyn, New York |
|
August 25, 2012 |
August 25, 2012 |
HAMP
2.0 Allows
Loan
Modifications on Up to Three Properties
Link on Blogger.com |
I own two properties, one
that I use as my primary residence and another that I
use as a rental property. I cannot afford to pay the
mortgage on either, but would like to avoid
foreclosure, keep both homes and
modify
each loan. Is that possible? |
Prior to June 1, 2012,
only mortgages on primary residences could be modified.
However, with
HAMP
2.0 that became effective on June 1, 2012, you have
an opportunity to
modify
loans and avoid
foreclosure on up to three properties. With that in
mind, you must be able to show affordability as the bank
will count all your mortgages as expenses and add them
to your debt. If you have two loans with the same bank,
then you would have to submit two packages with
different loan numbers in order for each property to be
separately reviewed for a loan modification. |
Brooklyn, New York |
|
August 18, 2012 |
August 18, 2012 |
Duration of Lis Pendens
Filing
Link on Blogger.com |
How long is a lis pendens
filing valid? Does the lender only have a certain amount
of time to actually follow through with
foreclosure in New York? If a lender initiates lis
pendens, how long do they have to follow through - if
the borrower is trying to work something out (i.e. get a
loan
modification) for example, and let's just say it's
over a year since the original papers were filed with
the court, can the lender still foreclose or is there an
"expiration" to these documents? |
Lis pendens is valid for
three years and after three years if
foreclosure did not take place, the bank, through
its
attorneys, files for a renewal. In New York, there
are mandatory settlement conferences, where you can try
to resolve your case (i.e. by attempting
loan
modification,
short sale,
reinstatement, payoff, etc). Unless a foreclosure sale
date has been scheduled, there is still a good chance
you can try to work your case out. In New York, after
over a year of foreclosure filing, the case is still in
its preliminary stages. |
Brooklyn, New York |
|
August 14, 2012 |
August 14, 2012 |
Funds Owed to the Bank
on a
Foreclosed "Under Water" Property
Link on Blogger.com |
Do I owe money to the bank
after my home is
foreclosed on when I have no equity in the property?
I haven't tried anything yet, but I am ready to give up
the property. Following a divorce and without spousal
support I can no longer afford this home and there is no
equity in it. |
If
foreclosure takes place, the bank might sue you for
a deficiency judgment, which is determined based on the
sale price minus your debt owed to the bank. Whatever
the difference is the amount you will owe to the bank,
which the bank must find a way to recover.
Short sale
or a
deed-in-lieu of foreclosure are better options than
foreclosure. |
Brooklyn, New York |
|
August 9, 2012 |
August 9, 2012 |
When Does the Bank Stop
Accepting
Short Sale Offers?
Link on Blogger.com |
In State of New York: if a
home is sent to
foreclosure
attorney
by the lender, can the lender accept an offer of a
short sale
from a creditable buyer, if the short sale is offered
within a day or two of the monthly deadline for the
mortgage payment? For example: December 31 is the
deadline for mortgage payment. If not made, lender says
property automatically goes to the foreclosure attorney
and they cannot accept short sale offer, and the
foreclosure attorney proceeds with foreclosure. Also,
when does homeowner receive foreclosure notice from
lender's foreclosure attorney? |
The actual legal
commencement of
foreclosure can take anywhere from a few months to a
few years, depending on the lender and the laws of the
state. Short
sale is one of the ways to avoid foreclosure. Once a
foreclosure sale is scheduled, it is hard to go another
route and do a short sale but until the sale is
scheduled, you can list your property for sale and send
the package to the bank for approval. The bank will
always choose a short sale over foreclosure. |
Brooklyn, New York |
|
August 6, 2012 |
August 6, 2012 |
Short Sale
Always Better Than
Foreclosure
Link on Blogger.com |
I have a
modified loan and a second loan with the same bank
in New York City, which are now current. I recently lost
my job and am unable to continue making mortgage
payments. I also have no possibility of sale as the
combined mortgage principles and the home value may be
the same at the present time. If I decided to go for a
short sale
or go into
foreclosure, does the lender here in New York City
have the right to go after me with a deficiency
judgment, and if they do how long the foreclosure
procedure will take before eviction? |
It is always better to do
a short sale
than to go into
foreclosure. As a result of foreclosure, the bank
can try to obtain a deficiency judgment against you but
of course getting it satisfied is a matter of having
assets. Short sale, on the other hand, if properly
negotiated, does not result in a deficiency judgment but
rather debt forgiveness, as it gets reported to the IRS.
This year, you don't have to pay taxes back on the
amount of debt that gets forgiven and you basically walk
away without liability. As a matter of fact, most banks
will offer you money to do a short sale. Please note
that foreclosure in New York City can take several years
if you are trying to wait it out and see if you can get
back on your feet and then reinstate your mortgage. |
Brooklyn, New York |
|
August 3, 2012 |
August 3, 2012 |
How Soon is
Foreclosure Process Started in New York?
Link on Blogger.com |
I walked away from my home
several years ago, which was due to illness and
financial distress. I mailed the keys to my home to my
mortgage company and have not made any payments since.
My home has not gone into
foreclosure, and now there is a collection company
calling me. How soon is the New York foreclosure process
normally started? |
Foreclosure in New York can be quite a lengthy
process. Many cases depend on the quality of the paper
work that the bank has to process with foreclosure. If
you are not resisting foreclosure and are in default,
then generally, it should be quicker but a multi-year
time span is not surprising. However, the fact that a
collection agency is harassing you for payments most
likely indicates that you are not in foreclosure. What
probably happened is that bank could not move standing
of your mortgage to foreclosure or the loan was so
minimal that it was not economically beneficial for the
bank to pursue foreclosure and charged your debt off,
selling it to a collection agency for pennies. You
should do some investigative work as to the status of
your case because it is possible that you could have
been living mortgage free all these years. |
Brooklyn, New York |
|
August 1, 2012 |
August 1, 2012 |
Procedure to Initiate
Foreclosure
Link on Blogger.com |
I have first mortgage
which is current, not past due, all payments made on
time. I have a HELOC, which is delinquent by several
months and the bank sent a
foreclosure letter. Even though they are secondary
can they foreclose? |
Procedurally, to begin
foreclosure, the bank must first send a 90-Day
Letter, giving you 90 days to get current on the loan.
If foreclosure process is initiated sooner, it can be
dismissed on the grounds of failing to send the 90-Day
Letter. Having said that, most banks are so backed up
that just because you have received that letter does not
mean that foreclosure will begin exactly 90 days later.
In some cases, it is months later, and in other cases,
it may take a couple of years. It is trickier with the
second mortgages. The bank must evaluate if it
economically feasible for them to pursue foreclosure,
i.e., if the first mortgage takes up all the equity of
the home and there is nothing left for the second, then,
many times, the second position will charge off the
loan. It is more likely to witness foreclosure of the
second mortgage if there is equity left in the home once
the first mortgage is subtracted (ex: fair market
value=$300,000; 1st mortgage=$200,000; 2nd
mortgage=$100,000--there is enough equity for both
lenders to recover the amount of the debt). So, it is
definitely possible for the second mortgagee to
foreclose, hence you sign the mortgage at closing as
security instrument for the lender, allowing the bank to
take away your property if you default on payment. |
Brooklyn, New York |
|
July 30, 2012 |
July 30, 2012 |
Negotiating a
Settlement with a Bank to
Extinguish Mortgage Debt
Link on Blogger.com |
We were facing
foreclosure and we filed for
Chapter 7
Bankruptcy, which was discharged earlier this year.
At that time, we owed about half of our total mortgage
debt on the first mortgage and half on the second and
both mortgages were with the same bank. The value of the
home at that time was listed in the bankruptcy at about
as much as our first mortgage was worth and most of the
second mortgage was unsecured. Presently we owe slightly
more on our first mortgage than at the time of
bankruptcy (we are current with our payments but with
interest it has gone up since the bankruptcy) and have
not been able to pay the second mortgage for three years
now. I got a personal injury lawsuit settlement recently
and we would like to approach the bank that holds the
second mortgage with a settlement lump sum amount. I
believe we had to reaffirm the first but if we approach
the second and they do not go for a lump sum, will they
be able to come after us for the payments like they did
before the bankruptcy? Will we have to reaffirm the
second and what exactly does that mean? How do we best
go about approaching the bank? |
You should contact the
attorney
who filed
bankruptcy for you and find out if bankruptcy
already wiped out the second mortgage, or at least the
unsecured portion of it. In any case, lenders in second
position entertain settlement offers with much more
enthusiasm than one would think since the main concern
is to receive something than be wiped out completely. In
your case, if you are still obligated under the second,
you should definitely
negotiate into a lump sum payment
and there is a high probability that the bank will
accept a lump sum (usually in proportion to the fair
market value of the home minus first mortgage is what's
left for second to recover). Otherwise, find out if
there is a possibility of a
loan
modification--that could be another way out or you
will be back at square one where you were before you
filed for bankruptcy. |
Brooklyn, New York |
|
July 28, 2012 |
July 28, 2012 |
Steps for Qualifying
for
Loan Modification
Link on Blogger.com |
I have been given a run
around by my bank regarding a
loan
modification. They put me in a
foreclosure and then rescinded. They assigned
multiple representatives to my account. Recently they
sent me a letter stating that I am not eligible for a
loan modification, because I did not provide them the
documentation they requested, although they had this
documentation from me on file for a while now, but
according to them it now needs to be updated. Our
biggest fear is that they can put us in foreclosure and take our home away
whenever they want to. So far, I tried working with the
bank directly with no third party assistance. We sent
them all requested documents months ago, only to be
asked to start all over. We thought we were going to be
approved for a loan modification, so that we can move on
with our lives. But now we are at square one again. We
have sufficient income, so we can afford the mortgage. |
There are a lot of
criteria that need to be satisfied to be approved for a
loan
modification. Banks are so overwhelmed by the number
of homeowners who are in default and are seeking
assistance that is it almost impossible to find a bank
that completes its deadlines to review the documents
timely. You have to be patient and annoying and call the
bank at least once a week to find out the status of the
review. If anything is missing, it needs to be
supplemented immediately. Otherwise, documents have such
a short life span that within 60 days, documents will go
stale and will need to be updated again and again. It is
always best to send everything at once. If something is
missing or income cannot be verified immediately and you
need two new bank statements, you will have to resubmit
all documents again (including updating all the forms
which sometimes change its format). That's the first
part of the puzzle. Second is actually qualifying for a
loan modification. To get a loan modification, you must
qualify, which means you have to be within specific
income brackets to qualify in proportion to your total
debt (including arrears). You can't make too much and
you can't make too little since both of those reasons
could disqualify you, among many others. Receiving a
denial for missing documents is not the end of the road.
Rather, it is the beginning for a new submission with
all new documents. Before you submit, it is better to
speak to a
professional who has knowledge of this area so your
financial situation could be properly assessed whether
you qualify. |
Brooklyn, New York |
|
July 26, 2012 |
July 26, 2012 |
Bank
Attorney's
Fees in
Foreclosure Cases
Link on Blogger.com |
The bank I have my
mortgage with is saying that I have been behind on my
mortgage for several months. I acknowledge that I am
behind on my mortgage but by much fewer months than my
bank suggests. When I tried to make a payment, I was
told that I had 48 hours to pay the outstanding balance.
I got the money together, but then the bank
representative told me that they would not accept my
payment because my case had gone to
foreclosure and I need to pay the foreclosure
attorney's
fees now as well. On the other hand, my account manager
told me to send the payment in, so I did and now he says
that my case will be taken out of foreclosure and the
bank will inform them if I owe them anything with
regards to the foreclosure attorney's fees. Who do I
believe and what will happen next? |
Generally, if your loan
was referred to a
foreclosure
attorney,
the bank cannot accept the money anymore and it has to
go through their attorney's office to reinstate it so
all the fees could be properly evaluated. In your case,
you are not behind by much and it seems that the bank
referred your case into foreclosure at its first chance.
Generally, what it means is that the attorneys for the
bank have to draft a summons and complaint and serve you
with the papers. So, if their attorneys just received a
referral but they haven't done anything that would have
incurred fees yet, then it is very likely that the
amount of arrears is still the same as you were told.
You can also call the attorneys for the bank to double
check but based on the short amount of time in default,
the scenario you described could make sense. |
Brooklyn, New York |
|
July 24, 2012 |
July 24, 2012 |
Is Mortgage Company
Obligated to Stop
Foreclosure Proceedings by Accepting my Past Due
Payments?
Link on Blogger.com |
My mortgage company
offered to accept the past due payments on my account in
the
foreclosure process in exchange for stopping the
foreclosure proceedings. Is the mortgage company
obligated to stop the foreclosure by accepting the
payment? I am not the mortgage holder but I am in the
house with a filed quit claim deed in my name. Since I
am not the mortgage holder I can't get anything in
writing legally from the mortgage company stating their
terms to me.
I have had a consultation with a real estate
attorney,
who answered some questions for me. |
That's right. As long as
the bank receives its payment, they will keep on taking
it. They will reinstate the loan, the payments will go
back to their original terms and the
foreclosure proceedings will be stopped. You can't
get anything in writing because you are not the
borrower. You would have to assume the loan to make it
in your name and to have any new terms stated in
writing. But if you are not trying to get a
loan
modification on your mortgage and just trying to
resume to making payments, then you can just send the
check to reinstate it and then continue making monthly
mortgage payments. As long as you do, the bank will not
bother you. As soon as you stop, again, the borrower,
who is the person financially obligated under the note
will end up in
foreclosure, thus, risking losing the home that you
own. |
Brooklyn, New York |
|
July 21, 2012 |
July 21, 2012 |
Am I Responsible For
2nd Mortgage on My House (That Was Charged Off), If the
Bank
Forecloses On the 1st One?
Link on Blogger.com |
Our home is in
foreclosure and we have been working with the lender
to get a
loan
modification on it for over a year. There was a
second loan on the house, with the same lender, that we
thought was "settled" but when we called the lender
about a year ago to confirm that it was "settled", we
were informed that it had been charged off about three
years ago. If the first loan is foreclosed upon, will
the bank come after us? If they don't for the first,
will they for the second loan? We contacted an
organization called NACA, and they have been assisting
us with trying to achieve an affordable monthly payment
on our house, and to avoid foreclosure. I'm getting
divorced and the Judge told me he would award me the
house, but that I would have to sign a waiver claiming
sole liability on the home. I don't know yet if I will
be able to get the loan modification and I don't want to
claim all liability if the house goes into foreclosure
with the second loan being charged off and me still
being responsible. |
Once the second loan is
charged off, the lender generally sells it to a
collection agency to try to recover some money from you
(generally a percentage of what is owed). The fact that
your loan was charged off to begin with indicates that
the property had no equity and that it was not
economically feasible for the 2nd lender to pursue
foreclosure. Therefore, if foreclosure actually
takes place, all or most of the money recovered will go
to the 1st lender to satisfy the debt. By having charged
the second loan off, the loan is no longer secured. It
will be treated as any other unsecured debt, like a
credit card debt. If you have no assets that the bank
could take if the home is foreclosed upon in order to
satisfy a deficiency judgment (if the bank chooses to
pursue it), then it is very unlikely that you could be
at risk. Worse comes to worst, you might be able to file
for
bankruptcy to discharge your unsecured debts. You
should note, however, that you can't get the
loan
modified if you divorce unless you assume financial
obligation of the debt. In order for the loan to be
modified, you need to be able to show financial
affordability, or 31% of your gross monthly income
should pay off your mortgage in 40 years at 2%. NACA is
a 3rd party that works with the bank to help you get the
loan modified. Generally, the bank cannot deal with you
directly once NACA is involved unless that agreement is
severed. Just stay on top of what's going on to make
sure your loan is reviewed for a loan modification. If
the first is modified, then it is most likely you won't
have to worry about the second until you sell the home. |
Brooklyn, New York |
|
July 19, 2012 |
July 19, 2012 |
What Can a Bank Do to
Satisfy a Deficiency Judgment from a
Foreclosure?
Link on Blogger.com |
We are being sued by our
bank. Our property went into
foreclosure about five years ago. Can our bank
garnish our wages or reach into our personal bank
accounts? What can we do to minimize our exposure? We
agreed to a payment schedule but never heard anything
back. Recently we received new communication from the
bank, where they are asking for more documentation, such
as personal bank accounts information, property
ownership, etc. The first lien holder sold our mortgage
to our bank, which retained an
attorney
to collect the difference between the amount that the
property sold for at foreclosure sale and what we owed
on our principal balance. |
Yes, the bank can go after
the deficiency judgment, which in this case appears to
be the difference between the amount the property sold
for at
foreclosure sale and your principal balance. The
only way the bank can satisfy this debt is if you have
assets, i.e., another property, bank accounts, W-2 job,
tax refund from the IRS, etc. If you have no assets,
then you are considered judgment proof, meaning that the
creditor will not be able to recover anything from you.
If you are employed, then up to 10% of your wages can be
garnished. Perhaps, you can negotiate with the
collection company or the
attorney
that is pursuing collection of this debt to
settle for
less. Oftentimes, they will take a lump sum that could
be less than half the cost to make it go away. |
Brooklyn, New York |
|
July 17, 2012 |
July 17, 2012 |
Qualifying for
Loan
Modification After Filing
Chapter 7
Bankruptcy
Link on Blogger.com |
I recently had to file a
Chapter 7
Bankruptcy to keep my property from
foreclosure. Subsequent to the filing of Chapter 7
Bankruptcy, can I still manage to get a
loan
modification or sell my property through a regular
listing? |
Yes, after you assume the
loan through the
Chapter 7
Bankruptcy and the stay is lifted or Chapter 7
Bankruptcy is discharged, you can still try to work out
loan
modification with the bank.
Foreclosure or possibility of loan modification is
not affected by Bankruptcy unless you surrender the
property or the property is taken away. Now, you have
the option to try to work out different
loss
mitigation options (i.e. loan modification) through
the Bankruptcy court. Talk to an experienced
attorney
to determine the
best
option for you. |
Brooklyn, New York |
|
July 14, 2012 |
July 14, 2012 |
Retrieving your Equity
from
Foreclosure Sale and Filing a Motion for Surplus
Money Proceeding
Link on Blogger.com |
Our home was recently
foreclosed on by the mortgage company. There will be
a sum of several hundreds of thousands of dollars in
equity owed to us after the mortgage company takes the
money that is owed to them. We have been contacted by
individuals and lawyers stating that we should retain
their services in securing our equity from the
foreclosure sale. They want a substantial percentage of
the proceeds that will be due to us to handle this
procedure. The New York City rules seem to indicate that
the money owed to us are simply dispersed as a matter of
law in a timely manner. I can't understand why we would need
such an expensive representation for this as our case is
not so complicated. Do I need to file anything along the
way and do I need an
attorney? |
You will likely need an
attorney
who can bring a motion to the court for the Surplus
Money Proceeding. It takes time for the court to hear
you on your motion, then decide it, and thus, for the
money to be disbursed. You will need to go through the
New York City Department of Finance to obtain the funds
eventually. Paying a percentage of the recovered amount
seems a bit excessive. Look for a professional who would
agree to do it based on a fixed retainer fee. |
Brooklyn, New York |
|
July 10, 2012 |
July 10, 2012 |
Homeowners
Association's (HOA's)
Precedence in Claims on your Property over the Bank
Link on Blogger.com |
We recently got a
loan
modification on the mortgage on our primary
residence with very attractive terms. We have two
HOA's
and we communicated to them that we would catch up on
our dues when the loan modification became permanent.
One of the HOA's put us in collection. What will happen
if we stop paying anything to the HOA? Will they
foreclose and get someone to pay the bank the amount
due on the note. What risks do we take if we don't pay
one of the HOA's? Can the HOA
foreclose and ignore the
bank and the money owed to the bank? Who pays the money
to the bank? |
You are better off not
messing with the
HOA.
HOA can put your home/condo for sale, recover its fees,
pay the rest to the bank. Oftentimes, the bank will
itself pay the amount due to avoid any type of lien sale
and then charge you for it. HOA fees are not even
extinguished when you file for
bankruptcy. So, they will not be extinguished in
foreclosure. If you want to save your property, you
should make an arrangement with HOA to catch up on
arrears. |
Brooklyn, New York |
|
July 2, 2012 |
July 2, 2012 |
Can the Bank Garnish my
Wages and Go after my Assets through a Deficiency
Judgment?
Link on Blogger.com |
A few years ago, I took
out a second mortgage from my primary residence and made
a few unsuccessful investments with that money.
Subsequently, I was forced into
Chapter 13
Bankruptcy and I surrendered all of assets I had
acquired as investments. Chapter 13 Bankruptcy did not
take care of my second mortgage. Now I need to get a
loan
modification on both: my first and second mortgages
to stay in my primary residence. So far the banks have
not been cooperating. I will stop paying both mortgages
as I can save that money to find another house to rent.
The first mortgage will be covered in a
foreclosure sale, but the second will not. Can the
bank come after me for the difference and garnish my
wages? |
Essentially,
foreclosure should be your last resort. Mainly, it
is because of the deficiency judgment. Yes, banks can
obtain a deficiency judgment and go after your assets or
garnish your wages to satisfy the debt although
sometimes the bank can make an exception. If you know
you are willing to surrender your property, then you are
better off doing a
short sale,
especially because on your primary residence this year,
any debt, that is
forgiven is not subject to capital
gains taxes. Consider doing a short sale or
deed-in-lieu to avoid negative financial
consequences. |
Brooklyn, New York |
|
June 27, 2012 |
June 27, 2012 |
Does the Bank Have
Claims to my Future Assets because of a
Short Sale of my
Old Property?
Link on Blogger.com |
We just completed a
short
sale on a home financed by our bank. We are getting
another home as a gift in a few months. Can the bank
come after us because we now own a home debt-free? Our
old home was purchased using a standard loan that we
refinanced. We sold the home for about $60k less than
what we owed to the bank. My wife is unemployed and
cannot work due to a medical disability. |
No, that shouldn't be an
issue since at the moment you did a
short sale on your
home, you did not own another asset. Once you do a short
sale, the amount that is
forgiven gets reported to the
IRS as a taxable income. But if you did a short sale
this year on your primary residence, any debt that gets
forgiven is not subject to capital gains and you won't
have to pay any taxes to the IRS in relation to the
short sale. |
Brooklyn, New York |
|
June 23, 2012 |
June 23, 2012 |
Is Strategic Default
the Best Path to
Loan
Modification?
Link on Blogger.com |
We are looking for a
strategic default because we got no help in adjusting
our mortgage down to reflect the drop in value of our
home. We have called the bank many times over several
years. We can afford the payment, but our payment is
scheduled to go up in the future and the house doesn't
justify the cost. We have inquired about merely getting
our rate down to going rates and every time no matter
what new so-called
loan
modification program exists have been told you have
to initiate default by missing a payment for the bank to
even start discussing it with you. Should we get
legal
assistance in the strategic default process? |
Numerous factors come in
play here. It is true that most banks will not even
consider you for a
loan
modification unless you missed three (3) payments.
But if you miss three (3) payments, then you have to
beware that you are at risk of
foreclosure. If your current mortgage payments are
affordable, then you may not even qualify for a loan
modification. Loan modification is not automatically
granted. You must submit documents; the bank reviews
them; and if you qualify, you may get a loan
modification. Certainly, you could be risking a lot
more. If your credit history is good, then you should
try to
refinance and you can still get a good market rate
today. If you decide to try for a loan modification,
consult with a
professional in advance to ensure that you qualify. |
Brooklyn, New York |
|
June 4, 2012 |
June 4, 2012 |
Making Mortgage
Payments During
Short Sale
Process
Link on Blogger.com |
We are considering a
short sale
on the home we owned for many years. We contacted a
short sale agent but we did not contact our bank. I lost
my job last year. The agent advised us that we are
$10,000 under water on the property not including an
additional home equity line. We are current on our
mortgage payments but we are wondering if we should
continue to make the payments during the short sale
process? |
You should have no
problems doing a
short sale,
especially if you are only $10,000 under water. You need
to contact the bank to initiate the short sale process.
They will absolutely have to verify your financials to
ensure that there is no way to repay the entire debt. In
your case, where the amount of debt that needs to be
forgiven is $10,000 but if you have other assets, it may
be a problem. Since every bank has its own process in
place, you need to contact the bank to determine if they
will agree to a short sale in your case. It doesn't seem
that there should be a problem with such a small amount
being forgiven. As far as stopping payments goes, you
need to know that when you stop making payments, you are
always at risk of facing
foreclosure. At the same time, if you stop making
mortgage payments, by the time the short sale takes
place, you will owe more money to the bank, and thus, a
greater amount might or might not be forgiven. The
amount that banks will generally accept at the short
sale is roughly equivalent to the fair market value of
your home. |
Brooklyn, New York |
|
May 23, 2012 |
May 23, 2012 |
Bank's Rights to
Deficiency Judgment Following Acceptance of
Deed-in-Lieu
Link on Blogger.com |
We have been approved for
a
Deed-in-Lieu of
Foreclosure. My case is very straight forward (i.e.
one mortgage, no liens, etc). The Estoppel Affidavit
that we received mentions the cancellation of debt. Does
the bank's acceptance of Deed-In-Lieu of Foreclosure
waive their right to a deficiency judgment? |
No, you avoid a deficiency
judgment by opting for the
Deed-in-Lieu of
Foreclosure. However, when any portion of the debt
is cancelled, the amount that is cancelled is then
treated as part of your annual income, on which you
would have to pay taxes at the end of the year. However,
if the debt is cancelled on your primary residence, then
you don't have to pay taxes on that amount. Essentially,
if the property is not an investment property, then you
should have no monetary consequences. |
Brooklyn, New York |
|
May 12, 2012 |
May 12, 2012 |
Deficiency Judgments in
Foreclosure Cases
Link on Blogger.com |
I'm in
foreclosure on my property. The auction date is set
for next week. If there is a deficiency in the sale
price, will I be liable for the deficiency? Should I
file
bankruptcy prior to the foreclosure? I've spoken to
some mortgage brokers, but I'm getting mixed feedback. |
Yes, the bank can go after
you for the deficiency. Generally, though, in order to
be able to enforce the deficiency judgment, you must
have some other valuable assets, like another property
or sufficient sum of money in the bank account. It is
generally more advisable to do a
short sale
or a
deed-in-lieu of
foreclosure. Then, if the property is your primary
residence, you don't have to pay taxes on the debt that
was cancelled.
Bankruptcy is always an option as an emergency
backup to stop the foreclosure sale. Once you file for
Bankruptcy, there is a 30-day stay of foreclosure
proceedings. Within that time, if you can't work out the
way to keep your home, then the bank can move for a
motion for relief from stay, thus, allowing it to
proceed with the foreclosure, and hence, the foreclosure
sale, once again. |
Brooklyn, New York |
|
May 5, 2012 |
May 5, 2012 |
Starting the
Short Sale
Process
Link on Blogger.com |
I would like to put my
home up for a
short sale. How do I start? If anything occurs in my
home (i.e. it incurs internal damages), will the bank
come after me? Will the bank come after me for the
difference in their short sale price and the amount I
owe? |
To start the
short sale
process, you need to contact the bank first. You will
have to fill out a package of documents and the bank
must determine that you qualify for short sale. The bank
is not a purchaser of your home, so the bank cannot come
after you for broken things. Since your are selling your
home to a 3rd party buyer, once the short sale takes
place, you are not responsible for any damages to the
home if the purchase is "as is" unless you have
intentionally concealed the truth about some material
defects of your home. When the bank agrees to do a short
sale, they agree to cancel part of the debt that is
non-recoverable under current market conditions and they
write off that amount as their loss for the year. IRS
will send you a form with the amount that was cancelled
to report on your taxes. However, if the property is
your primary residence, then you won't face any tax
consequences. |
Brooklyn, New York |
|
Apr. 27, 2012 |
Apr. 27, 2012 |
Loan
Modification for Homeowners, who Have just recently
Regained Employment
Link on Blogger.com |
My mortgage was
transferred from first bank to second bank in December
2011, I lost my job at the end of that month. My
mortgage is current through January. I contacted
HOPE
in January to assist me while I looked for employment. I
sent countless documents to HOPE, who in return sent
them to the second bank. The second bank, however, has
not been effective in trying to help me stay in my home.
They have said I am ineligible because I am receiving
unemployment benefits. I have asked about the
Unemployment Program listed under the Making Home
Affordable Act (HAMP) and I was told that I am
ineligible even before the list of documents was sent
from HOPE. I just recently landed a full-time position
in public sector, which I am about to commence very
soon. I told the second bank this, in hopes to stave off
the
foreclosure process, but I was told that the
foreclosure process will begin shortly. I want to stay
in my home. My new job will produce less income than my
previous job, but with a lower interest rate, currently
I am above 6%, I feel I just need a little time. I was
never late nor missed a payment while I was employed and
I feel that the second bank is just going to continue to
regard me as ineligible for
loan
modification or any other assistance. Please, tell
me what options I have to stay in my home. |
It is unclear if the
second bank is about to set a
foreclosure sale date or commence a foreclosure?
Your home cannot be foreclosed upon until the bank
exercises its legal right by suing you in court as a
result of the default under the terms of the Note and
Mortgage. If you have not gone through the lengthy court
foreclosure process, then the second bank cannot be
setting a meaningful foreclosure sale date any time
soon. If, however, the bank initiated its foreclosure
action a long time ago, then it is likely that a
foreclosure sale could take place shortly. If that is
the case, then you may want to consider filing for
bankruptcy to stop foreclosure and you can even try
to obtain a
loan
modification through the Bankruptcy Court. On a
different note, if you just started your job this month,
then you would not have enough financial documents to
verify your income. You would have to wait 2 months, get
30 days of pay stubs and 2 months of bank statements,
along with all the forms, and most recent tax returns
and try to submit the documents again. It is very hard
to get a permanent loan modification when you are
unemployed because then you obviously show
unaffordability of the monthly mortgage payment to the
bank and the last thing the bank wants is another
default. Unemployment program under
Making Home Affordable Program (HAMP) is a temporary
solution. To get the monthly amount reduced permanently,
you need sufficient income. Now that you are employed
again, there is a great chance of
success
to your story. |
Brooklyn, New York |
|
Apr. 15, 2012 |
Apr. 15, 2012 |
HARP
qualification for homeowners, who are on the deed
but are not the borrowers on the note
Link on Blogger.com |
My spouse has recently
passed away. Our mortgage was in his name only. The bank
says I am not eligible for
HARP
2.0 because the loan was in his name only. My name is on
the deed of trust. They have suggested
short sale
or
foreclosure. I really want to keep my home and have
my payments reduced. Is there a way to do this? I
already tried calling the bank several times to try to
find a solution to get my home in my name and apply for
HARP 2.0 to
refinance, but so far no luck. |
Unfortunately, even though
you are on the deed, you are not the Borrower under the
Note. Therefore, the bank cannot
refinance or
modify
a loan, which you are not financially obligated to.
The way to do this would be to first assume the loan but
you would have to qualify for assumption, i.e., you must
be current on your monthly mortgage payments and you
should have sufficient income to qualify. Then, at some
later point in time, if you are actually having
financial difficulties, you can discuss the options of
refinancing or loan modification with your bank. |
Brooklyn, New York |
|
Apr. 14, 2012 |
Apr. 14, 2012 |
Limited
loan
modification options for loans involving servicing
and investor banks
Link on Blogger.com |
I received a
foreclosure notice after 3 plus years of trying to
get a
loan modification through my servicing bank. They
told me after many tries that the investor bank would
not allow my loan modification. I would like to fight
them in court as to their right to refuse my loan
modification after they rejected my payments. Do I have
any options? I've sent payments but they were returned,
tried loan modification but that didn't work. Is it
possible to fight the validity of my bank in court as
the trustee of my note is considering they probably
purchased my mortgage with thousands of others and are
looking to write off the debt. I have saved up the 90%
of my arrears, but I don't want to give it to them
without getting better mortgage terms. Should I hire a
lawyer
to fight this case for me? |
It sounds like your case
will involve some serious
litigation. It is very likely that the bank in the
foreclosure action may not be able to prove its
standing to sue (by not being the owner of the note) but
that can only be disputed if it is timely brought up to
the court. Unfortunately, most of these loans where one
bank is the servicing company but another bank is the
investor, the options for a
loan
modification are limited. In many similar cases, the
investor bank granted the servicing bank very limited
rights as to what can be done in terms of loan
modification (that information is provided in the
Pooling and Servicing Agreement that you would not
necessarily know about). Sometimes, when you speak to a
servicing bank representative over the phone, you can
ask them for the type of limitations that the investor
bank has provided in terms of loan modification. The
investor bank, for example, may allow for an interest
reduction but may not allow term extension, which is
another major component of achieving affordable monthly
mortgage payment. Also, very often, the problem of being
denied a loan modification is improperly filled out
paperwork. If you are not properly documenting your
income, it is very likely that you can be denied for
having insufficient income or you may be denied on the
grounds of already having an affordable monthly payment
(i.e. current payment is lower than 31% of your gross
monthly income). In any case, your hope is not lost. If
you just ended up in foreclosure after 3 years, then
your process is just beginning. First, you will have to
go through the court mandatory foreclosure settlement
conference part, where the bank must
negotiate with you in good faith. You have a lot
higher chances of obtaining loan modification while in
court than on your own. So, your battle is just
beginning and good luck
winning
it! |
Brooklyn, New York |
|
Apr. 5, 2012 |
Apr. 5, 2012 |
Does a default on a
construction loan entitle the bank to the land as well
as the home?
Link on Blogger.com |
We have been told by the
foreclosure court that our foreclosure sale date
will be in 90 days. We owned the property prior to
obtaining a construction loan in 2005, to build our
home. Now that we are in foreclosure for the mortgage
from 2005, is the bank also entitled to the property
which we had owned prior to the construction of our
home? We were also told that filing
Chapter 13
bankruptcy will prolong the sale date of our home,
is this true? We got the construction loan solely to
build our home that is now foreclosed on. |
If you signed a mortgage,
then more likely than not, that you secured the debt
with collateral, i.e., property. Banks will generally
not give out a home loan without having its interest
backed up by collateral. That's what gives them the
legal remedy to
foreclose and to recover, if not the full amount
owed, then at least the fair market value of the
property. It is unclear what other property you own. If
you own one property and you
refinanced several times, your debt to the bank is
determined by the amount borrowed at the last closing.
It would be irrelevant if you bought your house a lot
cheaper a long time ago and then you refinanced and took
out a greater loan for whatever reason. You owe whatever
you last borrowed. You can try to
modify
your mortgage so you could reduce your monthly mortgage
payments as one way to avoid foreclosure. However, you
can also do a
short sale, which would allow you to sell the home
for the fair market value rather than for what you owe.
You can also do a
deed-in-lieu of foreclosure. Many banks today offer
financial incentives for you to do a short sale or a
deed-in-lieu. Finally, filing for
bankruptcy will stay the sale and a lot of people do
file for bankruptcy as the last resort to avoid
foreclosure. However, if you cannot work out a plan
through the Bankruptcy Court on how to resume to make
mortgage payments, the relief from the Bankruptcy court
will be temporary. While the sale will be stopped, the
stay will only last so long until the bank makes a
motion to lift the stay, which would essentially take
you back to square one (i.e. bank will continue the
foreclosure process). Weigh your options carefully as to
what exactly are you trying to accomplish... |
Brooklyn, New York |
|
Mar. 29, 2012 |
Mar. 29, 2012 |
Does having the deed
and the mortgage note in two different names delay the
foreclosure process?
Link on Blogger.com |
What happens in
foreclosure when the deed and the note are in the
names of two different people? Quitclaim deed was done,
the loan was never
refinanced and the lender was never notified. The
person owing the debt on the mortgage had since passed
away. Will this delay the foreclosure process and for
how long? What should the person on the deed do?
Unfortunately, I cannot keep the home due to financial
hardship. |
If you are on the deed but
you are not the one who took out the loan by signing the
note, you have no financial obligation, nor do you have
any rights as far as
loan
modification is concerned or any other type of
negotiations with the lender. If you are behind on the
mortgage, then you would have to assume the loan (if you
qualify), which would then create the right for you to
negotiate with the bank. If the mortgage is still
current, then you can continue to make payments to avoid
foreclosure. However, there is no way around
avoiding foreclosure if you do not make payments and you
do not assume the loan...it's only a matter of time. As
far as the foreclosure process is concerned, it could be
quite lengthy as the bank must follow proper legal
procedural steps in order to effectuate a foreclosure
sale, which could last anywhere from a few months to a
few years, depending on the county in which the property
is located. |
Brooklyn, New York |
|
Mar. 25, 2012 |
Mar. 25, 2012 |
Stopping
foreclosure sale by reinstating the mortgage loan
Link on Blogger.com |
Is it possible to stop a
foreclosure sale if I am able to make the account
current, despite the fact that since the commencement of
foreclosure action the legal fees imposed on me have
exceeded my budget? |
You can definitely
reinstate the mortgage loan to stop the
foreclosure sale. You can request the breakdown of
the legal fees with the bank's attorney's firm if you
believe there is something to dispute. |
Brooklyn, New York |
|
Mar. 23, 2012 |
Mar. 23, 2012 |
Refinancing a mortgage on a property saved from
foreclosure via
bankruptcy
Link on Blogger.com |
What steps need to be
taken to
refinance a mortgage on a property saved from
foreclosure via
bankruptcy? |
With bad credit history as
a result of an earlier
bankruptcy filing, you may not be able to
refinance. You can apply for a
loan
modification, if you need to save your home from
foreclosure once again. You may end up with more
affordable payments that you will be able to make in the
future, but you need sufficient income to qualify.
Consult with a
professional to help you determine if you are
eligible. |
Brooklyn, New York |
|
Mar. 17, 2012 |
Mar. 17, 2012 |
Unaffordable mortgage
payments:
loan
modification,
short sale
or
deed-in-lieu of
foreclosure
Link on Blogger.com |
My property is under water
by about $150k and my monthly mortgage payments right
now only include: interest, taxes and an association
fee. My interest only mortgage expires later this year,
which means I will have to pay principal and interest. I
can barely afford my monthly payments right now. I am
considering either listing the house up for
short sale
and then submitting the highest offer for bank's
acceptance, or walking away from it. I wanted to know
what my options would be if the bank did not accept the
short sale offer? If I walk away from the property, can
the bank hold me financially responsible? This loan is a
result of
refinancing several years ago, when my financial
situation was more stable. Since then, the bank has
denied all of my
loan
modification requests. |
Banks generally approve
short sales
where the purchase price is roughly equivalent to the
fair market value of the property. If you believe you
can get a short sale offer that would roughly match the
fair market value of your property, then that's the
amount that should be accepted by the bank. If this is
your primary residence, then you will not suffer any
financial consequences. You can also try to do a
deed-in-lieu of
foreclosure if you have bad luck selling your home.
If you would like to get a
loan
modification, then you should consult with a
professional who could determine if you are eligible
for a loan modification based on your financials. For
example, if you are unemployed and your only source of
income is unemployment, then that would explain the
denial. The bank, essentially, looks at your financials
to determine whether you could pay off your loan at a
lower interest rate and at a longer term (i.e. 2%
interest rate over 40 years). It is possible that your
paperwork was not properly filled out. If your priority
is to save your home, you can always reapply for loan
modification if you had a change in income (even if your
paperwork was not properly filled out before and now it
would be filled out correctly, that would be a change in
income from the bank's perspective). |
Brooklyn, New York |
|
Mar. 13, 2012 |
Mar. 13, 2012 |
Saving your home
through Chapter 13
bankruptcy
Link on Blogger.com |
I am self-employed and due
to medical reasons, I have recently had a loss of income
and therefore I am now in a
foreclosure process. I might be able to borrow funds
from family to get current on my mortgage. However, I am
wondering whether
bankruptcy might be a better option. If I consider
debt reconsolidation bankruptcy, would the house be
included in the re-consolidation? |
If you are referring to
Chapter 13
bankruptcy, then you could reorganize and
consolidate the debts, such as a debt for a home. You
would have to create a payment plan that would enable
you to pay off the delinquent amount in 3-5 years. The
best decision for you would have to be based on the
overall state of your financial affairs. If you have
delinquent credit card or medical bills, then most
likely Chapter 13 is the way to go, as it helps
eliminate some or all unsecured debts while being able
to save your most valuable assets, like a home and a
car. |
Brooklyn, New York |
|
Mar. 10, 2012 |
Mar. 10, 2012 |
Surrendering an under
water property to the bank
Link on Blogger.com |
What's the procedure to
hand over an under water real estate mortgaged property
to the bank? I have an interest only mortgage that
is up-to-date. |
Contact the bank and tell
them you are interested in doing a
deed-in-lieu of
foreclosure. Let the bank know that you are
having a difficult time paying your mortgage and that
you would like to surrender your property to the bank.
It is most likely that the bank will first ask you to
list it for sale and see if you could receive a
short sale
offer. If you are unable to sell it, then the bank is
likely to accept the deed-in-lieu, as long as there are
no tenants living on the premises that the bank would
then have to evict. |
Brooklyn, New York |
|
Mar. 6, 2012 |
Mar. 6, 2012 |
Short payoff offer on
the property vs.
short sale
Link on Blogger.com |
I have three mortgages on
my current home: 1) first two are with the same bank and
I am about 1 year and 6 months behind on them
respectively, 2) the third is with a credit union and is
currently up-to-date. I stopped making mortgage payments
because I ran into financial difficulties. The fair
market value of the property is currently as much as the
principal on my 1st mortgage alone, plus I owe back
payments, interest, penalties and taxes in addition to
principal. The bank is not willing to discuss a
loan
modification but is willing to entertain a
short sale,
the problem is I want to keep the property. Is there any
precedence for approaching the bank that owns the 1st
and 2nd notes and offer to purchase or payoff the notes
using the money from my savings? I only want to pay fair
market value or some compromise. Do you think the bank
that owns the 1st and 2nd mortgages would entertain a
cash offer without me having to disclose my finances? |
Most banks will agree to
do a short
sale but refuse to do a short payoff. They do not
want the borrower to benefit twice by extinguishing part
of the debt and allowing the same borrower to remain in
the home, whereas the bank will agree to do a short sale
for the fair market value of the home with a 3rd party.
Unless you are willing to pay the entire debt owed to
the bank, the bank is not likely to entertain your
offer. Some banks might agree to 80% of the full amount
but you have to send them an offer in writing and you
must stay on top of this, as banks often neglect to
respond to such offers. Also, it is important to note
that banks, upon realization that you have the ability
to reinstate the loan, will refuse to entertain any
short payoffs or
loan
modification offers. The bank might not necessarily
know of all your finances but they will likely have to
verify your funds to be sure you show affordability.
This may, however, begin a cycle of questions that may
be problematic and take you back to square one. |
Brooklyn, New York |
|
Mar. 3, 2012 |
Mar. 3, 2012 |
Responding to summons
and complaint, and subsequent steps in
foreclosure cases
Link on Blogger.com |
My bank is suing me
because I have not paid my mortgage for about a year.
These are the reasons I am not paying my mortgage: 1) I
applied for
loan
modification, but the bank never approved it, 2) for
personal reasons, I fell into financial hardship. The
summons and complaint letter I got from the court states
that I have 20 days to respond. What should I state in
my response? In other words how do I proceed? My main
concern is that following this
foreclosure process I might end up with a larger
debt than I had originally. |
When you personally get
served with the summons and complaint, you get 20 days
to answer unless you call the Plaintiff's firm and ask
for an extension to file an answer. Generally, such
requests get granted if you don't wait too long. In your
answer, you must answer to every allegation in the
complaint, either by admitting, denying, or stating that
you don't know the answer. If any paragraph of the
complaint remains unanswered, it will be considered true
and admitted. Once you answer the complaint,
foreclosure action cannot take place because of your
default. You will be put on notice of every legal
proceeding in your case. You will have an opportunity to
oppose Plaintiff's motions, as well. In New York you
will be placed in the mandatory settlement conference
part, where you and the lender will have to negotiate in
good faith to try to settle the case, i.e.,
modifying the loan (if you qualify). Essentially,
you have to figure out what's most important to
you--saving the home or getting rid of the debt as
quickly as possible. If your priority is to save your
home, then you will have an opportunity to do so in
court settlement conference part. If your goal is to get
rid of the debt (and the house) as soon as possible,
then you can either do a
short sale
or a
deed-in-lieu of foreclosure. Regardless of what you
decide to do, you should still put in an answer to the
complaint. Consult with a
professional attorney, who could advise you of your
legal rights. |
Brooklyn, New York |
|
Feb. 29, 2012 |
Feb. 29, 2012 |
Extension on
foreclosure sale in New York
Link on Blogger.com |
After the court has issued
a
foreclosure sale date, is it possible to get an
extension in New York? The bank dragged out my
short sale
until the last day and then declined the offer. I was
also told by the court that I would be able to get an
extension but when I attempted to get one a few days
later, the court told me there was no sale date on the
calendar and once it was entered then I could file for
an extension to complete a
deed-in-lieu. Now my goal is to try to get a
deed-in-lieu and keep this foreclosure off my credit
report. |
If you initiate the
deed-in-lieu process with the bank, they are likely
to hold off on the
foreclosure sale for now. In New York, there are
many procedural steps that the bank must take in order
to actually have the sale go through. If you have a
foreclosure sale scheduled and need to stop it on an
emergency basis, then filing for
bankruptcy is the way to stop the sale. However, if
you are afraid of having foreclosure appear on your
credit report, then you are not likely to agree to
bankruptcy either, but it is a good idea to know your
options regardless. Consult with an
experienced attorney to determine the best course of
action for you at this time. |
Brooklyn, New York |
|
Feb. 26, 2012 |
Feb. 26, 2012 |
Qualifying for
Deed In
Lieu of
Foreclosure
Link on Blogger.com |
We walked away from our house as we could no longer
afford it. The interest rate on our mortgage was
unreasonably high by today's standards and still our
bank was not willing to renegotiate the terms.
Therefore, we have been out of the house for several
months now. At this point we would just like the bank
to proceed with
foreclosure and take possession of the house, but
it's not happening. We heard about a process called "Deed
in lieu of Foreclosure". How do we go about this or
see if we qualify? |
Foreclosure is a complex, legal process. Just
because you stopped making payments and physically
walked away from the house does not mean that the bank
can just take the house away. The bank must initiate a
lawsuit and follow all the proper legal procedural steps
before it can get to the actual sale of your home. By
executing a
deed-in-lieu of foreclosure, you can expedite the
process. Essentially, by doing a deed-in-lieu, you are
transferring the title of your house to the bank, thus
avoiding foreclosure and all the fees and costs that the
bank accrues as a result of having to sue you. However,
there may be tax consequences, depending on the value of
your home at the time the transfer takes place.
Generally, a deed-in-lieu is a better alternative than
foreclosure if you have no intentions to save your home.
As a side note, please take into consideration that if
foreclosure action would take place in New York, there
are mandatory settlement conferences in New York,
whereby banks are bound to negotiate with the borrower
in good faith, and it is oftentimes, easier to negotiate
with the bank and have the interest lowered than going
through the court process. Furthermore, it is important
to note that a deed-in-lieu still places the headache of
re-selling the property on the bank. Therefore, the
lender might not agree to a deed-in-lieu unless the
homeowner has tried all other
loss
mitigation options first, such as
short sale. |
Brooklyn, New York |
|
Feb. 22, 2012 |
Feb. 22, 2012 |
Lack of legal standing
defense in the assignment of mortgage cases
Link on Blogger.com |
We have been issued a
summons and complaint in a
foreclosure process from our mortgage servicer. We
have been in the process of
loan
modification on our mortgage for approximately two
years (and paying as requested). The mortgage servicer
would periodically update us, letting us know that all
is proceeding well and our loan would be modified within
weeks, and then restart the whole process from scratch
all over again. They have dragged their feet for reasons
unknown to us, while telling us that we are doing
everything expected of us. When we got the summons and
complaint notice, we realized that it is not from the
mortgage servicer but from the bank. We have always only
dealt directly with mortgage servicer and not the bank.
We have factual evidence that proves that we have been
defrauded and that the bank has no legal standing in
this matter. We have assembled documents in response and
are alleging that the bank doesn't legally own the debt
or mortgage. Is there a specific process that we need to
follow to get the foreclosure dismissed? |
First things first, you
must answer the complaint. In your answer, you should
definitely use the defense of lack of standing (along
with other defenses if they exist). But you would also
have to bring a Motion to Dismiss based on lack of
standing and then it would be in the court's discretion
to determine whether your case is dismissible or not. It
is a common practice for banks to do an assignment of
mortgage, which would explain why another lender is
suing you. It is a rather sensitive topic for banks
today (as a lot of mortgage assignments were defectively
executed) and your suing bank would thus have to prove
their ownership of the note in order to proceed in their
action. Also, whoever is servicing the loan is generally
not the owner of the note. It is the servicer's duty to
collect the owed debt for the owner of the note. Please
do your research accordingly. You may want to contact a
knowledgeable attorney who could help you with
foreclosure defense. |
Brooklyn, New York |
|
Feb. 18, 2012 |
Feb. 18, 2012 |
Notice of Motion for
Summary Judgment (MSJ) and its role within the
foreclosure process
Link on Blogger.com |
We have just received a
notice that states that motion for summary judgment of
foreclosure has been scheduled for hearing on a
certain date. What does this mean and what is the next
step in the foreclosure process? If the foreclosure
entry is accepted by the court, what would be the next
action taken by the lender? If the lender's solicitor
goes to court on that date and the court sets the
foreclosure sale, does the solicitor contact us and how
long do we have before the foreclosure sale takes effect? |
If you have received
Notice of Motion for Summary Judgment (MSJ), that means
that you put an answer to the complaint and now the
attorneys for the bank are trying to tell the judge that
there are no issues of fact to be decided by the jury,
only issues of law to be decided by the judge. Along
with the MSJ, banks usually move the court for an Order
of Reference, seeking the court to appoint a Referee,
who would indeed conduct the sale. If you are fighting
to save your home, then it is best to put in opposition
papers to MSJ, where you should state why MSJ should be
denied. You would need an
experienced attorney, who could help you oppose and
then possibly argue before the judge. Also, please note,
that even if MSJ is granted by the court, the bank must
then move the court by filing a Judgment of Foreclosure
and Sale (JFS).
Foreclosure auction cannot take place until JFS is
granted and a sale is scheduled and you are put on
notice of the sale (in addition to having notice mailed
to you if you were served more than a year ago, notice
gets published a number of times in a local newspaper).
If you do not have sufficient time to consult an
attorney before the next court date, you can always come
to court and ask for an adjournment (typically
first-time adjournments are easily granted). |
Brooklyn, New York |
|
Feb. 15, 2012 |
Feb. 15, 2012 |
Bankruptcy filing stalling the
foreclosure process on my properties
Link on Blogger.com |
We filed for
bankruptcy in first quarter of 2011 and it was
discharged four months later. Two of our residential
properties financed by different banks were named in the
bankruptcy: 1) this property was financed through a
mortgage from the first bank, 2) this property was
financed through a mortgage and an equity line of credit
from the second bank. Both lenders have not
foreclosed on the properties yet. We tried to do a
loan
modification with the second bank, but ran into a
roadblock. Since then we have decided to move on with
our lives and let the banks foreclose on the properties.
However, the banks keep on stalling the foreclosure
process. Is there a "statute of limitations" that
prevents the banks from foreclosing on our properties,
because both properties were listed in the bankruptcy?
At this point we would like the foreclosure process to
move forward. However since both properties were named
in the bankruptcy, we are worried that banks will come
back to us at some point and let us know that both
properties are still our responsibility. |
Foreclosure can be a very lengthy process that could
take a number of years, not just months, especially if
you live in states that have experienced a lot of
foreclosures in the last few years. In those states,
courts are doing everything possible to slow down the
foreclosure process to help save as many homes as
possible. The date since you filed for
bankruptcy is irrelevant here. The bank will
foreclose on your home as soon as they can (legally and
procedurally). It will definitely be a quicker
process if you do not oppose it. At the same time, you
can perhaps try to do a
deed-in-lieu of foreclosure, whereby you give up the
deed to the house to the bank and that too could significantly
expedite the process. |
Brooklyn, New York |
|
Feb. 5, 2012 |
Feb. 5, 2012 |
In the case that I
default on mortgage payments on my investment property,
can the bank go after my primary residence, which is
paid off?
Link on Blogger.com |
I own two homes: one is
completely paid off and the other has a mortgage on it.
Due to certain events in my personal life I am worried
that I might default on the mortgage of the second home.
In the case that I do default on the mortgage, would the
bank be permitted to go after the home that is paid off?
I have not pursued any options yet. However, I also have
very unstable tenants in the house and will have trouble
making the payments if they move. |
The only way the bank can
go after your home that is paid off is if after a
foreclosure sale, there is still money owed to the
bank (i.e. difference between the mortgage and the sale
price). That should only be a concern if your home is
"under water." Then again, the bank can't just take your
home but can obtain a deficiency judgment resulting from
the difference in price and put a lien on your other
property (you are unlikely to be forced to sell your
primary residence). However, when you do voluntarily
sell your home, that is when you would have to satisfy
the lien. Nevertheless, if your home has equity, then
the bank will be satisfied with the proceeds from the
sale and that would not be a concern. Although most
banks have a policy in place to try to
modify
the loan on the primary residence, some banks try to
find a workout option even on investment properties. It
is possible that if you could get a loan modification or
refinancing, your payments could be much lower and
more affordable. |
Brooklyn, New York |
|
Feb. 4, 2012 |
Feb. 4, 2012 |
Mortgage payments on my
under- water home are no longer affordable due to
financial hardship. What can I do?
Link on Blogger.com |
I have been paying my
mortgage on-time for many years. Now I am late on my
payments by one month as I have ended up in financial
hardship due to certain events in my personal life. Very
soon I will not be able to afford my home. What can I
do? I owe approximately $225K and my home is now only
worth $200K. In the past, I tried to modify my mortgage
and after a year of
loan
modification process I was denied. |
Whether you qualify for
loan
modification depends on various factors, such as
gross monthly household income, debt to income ratio,
net present value of the home. On the mortgage of $225K,
you could likely qualify for
HAMP
loan modification (if your servicer participates in
HAMP) if your gross monthly income is approximately $3K.
However, if you are still unable to afford your monthly
payments or you have insufficient income, then you
should likely consider a short sale. Consider
contacting a
knowledgeable attorney, who could advise you on
options that would work best for you. |
Brooklyn, New York |
|
Jan. 29, 2012 |
Jan. 27, 2012 |
Does signing over
quitclaim deed release me from financial obligation on
foreclosed property?
Link on Blogger.com |
The bank is about to
foreclose on my home. Someone had approached me and
said that he will settle the debt with the bank if I
sign over a quitclaim deed. He also stated that he will
immediately take over possession of the house, deal with
the bank, the tenant, etc. and I will be able to walk
away from the house debt-free. I am very skeptical that
this can happen so easily. I am worried that quitclaim
deed does not release me from the financial obligation
on the property in case the property ends up in
foreclosure. How can this person make a deal with the
bank? How can I get the bank to release me from my
mortgage? |
You are absolutely right.
Whoever is telling you to do a quitclaim deed is trying
to scheme you. While this individual will become the new
owner of your property, you will continue being
financially obligated to the bank. It will be your
credit report that will suffer and essentially you will
be the one sued (although the new owner will be sued too
for the sake of having his interest in the property cut
off). The new owner will not be able to
modify
the loan or negotiate anything with the bank because
the new owner is not the borrower and the borrower is
the only person that the bank will deal with. If you
want to get rid of this mortgage, sell your property to
this individual or any other interested buyer and
satisfy the mortgage. If the buyer will need to take out
a mortgage, then let it be in their name, not yours. If
your property is worth less than the mortgage, then do a
short sale.
This way, you will also be able to get rid of financial
obligation to the bank, but do not, under any
circumstances, transfer the ownership of the property to
someone else while remaining financially responsible for
it! If you want to learn more about your rights in this
case and the proper transfer process, consider
contacting a
knowledgeable attorney. |
Brooklyn, New York |
|
Jan. 25, 2012 |
Jan. 23, 2012 |
Has my bank acted
negligently by not
modifying my loan for many years and now
foreclosing on my home?
Link on Blogger.com |
I have been trying for
many years to get a
loan
modification from my bank. They are now putting me
into
foreclosure. I exhausted all my savings, retirement
funds, credit cards and have had to file
bankruptcy all because of them dragging their feet.
Can I sue them for their negligence? |
While your
foreclosure case is pending in court, it is much
easier for you to show the bank's negligence by
explaining the details to the judge or referee. In NY,
settlement conferences are mandatory and the
judges/referees presiding over these cases have a lot of
leeway to obligate the bank to conduct a good faith
review of your financials for
loan
modification. Unfortunately, if you don't qualify
for a loan modification, it is not an indication of bad
faith. If you believe that the banks have been dragging
their feet by constantly requesting additional
documents, then unfortunately, it is part of the tedious
loan modification process. The bank cannot even review
you for a loan modification until it receives a
"complete" package. |
Brooklyn, New York |
|
Jan. 21, 2012 |
Jan. 19, 2012 |
Compelling your lender
to
modify your loan.
Link on Blogger.com |
How can I compel my
mortgage lender to
modify
my existing loan with terms that will relieve my
financial hardship? I have submitted five requests and
each time they have responded by proposing to place
delinquent payments on the back of the loan, refused to
reduce the principle balance and increased the monthly
payment. The principal on my loan is currently $100k
more than the market value of my house. I am requesting
of them that they reduce my principle balance to within
10% of current market value, and reduce the interest
rate to reflect a monthly payment at or near $1,5k. A
number of other homeowners have informed me they were
able to achieve similar terms. My lender has been
calculating our debt to income ratio using our gross
income which is approximately 1/2 our net income in
determining our ability to pay! How can we qualify for
the
HAMP program, or compel our lender to grant us an
in-house modification that will relieve our financial
hardship? What are the options that may fit our
situation? |
In order to qualify for
HAMP,
the bank must look at your gross monthly household
income. If you applied 5 times and were offered
loan
modification terms that have increased your monthly
payment, then 31% of your gross monthly income must show
affordability of such modified amount . It is also
possible that the packages were filled out incorrectly,
as is often the case. In order to continuously be
reviewed for HAMP, you need to show a change in income.
For example, when you last applied, you did not have
rental income but now you do, or vice versa. Also,
capitalization of all the arrears is the first step to
mortgage modification. If you owe more than $100,000.00
in arrears, they must get added to the unpaid principal
balance, including
foreclosure fees and costs, and that becomes your
new principal balance. When you do not have sufficient
income, then your lender may elect to forgive some of
your principal, or at the very least, it may defer up to
30% by adding a balloon payment to your agreement that
would mature in 30-40 years. If your income is enough to
show affordability without having to decrease your
payments to 2%, extending the term to 40 years, or
deferring some of the principal, then you are unlikely
to end up with better terms under HAMP. Traditional
modification may be another option if your net income
outweighs your expenses (expenses include the mortgage
payment that you are no longer making). You should
consider speaking to a
professional in order to determine what option will
work best for you. |
Brooklyn, New York |
|
Jan. 17, 2012 |
Jan. 15, 2012 |
Stopping
foreclosure while unemployed.
Link on Blogger.com |
I am unemployed and facing
foreclosure on my home that I have owned for over a
decade. The court has accepted my request for time
extension since I am scheduled for mediation in a couple
of weeks. I also have a formal offer from an investor as
the home has been up for sale since December. This offer
has been submitted to my bank and is in the beginning
stages of negotiation. My bank's
short sale
department tells me I can look at both options and make
my decision based on what mediator presents to me and
the bank. Do I have a chance of saving my home through
mediation if I have no income other than my unemployment
benefits? Should I take any job - no matter how low the
pay is to be able to negotiate better at mediation?
Should I file
bankruptcy instead (I have approx $20K in debt, most
of which is medical bills). |
The purpose of mediation
is to determine what type of
loss
mitigation option you are suitable for in order to
avoid
foreclosure. If you have no income, then
loan
modification would not be an option. Oftentimes,
borrowers do not understand what constitutes income. It
is not necessarily a job. It could also be pension,
disability, social security, rental income, even
contribution from a family member who lives with you,
etc. Basically 31% of your gross monthly income should
be able to pay off your entire mortgage debt in the next
40 years at 2% interest. The 31% must cover principal,
interest, taxes, and insurance. It is very likely that
if you get a job, you would be able to afford a modified
mortgage payment. If you file for
bankruptcy, it may help you get rid of your other
debts, but as far as your mortgage loan is concerned,
the bank will file a Motion for Relief from Stay, which
if granted, will allow the bank to proceed with
foreclosure. The only true way you can modify your loan
is by showing affordability. |
Brooklyn, New York |
|
Jan. 13, 2012 |
Jan. 11, 2012 |
Pursuing
short sale
on a property owned by a spouse
Link on Blogger.com |
My husband purchased a
home under his name some time before we got married and
everything on this property is registered under his
name. The mortgage principal on this property is
currently $20k less than the original purchase price,
while the short sale asking price is $60k less. We
didn't want to pay $40k just to sell the home, and thus
a real estate agent suggested that we do a
short sale,
which we have been pursuing since September and thus
haven't been making mortgage payments in hopes the house
would be sold by now. We do have money saved up, but it
is all under my name in my bank accounts. Are we doing
the right thing by not making payments or should we
start paying our mortgage? The bank is constantly
sending us letters saying they will begin the
foreclosure process on our home and our real estate
agent tells us this is normal. Will this situation
affect my credit score or just his? Will this matter the
next time I purchase a home since we are married now?
Can the bank come after us to collect? |
When you stop making your
mortgage payments for over 90 days, the bank can begin a
foreclosure action against your husband (since he is
the borrower under the loan so long as the bank abides
by proper procedural rules). Whether you can now resume
making mortgage payments depends on whether the bank has
legally commenced a foreclosure proceeding (i.e. you had
to be served with summons and complaint).
Short sale
is an option that is pursued when you want to sell your
home but your home is worth less than the mortgage.
Short sale is considered an alternative to foreclosure,
the benefit of which is that the bank cannot obtain a
deficiency judgment against you and then try to enforce
it (if you have joint assets, then the bank could try to
enforce such judgment against your assets). What you
have to keep in mind though is that the difference
between what you owe to the bank and what the bank
actually recovers at sale will be used as income when
you file your tax returns, i.e., if the property sells
for the asking price of your short sale, you might end
up paying taxes to the IRS on the $40k that was forgiven
by your lender. So, to cut more to the chase: (1) only
your husband's credit score will be negatively impacted
as he is the only borrower under the note (his score is
already adversely affected because he is no longer
making payments); (2) you will be able to purchase
another home in the future...if you intend to purchase
another home with your husband before his credit
recovers, then you may be better off taking out a
mortgage in your name (your husband can still be a
co-owner of the new property but you could be the sole
borrower); and (3) the bank can go after you to collect
only once the lengthy foreclosure process is actually
completed (remember: it does not apply if you conduct a
short sale other than the money you would owe to the IRS
at the end of the year). |
Brooklyn, New York |
|
Jan. 9, 2012 |
Jan. 6, 2012 |
Miscalculated escrow
payments by the bank
Link on Blogger.com |
The bank that holds my
mortgage miscalculated my escrow payments for last year
and I now have a substantial shortage. They claim they
were misinformed by the mortgage holder they purchased
the loan from. Should I be held responsible for this
discrepancy? |
You can request a payment
history from the bank and see how the funds were
applied. You should know what your escrow payments are,
as you get the statements from the bank and from the
city/county. Therefore, if you notice a mistake, you can
argue with the bank over the wrong information. Please
note that taxes typically go up every year or so, and
that your taxes could have gone up a while back and you
might not have noticed, while the bank has rendered the
difference. Typically, if there was a mistake made on
the part of the bank and you can prove that mistake, the
banks will credit your account for the mistake made on
their part. |
Brooklyn, New York |
|
Jan. 3, 2012 |
Jan. 1, 2012 |
Restarting the
loan
modification process after the first loan
modification window has expired
Link on Blogger.com |
The bank I have a mortgage
with has offered me a
loan
modification in September. However, due to minor
changes in my records a couple of years ago, a notary
public has refused to notarize my loan modification
papers. I contacted my bank on the same day and
subsequently in later days to come. Only now (three
months later), my bank has accepted my amended records,
but then said that my window for loan modification has
expired two days prior to that. What can I do now? |
Unfortunately, the only
place you can go from here is restarting the process
from scratch. You will have to resubmit your paperwork
and hopefully if the income is similar to what it has
been at the time of previous submission, you will be
approved with similar terms. The banks' timeframe for
accepting paperwork late is usually stretched out until
the end of the month approval was granted (i.e. the
entire month of September). Unless the bank issues a new
loan
modification agreement with a new deadline for
return, the original offer for a modification agreement
is no longer on the table. The good news is that since
the agreement from September has not been properly
enforced, the bank can still issue a new modification
agreement (although it is in the bank's discretion). You
should try to speak to the same negotiator who issues
the original modification agreement, supplement the bank
with updated pay stubs and bank statements, probably
re-date a few forms, and if the bank is working in good
faith, it might re-issue the modification agreement with
similar terms. |
Brooklyn, New York |
|
Dec. 30, 2011 |
Dec. 28, 2011 |
Walking away from under
water property
Link on Blogger.com |
One of my properties is
under water and I would like to walk away from it. The
bank knows my financial situation and I am not in
hardship. What is a proper legal procedure I can follow
to walk away from my house? |
In a somewhat rare
situation like yours, it is best to negotiate a
deed-in-lieu of
foreclosure with the bank. If you simply walk away
from your house now, the bank will follow its typical
foreclosure routine and obtain a deficiency judgment
against you. What makes your situation rare is that you
actually have assets to satisfy deficiency judgment, as
opposed to most other cases where the bank would not be
able to enforce such deficiency. Therefore, in your
situation, it is best to do the deed-in-lieu to the bank
as long as it has been agreed that you walk away with a
clean slate, i.e., no deficiency. Please note that the
bank will usually consider a deed-in-lieu as the last
resort. They would want you to try to do a
short sale
first. With short sales, there may be tax consequences
and again, in your case, it would have to be properly
negotiated with the bank to avoid that. Also, please
note that in order to do a deed-in-lieu, the property
must not be occupied by tenants. |
Brooklyn, New York |
|
Dec. 25, 2011 |
Dec. 23, 2011 |
Speeding up
the
foreclosure process
Link on Blogger.com |
My home is in
foreclosure and I don't know yet when the mortgage
company will take over my home. My homeowners insurance
will term next month and the mortgage company should
start covering the house through the forced coverage.
Given that my family is currently in financial distress,
I would like get this home off our backs as soon as
possible, since otherwise we could end up with a large
financial obligation that we cannot afford. I am looking
for suggestions on how to speed up this process. |
If your mortgage is under
water (i.e. mortgage is greater than the appraised value
of your home) and you are not renting any of the space
to tenants, then consider contacting the bank to do a
deed-in-lieu of foreclosure. Basically, you transfer
the deed of the property to the bank and you walk away
debt-free. It is then the bank's responsibility to sell
the property. Generally, the bank may require you to try
to do a
short-sale first (that is if the mortgage is under
water). If you still have equity in your home, then you
can always just try selling your home and paying off the
debt to the bank. Otherwise,
foreclosure process is very lengthy and will take a
couple of years to be completed, especially in NY, and
then the bank may obtain a deficiency judgment against
you for the remaining balance (the difference of what is
owed to the bank and what is recovered at foreclosure
sale). Call an
experienced attorney today to discuss your options. |
Brooklyn, New York |
|
Dec. 21, 2011 |
Dec. 19, 2011 |
Unaffordable
mortgage payments coming off the interest only loan
Link on Blogger.com |
The term on my interest
only loan will end soon and my home is under water. At
the end, I will end up owing $100,000 more than what my
home appraises to with 20 years left to pay off. Given
the above, I do not qualify for refinancing nor any
government programs. Also, my new mortgage payments will
be more than double of what I have been paying so far,
and I will not be able to afford them when they start to
kick in. What can I do? |
The first step for you is
to find out if your lender participates in the
government's
Making Home Affordable program (most major banks
do). If you have sufficient income and have not yet
defaulted on your mortgage, you may be able to
refinance through Home Affordable Refinance Program
(HARP). Another option is loan modification but beware
that even though it is not required by law, most banks
require that you default on your payments before you are
considered for
loan
modification. Start off with calling your bank and
inquiring as to what programs does the bank participate
in. If they tell you to default on your mortgage
payment, then a whole new can of worms opens up (i.e.
ruined credit; potential
foreclosure if the modification is not resolved) and
I would recommend looking into other options first. The
bottom line is--the bank does not want your home, and
even more so if your mortgage is no longer secured by
equity in your home. |
Brooklyn, New York |
|
Dec. 16, 2011 |
Dec. 14, 2011 |
Unaffordable
loan
modification terms
Link on Blogger.com |
I have been applying for a
loan
modification for over a year. Finally, I got
approved but my modified mortgage payment is only $50
less than my original payment. I still cannot afford
this new monthly payment. If I do not sign this
agreement will the bank continue to work with me in
trying to modify my mortgage under better terms or will
the bank automatically
foreclose on my home? |
This is a tricky area.
There are many factors that come into play in a
situation like this, such as: monthly household income,
the value of the home in comparison to your debt, how
many payments were missed, whether your escrow has gone
up, whether the loan is
FHA
(FHA loans generally end up in slightly higher monthly
payments because different rules apply), etc . For
instance, if you were qualified under HAMP and 31% of
your gross monthly income is only $50 less than the
original monthly mortgage payment, then the new amount
is accurate, as it based entirely on your gross monthly
income. Had 31% of your gross monthly payment exceeded
the original monthly payment by any amount, you would
have been denied altogether, citing that the original
mortgage payment was affordable. This is precisely why
it is hard to answer a question like this without
knowing all the details of the situation. However,
generally, once a
loan
modification agreement is issued, the bank will not
conduct another review unless there is a material change
in circumstances (for example, if your household income
has increased since last submission of documents). Most
banks conduct a review for HAMP and traditional
modification. It is sometimes possible that a new review
will result more favorably. It is always a good idea to
consult with a
professional who could accurately depict the picture
of your available options before you choose an option
that may later be regrettable. In any case, failure to
accept proposed loan modification will not result in
immediate
foreclosure in NY. It is still a long and complex
legal process that must run its course. |
Brooklyn, New York |
|
Dec. 12, 2011 |
Dec. 10, 2011 |
The option of
deed-in-lieu for those rejected for a
loan
modification
Link on Blogger.com |
I have been rejected for a
loan
modification. Should I do a
deed-in-lieu? If I take that option, can I continue
to live in my home? |
The idea behind doing the
deed-in-lieu of foreclosure is that the borrower
transfers the ownership of the home to the bank, thus,
wiping out the entire mortgage debt. Some banks even
provide a financial incentive for the borrower to do so.
The reasoning behind it is that the non-paying owner
leaves, allowing the bank to try to re-sell the
property, and this way, earn some, if not, all of its
money back. As such, you cannot continue to live in the
premises unless specifically agreed so with the lender. |
Brooklyn, New York |
|
Dec. 8, 2011 |
Dec. 6, 2011 |
Foreclosure auction and eviction
Link on Blogger.com |
If my home does not sell
at a
foreclosure auction, will I be able to stay in my
home? |
Generally, if there are no
bidders at a
foreclosure auction, the bank that owns the loan
usually bids a nominal amount to take possession of the
property. This way, the bank can at least have some
security that if it resells the property at a later
time, it will recover some, if not all, of the money
that was originally borrowed but not paid back. It is
further important to note that unless no one is living
at the property at the time of sale, the bank will have
to institute an eviction proceeding to get the old owner
or tenants out of the house. Essentially, the eviction
process takes time. Eventually, unless you bring an
Order to Show Cause to the Court to prove otherwise, the
bank will prevail at its eviction proceeding and at that
point, you will no longer be able to stay at your old
home. Since it is in the bank's best interest that you
leave as soon as possible, oftentimes, the banks will
offer different financial incentives to help speed up
that process and avoid an eviction proceeding (some
banks will pay for your move and offer extra money to
start over, but that is not a rule of thumb). |
Brooklyn, New York |
|
Dec. 4, 2011 |
Dec. 2, 2011 |
Does 'trial'
modification lead to 'permanent'
loan
modification?
Link on Blogger.com |
We have been working with
the bank for the past two years to get a
loan
modification and now we are losing our house to
foreclosure. Originally, we were put on a payment
plan and have been paying less than what the actual
mortgage payments were for the past two years. The bank
has just contacted us with a decision that we were
denied a loan modification stating that our debt to
income ratio is not between 10-55%. What can we do? |
You most likely were given
a "trial"
loan
modification in late 2009 or early 2010. Sadly, even
as early as 2010, banks offered "trial" modifications
over the phone without verifying financials, which is
the essential component for banks now to offer a "trial"
modification, and yet alone, permanent modification. I
just successfully resolved almost an identical case,
where the borrower was on a "trial" modification, paying
a reduced sum for a duration of 18 months. After 18
months, he was denied a permanent modification.
Generally, if
foreclosure action has already been commenced, the
court will regard this kind of a denial as bad faith and
may even sanction the bank, but in this case, the bank
did not commence a foreclosure proceeding and continued
to accept payments from him and applied them as partial
payments towards his original monthly mortgage payment
(once foreclosure is commenced, the bank can no longer
accept any payments from borrower other than to fully
pay off the loan). Accordingly, upon denial, we
resubmitted all the financial paper work to the bank and
the financials showed affordability to the bank and my
client was offered another modification plan
(traditional, as opposed to
HAMP).
He was in a "trial" for 3 months, paying even less than
he paid for those 18 months and after 2nd payment, he
received a permanent modification agreement, offering
very similar terms to HAMP (starting with 2.175% and
eventually rising to 4.375% fixed). The bottom line is
you still have options and can have a favorable outcome.
You just have to reach out to an
experienced attorney, who could help you and not
mislead you. |
Brooklyn, New York |
|
Nov. 30, 2011 |
Nov. 28, 2011 |
Short Sale
vs.
Foreclosure: Holding the mortgagor responsible for
the difference between mortgage principal and
short sale
offer
Link on Blogger.com |
We are selling our house
via a short
sale and have received an offer of 25% less than the
mortgage principal we owe on the house. The
bank has accepted the
short sale
offer but asked that we pay an additional $15,000 to the
offer. The bank
stated that if we pay the $15,000, we will be released
from the remaining debt on our loan. What is the law
regarding holding a mortgagor responsible for the
difference between the mortgage principal and the
short sale
offer? Should we pay the $15,000 requested by the bank
(we made a counter offer of 25% of what the bank
requested), or should we let the house go into
foreclosure? The
foreclosure date has been scheduled within two
months from now. |
Generally, conducting a
short sale
has tax consequences for the borrower in terms of the
difference between the sale price and the mortgage
amount. In today's economy, where the banks benefit a
lot more from a short sale rather than waiting for many
years to conduct a
foreclosure sale, they are willing to negotiate with
the borrower by releasing some or all of the additional
debt. It is always a good idea to negotiate with the
bank and you did the right thing by giving a counter
offer. However, what is not clear to me is whether the
bank has asked for additional $15,000 specifically to
discharge additional debt or because they think the
short sale offer is too low, i.e., they think they could
receive $15,000.00 more if the bank conducted the sale
itself (usually the banks look at today's fair market
value when deciding what amount to settle for). As far
as letting the home go into foreclosure, that too, may
have severe financial consequences. The bank may obtain
a deficiency judgment against you and go after your
other personal assets to try to recover some of its
money that were previously lent to you. Both short sale
and foreclosure will adversely affect your credit but
more so with foreclosure than the short sale. If the
bank is willing to accept a
deed-in-lieu of foreclosure, that could be more
advantageous to you, as you could avoid a deficiency
judgment and it would be less harmful to your credit.
However, the banks are not generally willing to
entertain the idea of a deed-in-lieu when a short sale
is still a possibility. Between two evils you are
currently faced with, I would definitely say that a
short sale is a lesser evil than foreclosure. As a side
note, if you need more time to go through with the short
sale and your foreclosure sale date is approaching,
bring an Order to Show Cause to court to stop the
foreclosure sale on an emergency basis. For example,
short sale will take place soon and you need more time. |
Brooklyn, New York |
|
Nov. 26, 2011 |
Nov. 24, 2011 |
Refinancing vs.
Loan
Modification
Link on Blogger.com |
I am thinking of stopping
to make mortgage payments so I could
modify
my loan. What's better:
refinancing or
loan
modification? |
A lot of mortgage broker
companies, as well as other types of real estate
companies, that try to earn a living since the real
estate market collapsed, will try to solicit you to get
your loan modified with them. They might call or send
you notices telling to that you are already approved to
modify
your loan at 2%. The actual process, however, is
much more complicated before you have defaulted, i.e.,
stopped making your mortgage payments, your credit score
may be good, if not excellent, to
refinance your mortgage under today's fair market
rate, which could often be similar, if not the same rate
that is being offered once the loan is modified. If you
go with the option of refinancing your loan, then your
credit history stays untouched and you win twice. People
who default on their mortgage payment should only be
those who truly face some financial hardship (which is
essentially a prerequisite to getting your loan
modified). If you are experiencing financial distress
and you defaulted or plan to default on your mortgage
payments, the bank cannot commence a
foreclosure action immediately as they must first
give you 90 days to accelerate the entire remaining
balance due under the note and mortgage agreements.
Please beware that your credit score will start to drop
immediately after you missed one payment and will
progressively get worse, thus refinancing will no longer
be an option. Modification then may be your only option
to save your home and potentially lower your monthly
payments (with FHA loans, it is very hard to lower
monthly mortgage payments), however, you will not know
if your loan will be modified until it is actually
modified. Even after it is modified, it will take years
for your credit history to recover. Before you default,
you are in superior position--you have the time and
resources to weigh all your options... |
Brooklyn, New York |
|
Nov. 22, 2011 |
Nov. 20, 2011 |
Should I stop making
home mortgage payments to get a
loan
modification?
Link on Blogger.com |
I keep on getting phone
calls from mortgage brokers trying to convince me to
stop making mortgage payments on my property in order to
modify
my loan at 2%. Should I actually stop making
payments in order to get a
loan
modification? |
A lot of mortgage broker
companies, as well as other types of real estate
companies, that try to earn a living since the real
estate market collapsed, will try to solicit you to get
your loan modified with them. They might call or send
you notices telling that you are already approved to
modify your loan at 2%. Unfortunately, it is often true
that banks themselves will also advise you to stop
making mortgage payments in order to qualify for a
loan
modification. What they don't tell you is that you
might not qualify. Most people do not realize that once
you stop making monthly payments, a
foreclosure action may be commenced after 3 months,
and from that point on, a long, tedious process begins
to save your home. Your unique circumstances will play a
big role as to whether your loan will be modified. If
you have not yet defaulted, first call your bank and see
if they will even entertain an idea of working on a loan
modification for you prior to default. It is always your
best bet to consult with an experienced attorney and
allow the attorney to negotiate with the bank on your
behalf. Loan modification may save you up to 40% in your
monthly mortgage payments but the process can also cause
you a lot of stress and uncertainty (i.e. foreclosure).
Weigh your options carefully before you voluntarily
choose to default or believe someone that you are
already approved for a loan modification! |
Brooklyn, New York |
|
Nov. 18, 2011 |
Nov. 16, 2011 |
Can the bank go after
my assets if my home is
foreclosed upon?
Link on Blogger.com |
I own a second property
that is under water. If the house is
foreclosed on can
the bank pursue any other assets that I have? |
If the house is foreclosed
upon, the bank can get a deficiency judgment (the
difference between what the bank recovered at a sale and
what was owed) against you from the court and then try
to go after your assets to try to satisfy such a
deficiency. If you know in advance that you will not be
resisting the
foreclosure action taken by the bank, you might want
to consider doing a
deed-in-lieu of foreclosure, whereby you voluntarily
transfer the deed of the property to the bank and they
release you from any financial obligation to them. The
bank will usually agree to a deed-in-lieu after you have
tried other types of
loss
mitigation options, like a
short sale.
In a short sale, you would sell the property to a 3rd
party at a fair market value but for less than is owed
to the lender. Please note that unless a short sale is
properly negotiated with the lender, there may be tax
consequences to you as a result of a short sale. The
banks typically prefer a short sale over a deed-in-lieu
because they do not want be the ones then responsible
for selling your home. If you can show to the bank that
you tried to do a short sale but failed, they will
consider a deed-in-lieu. |
Brooklyn, New York |
|
Nov. 13, 2011 |
Nov. 11, 2011 |
Can second bank
foreclose when first
loan is already modified?
Link on Blogger.com |
I have two mortgages on my
home. The first was recently
modified under
HAMP. The
2nd lien holder sent me a letter stating that they do
not participate in the
government program and I was
denied for a
modification for 2nd. My house appraises to
$300,000.00. My first mortgage is $330,000.00 after
modification. I cannot afford to make my second mortgage
monthly payments and am now 2 1/2 months behind. The 2nd
bank is threatening to
foreclose on my property even
though I am paying my first mortgage. What can I do? |
The 2nd mortgagee (2nd
lender) is an unsecured creditor because there is no
equity left in your home to preserve the 2nd mortgagee's
interest. If they were to commence a
foreclosure proceeding right now, they will incur
fees and costs for foreclosure that they would not be
able to recover. If the sale took place right now, the
1st lender would get around $300,000.00 that the home
appraises to and would end up losing the other
$30,000.00. The second lender would get nothing at all
because everything would go to the first. Therefore, the
second lender is in the worse situation. Some banks
choose to extinguish these debts altogether or they
might try to settle with you by agreeing to a haircut on
the debt you owe them. Alternatively, just because the
bank does not participate in the
government program does not mean they cannot offer
you their own traditional
loan modification. After all, it is in their best
interest to do so. It is in your best interest to
conduct proper negotiations with the financial
institution that owns your debt. |
Brooklyn, New York |
|
Nov. 10, 2011 |
Nov. 9, 2011 |
Does bank review
automatically put
foreclosure on hold?
Link on Blogger.com |
Our bank said that our
mortgage qualifies for a review. There are no motions
that were granted by the judge yet. Actually, our court
process is just in the beginning stages. I was wondering
if a judge could make a decision while we are waiting
for a review to be done? Can
foreclosure be put on hold
while we are in review? |
The review process that
you are referring to is the bank's review of your
financial documents for a
loan modification.
Foreclosure
process, today, from start to finish, takes a quite long
time. In NY, before a judge could render any decision
(Judgment, Order of Reference, or Motion for Summary
Judgment), you are first required to attend a mandatory
court settlement conference. While you are in the
settlement conference part, your
foreclosure action is
stayed, or put on hold. That means the bank cannot move
forward with its
foreclosure process, the judge cannot
render any decisions, and definitely, no sale at an
auction can be scheduled. However, even if you are
past the settlement conference stage and are approaching
a Judgment stage, the bank can still review and approve
you for a
loan modification, which would essentially end
the entire
foreclosure proceeding. Just remember:
it is in the bank's best interest to try to
modify your
loan rather than to
foreclose. |
Brooklyn, New York |
Call our firm today
at 718-444-1115 and our
experienced staff will provide the utmost attention to your case to deliver the best outcome for you! |
