Foreclosure Frequently Asked Questions
I am behind on my mortgage payments, what do I do? Don’t ignore the problem. It will only make your situation worse. The further behind you become, the harder it is to reinstate your mortgage and the more likely you will lose your home. Prioritize your spending. After health care, keeping your home should be your first priority. Review your finances and see where you can cut spending in order to make your mortgage payment. Look for optional expenses — cable TV, memberships, entertainment — that can be eliminated. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage. Contact us immediately for a free foreclosure defense consultation.
I am in foreclosure, what options do I have? You have many options during the pre-foreclosure and foreclosure process. An experienced foreclosure defense attorney can help you choose the right option for you.
Should I open and respond to all mail from my lender or lender’s attorney? The first notices you receive typically offer foreclosure prevention information and options. These options mainly include the amount of money needed to reinstate your mortgage. The rest of the options include loan modification, deed-in-lieu of foreclosure and short sale. However, loan modifications are very rare. Good loan modifications are nearly non-existent. Later mail may include important notice of pending legal action, foreclosure lawsuits, and important dates and deadlines. Ignoring your mail is not an excuse or defense in foreclosure court. Ignoring these foreclosure notices only makes the situation worse. Before responding, contact us immediately for a free foreclosure defense consultation. Your mortgage lender already has thousands of attorneys working for them, you should have your own foreclosure defense attorney working for you.
I have just been served with a summons and foreclosure complaint. What do I do? At this stage you should hire our firm immediately to begin your foreclosure defense. Once served with the summons there is a 20 day deadline to file an answer and affirmative defense in writing with the clerk of the court. Any delay makes your situation worse and leaves you open to a quick default judgment. If that happens then you will likely be foreclosed and out of the house within 6 – 9 months. We call this the worst case scenario. A final foreclosure judgment in Florida has serious, long lasting consequences to your credit and your financial future. Your decision to participate now may preserve, protect, and safeguard valuable legal rights affecting your future income, credit worthiness, and income tax consequences. If your friends tell you to just “walk away” then you should walk away from them because they don’t know what they’re talking about. Contact us immediately for a free foreclosure defense consultation.
If I do nothing, what will happen? A default and default foreclosure judgment will be entered by the court, and the clerk of the court will auction your property, usually within 25 to 30 days from entry of a final foreclosure judgment.
Should I use a foreclosure prevention company? No. You don’t need to pay fees for foreclosure prevention when you could use that money to pay the mortgage or a real foreclosure defense attorney instead. Many for-profit scam artists will contact you promising to negotiate with your lender or offer to buy your property for cash. All of these companies are scams and they charge hefty fees (often two or three months’ mortgage payment) for nothing in return. Watch out for foreclosure recovery scams! If any firm claims they can stop your foreclosure immediately if you sign a document appointing them to act on your behalf, you are actually signing over the title to your property. Then you become a renter in your own home. Never sign a legal document without reading and understanding all the terms and getting professional advice from a real attorney.
Will the foreclosure process affect my credit score? Yes. Although it is hard pinpoint exactly how many points your credit score will drop due to a foreclosure. There are numerous factors that affect your credit score. Loss mitigation options that do not result in the completion of the foreclosure are better for your credit score. Short sale and deed-in-lieu of foreclosure are typically better for your credit then a foreclosure judgment, but your score will drop. Although, Fair Isaac Corp. (FICO) was quoted as stating that loss mitigation options such as short sale and deed-in-lieu of foreclosure will have the same negative impact as a foreclosure judgment, practical results have shown otherwise. FICO has done very little analysis distinguishing loss mitigation options vs. foreclosures, and as a result of ignorance and neglect credit scoring is very inconsistent and inaccurate. However, TransUnion, Equifax and Experian have a more detailed credit scoring system, so they may account for loss mitigation options. Keep in mind that the benefits of short sales and other loss mitigation options is that borrowers generally face shorter time frames before qualifying for another mortgage. Many lenders primarily make loans to sell to big mortgage players like Fannie Mae and Freddie Mac. Fannie Mae generally doesn’t buy loans made to borrowers involved in a short sale within two years. That’s shorter than the typical four-year wait time for a deed in lieu of foreclosure on your record. Further it is a much shorter wait then the five-years it will take if you have a foreclosure on your record. Typically, each late mortgage payments are viewed as negative mark. Generally, negative marks remain on a credit report for seven years or longer. Foreclosures also remain on credit scores for seven years or longer. The impact on credit scores diminishes over time though. Loss mitigation efforts and bankruptcy are definitely better than a foreclosure judgment.
What if I file bankruptcy? A bankruptcy stops the foreclosure either temporarily or in the long term. A Chapter 13 bankruptcy allows you a chance to catch up your past due balance and reinstate your mortgage over a five year period. You will pay your regular mortgage payment plus a partial payment towards your past due balance each month until you are caught up. In a Chapter 7, you are wiping out all of your debt, including your mortgage, without any intention of saving your home.
Are their income tax consequences as a result of a foreclosure? Yes. If your home is upside down and the home is sold for less than the mortgage amount owed you will receive a 1099 from your mortgage company. The IRS considers debt forgiven the same as earned income. However, there may be several ways to offset the 1099 tax liability such as offsetting against other losses or being insolvent at the time of the foreclosure or property transfer. We encourage people to consult with a CPA or accountant regarding all tax issues. Do not take tax advice from a realtor. The tax code is complicated, and you are advised to make a thorough examination of your personal financial situation with an experienced tax professional.
After the property is auctioned by the court clerk, do I have to get out? Yes. The sheriff’s office will physically evict you and remove you and your personal effects from the property, usually in as little as 10 to 15 days.
What can an experienced and knowledgeable foreclosure defense attorney do? File an answer and affirmative defenses and work to keep you in the home for as long as possible.
In the answer, is a denial of the lender’s complaint all I need to do? No. You must make specific denials and detail all all affirmative defenses you may have. You must also participate in discovery and actively monitor and attend all court dates. Otherwise the next notice you receive will be from the sheriff giving you 24 hours to pack and leave or face eviction.
What are affirmative defenses? They are special defenses which must be specifically alleged. These defense may include allegations that the mortgage company doesn’t actually own the mortgage, the foreclosure lawsuit was filed in the wrong court, the statute of limitations has expired, truth-in-lending violations, usury, fraud and other specific types of improper conduct by the mortgage company, which may defeat or partially defeat the lender’s claims.
Why are affirmative defenses different than just an answer with denials? The lender has a sufficiently more difficult burden to obtain a “fast” foreclosure judgment when affirmative defenses are properly filed.
Can an attorney just delay the case without justification? No. An attorney cannot cause delay solely for that purpose. But, in the full exercise of your legal rights, delay may result as a by-product of a proper foreclosure defense, often caused by the plaintiff not properly and promptly responding to your attorney’s rightful demands.
If I get an attorney, does he automatically get more time to file an answer? No, 20 days from the date you were served is the deadline. If you are defaulted, it will pose, at a minimum, difficulties in getting the default set aside and allowing your attorney to use the defensive arsenal otherwise available on your behalf.
If my property is sold by the court clerk, what price will it bring? Usually much lower than fair market value. Most of the time it is sold for the total amount of the mortgage or less.
Will I get any of the sales proceeds? Only if there is a surplus (if the property is sold for more that what is owed in total to the plaintiff and all other mortgages and liens on the property).
If the property is sold for less than the total owed, can the lender collect the difference? Yes, but only if the lender also obtains a deficiency judgment.
Can I sell the property and get my money out? Yes, you can sell or refinance so long as the lender is paid prior to the foreclosure sale date.
I have lots of other questions, can I call the judge or the court for advice? No. Judges, judicial assistants (judge’s assistant), court clerks and sheriff’s department employees cannot practice law or give you legal advice. They can only point out the existence of certain procedures, but cannot tell you how to follow them or how effective they will be.
Do I have the right to reinstate? (bring the mortgage current) Not always, unless your mortgage or mortgage note specifically gives you this right. However, many mortgage lenders often voluntarily consent to reinstatement. Keep in mind that reinstating your loan requires a one time lump sum payment in the form of certified funds. The bank will not give you a payment plan to help you get your mortgage caught up.
President Obama and the U.S. Congress have designated our offices a Federal Debt Relief Agency because we help people file for bankruptcy. Contact Stamatakis + Thalji + Bonanno today for your free foreclosure defense consultation.