What is Foreclosure?
In Florida, foreclosure is judicial (legal) process where if you default or allegedly default on a mortgage loan, the lender must sue you to regain title and possession of the property secured by that loan. A lender must file a foreclosure complaint; serve you with the complaint; prove that they own the debt; prove that you owe the debt, and finally, prove you defaulted on the debt before they can deprive you of your possessory interest.
First, let’s define some terms:
- Foreclosure: When a lender files a complaint (lawsuit) against the delinquent borrower and after obtaining a foreclosure judgement, seeks to force the sale of the borrower’s home or real estate at a public auction (the courthouse steps) to the highest bidder. The proceeds of the sale, if any, will be delivered to the lender to pay all remaining amounts owed on the delinquent mortgage. If there are no bids at the foreclosure sale, the lender will simply be permitted to take title and possession of the property and will eventually attempt to sell the home or real estate on the open market to recover its mortgage debt.
- Mortgage Default: Failure to repay a loan according to the terms set forth in the mortgage contract.
- Foreclosure Complaint: A lawsuit filed against a borrower over real property (real estate).
- Mortgage Note: A written promise (sometimes referred to as a promissory note) to repay a specified sum of money (principal) plus interest at a specified rate and length of time. The mortgage itself pledges the title to the real property as security, and the mortgage note states the amount of debt, the rate of interest and makes the borrower personally responsible for repayment of the loan.
- Deed in Lieu of Foreclosure: When the borrower signs over a deed (title and possession) of real property to the lender in order to satisfy a loan in default thus avoiding a foreclosure lawsuit. This option offers several advantages to both the borrower and the lender. The principal advantage to the borrower is that it immediately releases her from most or all of the personal indebtedness associated with the defaulted loan and she may receive more generous terms than she would in a foreclosure. Additionally, it tends to have less negative effect on credit scoring and reporting than a foreclosure does. A lender will save a lot of money and time, reduce the risk of borrower revenge (theft & vandalism before sheriff eviction), and possibly have some additional advantages if the borrower subsequently files for bankruptcy.
- Wrongful Foreclosure: When a lender or institution illegally forecloses (or attempts to foreclose) on an individual and sells their home using methods which are outside the bounds of the law or when the borrower has not defaulted on the note.
I’m In (Or About To Be In) Foreclosure, What Should I Do?
Get Legal Advice. If you are delinquent in loan payments to your lender, have been served with a notice of foreclosure letter or have received a foreclosure complaint, you have a very short time to respond. In the case of a foreclosure lawsuit, failure to answer the complaint by the deadline will result in a Default Judgement being entered against you. The lender will not have to prove anything and you may be looking over your shoulder financially for the next twenty years or more. Ignoring a foreclosure lawsuit or walking away from a mortgage will have serious long lasting ramifications that may effect your life, future income and credit worthiness and could even cause income tax woes.
Keep very good records and WRITE IT DOWN! You cannot go into court and testify that you talked to “somebody,” “sometime,” “who said we had a deal” and expect to win. Courts require evidence. When you make or receive phone calls from your lender write down all the details such as time, date, names, addresses, phone numbers and extensions, what was discussed, directions, terms, etc. — pretty much everything. Then immediately write a letter to the address the person provided detailing the conversation you just had or the deal you just made. Print the letter, sign and date it, then copy the letter for your records. Send the original letter (signed in blue ink so you can tell the difference) via certified mail return receipt and staple the returned card to your letter when it comes back. Note: you cannot legally record phone calls in Florida unless the other party is notified that the call is being recorded, so keep very good, well organized notes.
Mike Reiter & Associates can help you sort though your options and evaluate your financial situation.
Call today at 850-277-0777 for your free office consultation!
Consultations must be in person! If you can’t travel to the Panama City region, search for an experienced consumer attorney in your area at www.NACA.net.
Wrongful Foreclosure
There are many different instances of wrongful foreclosure and they are more common than you think. Any number of things can happen that lead to a foreclosure at no fault of the homeowner such as:
- The mortgage servicing company misapplied the payments.
- Insurance was “force placed” and was unnecessary or unauthorized.
- The escrow account was charged incorrectly.
- Payment was put into a “suspense account” instead of being properly applied to principle or interest.
- Payment during a bankruptcy was incorrectly applied to the loan or not applied at all.
- A forbearance agreement or another type of agreement has been disregarded.
- The interest rate was incorrectly adjusted.
- The lender or servicer accepted a partial payment but then continued with a foreclosure.
Know your rights! If your foreclosure case is based on errors made by your lender, you should NOT be the one compromising and paying their attorney fees! Florida and Federal law provides many consumer protections that can be used to preserve, defend, and exercise your rights. If you are a victim of a wrongful foreclosure your lender can be made to pay your attorney fees and reestablish the loan with terms favorable to you! However, you must be able to prove that the lender or institution foreclosed on you while they were legally prohibited from doing so. Evidence might include receipts, bank statements, mortgage statements, communications to and from the lender or servicing company, telephone records, and other personal records. Keep good records and write everything down.
If you think you’ve been the victim of wrongful foreclosure call Mike Reiter & Associates today for your free office consultation. 850-277-0777
Consultations must be in person! If you can’t travel to the Panama City region, search for an experienced consumer attorney in your area at www.NACA.net.
Tips for Avoiding Foreclosure
1. Don’t ignore the problem.
The further behind you become, the harder it will be to reinstate your loan and the more likely that you will lose your house.
2. Contact your lender as soon as you realize that you have a problem.
Lenders do not want your house. They have options to help borrowers through difficult financial times.
3. Open and respond to all mail from your lender.
The first notices you receive will offer good information about foreclosure prevention options that can help you weather financial problems. Later mail may include important notices of pending legal action. Your failure to open the mail will not be an excuse in foreclosure court.
4. Know your mortgage rights.
Find your loan documents and read them so you know what your lender may do if you can’t make your payments. Learn about the foreclosure laws and timeframes in your state (as every state is different) by contacting the State Government Housing Office.
5. Understand foreclosure prevention options.
Valuable information about foreclosure prevention (also called loss mitigation) options can be found online.
6. Contact a HUD-approved housing counselor.
The U.S. Department of Housing and Urban Development (HUD) funds free or very low-cost housing counseling nationwide. Housing counselors can help you understand the law and your options, organize your finances and represent you in negotiations with your lender, if you need this assistance. Visit www.HUD.gov or call (800) 569-4287 or TTY (800) 877-8339.
7. Prioritize your spending.
After healthcare, keeping your house 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 you can eliminate. Delay payments on credit cards and other “unsecured” debt until you have paid your mortgage.
8. Use your assets.
Do you have assets–a second car, jewelry, a whole life insurance policy–that you can sell for cash to help reinstate your loan? Can anyone in your household get an extra job to bring in additional income? Even if these efforts don’t significantly increase your available cash or your income, they demonstrate to your lender that you are willing to make sacrifices to keep your home.
9. Avoid foreclosure prevention companies.
You don’t need to pay fees for foreclosure prevention help–use that money to pay the mortgage instead. Many for-profit companies will contact you promising to negotiate with your lender. While these may be legitimate businesses, they will charge you a hefty fee (often two or three month’s mortgage payment) for information and services your lender or a HUD Approved Housing Counselorwill provide free if you contact them.
10. Don’t lose your house to foreclosure recovery scams!
If any firm claims they can stop your foreclosure immediately and if you sign a document appointing them to act on your behalf, you may well be signing over the title to your property and becoming a renter in your own home! Never sign a legal document without reading and understanding all the terms and getting professional advice from an attorney, a trusted real estate professional or a HUD Approved Housing Counselor.
Consultations must be in person! If you can’t travel to the Panama City region, search for an experienced consumer attorney in your area at www.NACA.net.
850-277-0777, PO Box 330, Lynn Haven, FL 32444, email: mikelawbk@gmail.com.
Nothing contained on this website constitutes legal advice, and no attorney-client relationship exists either expressed or implied. If you have specific legal questions seek the advice of an attorney.