FREQUENTLY ASKED QUESTIONS
I. What is a breach or default?
A breach or a default is the failure to make a payment as scheduled on your mortgage in the context of real estate. So if you fail to make a payment, it will trigger action on the part of your lender to find out why you’re missing the payments and to attempt to collect those payments from you.
II. What is an underwater mortgage?
An underwater mortgage is one in which the property is worth far less than the amount that you owe on the property. For example, if you have a mortgage for three hundred thousand dollars and the property is only worth two hundred thousand dollars, then you’re ‘underwater’ about a hundred thousand dollars.
I. What is loss mitigation?
Loss mitigation is any strategy that a lender uses to mitigate or reduce the amount of damages that they would endure in a foreclosure lawsuit. So for example, rather than go a longer time without taking your payments, a loss mitigation solution would be a long modification or short sale and this will help reduce the damages that occur against the lender. They have the responsibility under federal law to offer these types of solutions to you.
II. What type of information should I have ready to discuss loss mitigation with my lender?
If you’re interested in loss mitigation solutions, such as a short sale or loan modification, the lender is going to ask you to document two things: your income and your hardship. The income will be documented by pay stubs, bank statements, tax returns, and things of that nature. Your hardship will be documented by whatever is causing you to miss your payments, such as a medical emergency, loss of your job, or similar situations.
III. What information will the mortgage lender ask for when I contact them?
Assuming you’re contacting a mortgage lender for the purposes of trying to work something out after missing payments, they’re going to want know how much income you have in order to determine what mortgage payment you’re able to afford. Secondly, they’re going to want to know what caused you to miss mortgage payments in the first place.
DED IN LIEU OF FORECLOSURE
I. What happens if I just mail the keys to the bank and walk away?
If you just mail the keys to the bank and walk away, it probably will not stop your foreclosure because, in order to get a deed in lieu of foreclosure, which is what you’re attempting to do here, there’s a requirement that you sign paperwork that is mutually agreed upon by both you and the lender. By walking away, you don’t have an opportunity to sign that paperwork. So the lender has no choice but to continue to pursue the foreclosure, get a default judgment against you, and then do their best to find you and garnish your bank accounts and wages if you’re an employee so that they can get whatever is not paid after the foreclosure sale.
I. What is a loan forbearance?
A loan forbearance occurs when a lender allows you to miss a few payments because of a hardship and then asks you resume your regular mortgage payments plus a little more in order to pay off the missed payments. So for example, if you have a thousand dollar monthly mortgage payment and you miss three months in a row, the lender may ask you to pay $1,500 a month for the next six months until that three payments you missed are paid off. Depending on your situation, forbearance may or may not be the best option.
II. What is a repayment plan?
A repayment plan is a plan whereby you will make up the payments of your arrears, the mortgage payment that you didn’t make before, with the lender. Or it could take the form of a loan modification where you reach some type of negotiated agreement to begin making payments at some point in the near future and begin making your principal interest taxes and insurance payments to the lender again, generally at a reduced payment amount.
I. What is a loan modification?
A loan modification is an agreement between you and the lender to change the terms of your mortgage payment. Typically, that agreement can result in a lower payment, sometimes a lower interest rate, and occasionally a reduction of your principal balance. It puts the borrower in a position where they can permanently remain in their home and allow them to live in peace and not worry about being kicked out of their home.
II. Can I refinance my mortgage if I miss a payment?
If you miss only one mortgage payment, then you can refinance your mortgage under a federal program called HARP. The more payments you miss, the less likely it is that lenders will help you refinance your property.
III. What is the difference between a refinancing and a loan modification?
The difference between a refinancing and a loan modification is largely technical. A loan modification results in the reduction of your mortgage payment and may or may not result in the reduction of your principle balance. A refinancing on the other hand typically could happen with your lender or with another lender and has the same goal typically to reduce your mortgage payment and maybe even reduce your principal balance. However, sometimes people will increase their principal balance while simultaneously reducing their mortgage payment by getting a lower interest rate so they can use the difference to pay off other bills.
IV. Can I qualify for a loan modification or should I not even bother?
Whether or not you will qualify for a loan modification depends on two points, the first of which is whether or not you have the ability to pay. The lender will generally take a look at about one-third of your income to determine whether or not they can make that number work as a payment for your mortgage principal, interest, taxes, and insurance. If you don’t have any income, then you probably won’t qualify.
V. Do I need to live in my house to qualify for mortgage assistance or a loan modification?
You don’t necessarily need to live in your house to qualify for mortgage assistance or a loan modification. Many lenders are willing to give loan modifications and other types of mortgage assistance on investment property, if it’s being rented to someone else, or if it’s not your homestead, so it really depends on the lender and what options they make available to you.
VI. Can I still qualify for a loan modification if my loan has already been modified?
If your loan has already been modified, most lenders won’t allow you to modify it a second time within 12 months of the first modification. After this period of time, many lenders will consider you for a second loan modification although they are not obligated to do so.
VII. Are there instances when loan servicers cannot help modify my loan?
There are instances when loan services will not help you modify your loan. Those instances occur when you have no income with which to pay a mortgage. They generally won’t invest the time if there’s no possibility of the payment can be made, however if you do have income, it is now a matter of discretion for that individual servicer and whether or not they’re being guided by the lender to either negotiate a loan modification or are refusing to negotiate a loan modification. Some investors/ lenders are not willing to negotiate loan modifications because the economy has hit them so hard they’re trying to get as much cash back into their coffers as they possibly can and really don’t care whether you’re able to make the payments or not once you fall behind. This is why you need the services of a good and competent attorney who can work with the servicer and the lender to make sure that your rights are protected.
VIII. Are there any free housing counseling services available to homeowners who are struggling to stay in?
The federal government funds many not-for-profit entities and you should Google this in order to find where they are for your particular location. In addition, under federal law, the lender is required to offer you free counseling services for your housing problems before filing foreclosure. If you don’t receive a letter stating this, you should tell your attorney, because it could be an affirmative defense in your case.
IX. What happens to my adjustable rate if I qualify for a loan modification?
Typically if you have an adjustable rate mortgage and you qualify for a loan modification the lender will make some adjustments to that adjustable rate mortgage so that it doesn’t hurt you as much as it would have before. If you can qualify for a fixed a rate mortgage at about 4 percent interest rate, then it can be a permanent fixed interest rate for the term of the loan. If you’re income is not sufficient to support a 4 percent mortgage, many times we can get as low as a two percent mortgage for five years and gradually have come up after six seven or eight years up to four or five percent and then remain at five percent or 4 percent for the rest of the term of the mortgage. Typically, this is a better interest rate than you would have had you kept the adjustable rate mortgage and will result in lower payments for you in the long term.
X. What happens to the principal balance after a loan modification?
If your property is underwater in other words you owe a lot more than with the property is worth, different lenders have different policies on how they will deal with that during a loan modification. Some lenders are willing to reduce the principal balance down to the fair market value when they approve the loan modification. Some lenders are unwilling to reduce the principal balance at all and still other lenders if you call will reward you for a history of good payments by reducing the principal balance in increments for every year that you make twelve on-time payments
I. What is a short sale?
A short sale occurs when you owe more money than the property is worth and both you and the lender agree to sell that property in an effort to get rid of most of your loan, the amount that you owe to the lender. Some lenders will come after you for the deficiency, the difference between what was owed and what the property was worth. Other lenders will agree to waive that deficiency because you’ve saved them so much money on the foreclosure. You should consult an attorney to determine whether or not you’re going to be able to get a waiver of that deficiency.
II. Can my property in Florida be sold or re-financed if I am in the process of foreclosure?
Yes, your property can be sold or refinanced when you’re in the process of foreclosure. It’s more likely that it will be sold, however, since lenders are willing to take short sales or just regular sales and you collect the difference if there’s equity. Can it be refinanced? It really depends on whether or not someone is willing to lend you the money. When you’re in foreclosure, your credit has taken a significant hit and is far less than when you started. So many lenders because of your decreased credit rating may not be willing to refinance with you.
III. How will a short sale affect my credit rating?
A short sale will have a negative impact on your credit rating but it is one of the least impactful ways to hurt your credit. A foreclosure will impact your credit for up to seven years, a bankruptcy up to 10 years, a deed in lieu of foreclosure up to five years, but a short sale will have a negative impact on your credit for up to two years.
IV. Are there tax consequences on a short sale?
There can be tax consequences on a short sale. A short sale occurs when the property is sold for less than what’s owed on it. The difference between those two numbers is called your deficiency. The lender has two ways to deal with the deficiency, first they can either come after you for the deficiency or they can waive the deficiency. If the lender waives the deficiency then they will issue a 1099 within the year which will be part of your personal income tax return. If the short sale occurs before December 31st 2013 and if it’s your homestead property, then the loan forgiveness is a non-taxable event. It could extend beyond 2013 if the present decides to extend that tax benefit. If it’s not your homestead property, then the loan forgiveness is a taxable event and you’ll have to consult the services of a CPA to determine whether or not you will have to pay additional taxes on this loan forgiveness.
CHOOSING AN ATTORNEY
I. How much does it costs to hire a foreclosure attorney?
The cost of hiring a foreclosure attorney varies according to what services are being provided. Some attorneys will only provide very limited services and some attorneys will provide a vast array of services in order to help keep you in your home. So depending on what your goals are, that will probably dictate what the fees will be when you hire an attorney.
II. Why should I defend the foreclosure if I realize I am behind on payments?
It’s probably in your best interest to hire a competent attorney to defend your foreclosure once you’ve fallen behind on payments and the lender has made the decision to file the foreclosure against you. This is because it can save you a lot of heartache in the future. You may be able to negotiate a loan modification, which will allow you to remain in your home permanently with a more affordable mortgage payment. You may be able to short sale the property and attempt to secure a waiver so that the lender won’t come after you for the difference. It’s not going to be very much fun if you just don’t defend yourself, and the lender ultimately within a year or so will try to garnish your bank accounts and then try to take portions of your way to securing employee working for company. So to prevent all this heartache from occurring, you definitely want to make some effort to defend the foreclosure.
III. Should I defend the foreclosure if I am underwater or owe more money than the property’s market value is worth?
You should defend a foreclosure even if its underwater and you owe more than its worth if you care about your credit and if you intend to exercise all of your rights under the law. You never know what opportunities you have once an attorney takes a good look at your case and determines what rights are available to you.
IV. I receive letters and notices from people claiming they can help me save my home. Can I rely upon them?
There are a lot of scam artists in Florida so just because you receive a letter from someone saying that they can help you doesn’t mean that they can. You’re going to have to use your own good judgment to take a look at these letters from people who are claiming they want to help you. The bottom line is that only a lawyer can take an advanced payment in the state of Florida to help you in a foreclosure rescue situation. If anyone else who is not an attorney asks you to pay them in advance, then it’s probably some kind of scam.
V. Should I negotiate with the lender myself?
I never discourage a client from negotiating with the lender themselves, however what my own personal experiences found, is that rarely with someone negotiating for the very first time with the lender achieve the best possible deal for them has compared to someone who has done it more than a thousand time. So you should check with any attorney that you interview to see whether or not they have actual experience negotiating with lenders. If they do have substantial experience, you may be better off using an attorney who has that kind of experience.
VI. What can an experienced and knowledgeable attorney do to help me with my foreclosure in Florida?
An experienced and knowledgeable attorney can do a lot to help you with your foreclosure in Florida. Such attorneys will make sure that all of your rights are being protected during the foreclosure process. Hopefully, you’ll hire an attorney who will also help you negotiate a loan modification or some other loss mitigation solution with the lender that you are looking to accomplish.
VII. Will my attorney be able to delay the foreclosure process in Florida so I can stay in my home longer?
A lot of attorneys will help you to lay the foreclosure process so that you can remain in your home longer. Other attorneys will also help you delay the process, but at the same time seek a solution so that you can remain in your home permanently if that’s your desire.
When can someone foreclose on my home in Florida?
In Florida a lender can foreclose on your home when you have missed sufficient payments. Typically, that’s about 90 days’ worth of payments or three months, but sometimes you can remain two months behind for an extended period of time and that may trigger a foreclosure as well from the lender.
What happens when I miss my mortgage payments in Florida?
When you miss your mortgage payment you can expect a call from your lender asking you why you missed it. If you missed several months then your lender will begin sending you letters demanding that you make those payments, and if you go too long without making these payments generally in Florida about three to four months in your lender will begin to file foreclosure.
What are the consequences of missing ONE mortgage payment?
When you miss one mortgage payment you’re going to take a hit on your credit and your lenders are going to start making phone calls asking you why you missed the payment.
What are the consequences of missing TWO mortgage payments?
If you’ve missed two mortgage payments, unless your FICO score started out in the mid seven hundreds, missing two mortgage payments will knock you below 600 on your FICO score. Secondly, it will cause the lender not only to make phone calls to you asking you why you’re missing those payments, but now they’re going to start sending your letters as well making the same inquiry.
What are the consequences of missing THREE mortgage payments?
Once you’ve missed three mortgage payments and you’re 90 days in arrears, statistically/nationally, there’s less than a 50 percent chance that you will bring that mortgage current. This means that the lender will now begin the foreclosure process, transfer the case over to the lawyers, and ask them to file a foreclosure lawsuit against you.
What are the consequences of missing FOUR mortgage payments?
Once you’ve missed four payments you have lost the opportunity to pay off the back payments of the loan. You would have received a letter after 90 days stating that you had 30 days in order to pay off the arrears. The case has been referred to a foreclosure attorney and by the time you miss the fourth payment, in most cases, the lawsuit has been filed against you and you can expect within a couple of weeks to be served by a process server with a copy of that complaint.
I am not in foreclosure yet, but I am worried. How do I know if I am in danger?
You’ll know you’re in danger when you start receiving phone calls from your lender for the failure to make certain mortgage payments. After 90 days, they’re probably going to make the decision to file foreclosure and you’ll receive a letter stating it’s their intent to do so or their intent to accelerate the loan. That means that the lenders about to file foreclosure and to attempt to take the home away from you so that they can have their debt paid in full.
If I know that I will be out of work and unemployed soon, what can I do now to prevent foreclosure?
If you know that you’re going to be laid off and unemployed sometime in the near future it’s time to call your lender. The lenders is going to want to know whether not you’re going to find another job or what can you do to be able to make payments while unemployed or how long you need to go without making payments. Many loans will allow you to forbear your mortgage payment, which means you can go three sometimes up to six months without making a mortgage payment, but then you’ll have to make it up at some time in the future. Generally, once you begin making payments it’ll be a higher payment than you originally had.
I received a letter from my lender advising me of its intention to begin foreclosure. What should I do?
When you receive a notice of intent to file foreclosure or notice of intent to accelerate your loan from your lender, then it’s time to get some help. You should call an attorney or if you like you can try on your own to call the lenders and see what they can do for you. That letter will generally tell you that you have a certain amount of time, about 30 days, to bring that loan current or else they will file foreclosure but you really should call an attorney.
My mortgage servicer is not my lender. How do I know who my lender is?
In order to find out from your servicer who your lender is the first thing you should do is make a phone call to your servicer and ask them who your lender is. If the servicer has filed foreclosure and your lender didn’t file foreclosure against you, then many times there’s a reason why they’re keeping the identity of that lender secret. The loan is no longer owned by the originating lender. It has been sold probably multiple times to various entities and the servicers merely the one collecting the payments and delivering the money to the current lender. If that’s the case that they won’t tell you who the lender is, then there’s a reason that is advantageous to you. Many times a lawyer will have to fight in court to find out who that lender actually is and once they find that out there is some advantage that you can gain.
Why did my mortgage company send me my payment back?
The acceleration clause in a mortgage is part of the agreement, typically in paragraph 22 of the mortgage, that says that the lender must give you notice prior to filing foreclosure. This notice usually takes the form of intent to accelerate the loan or intent to file foreclosure and there are certain requirements of what must be stated in that letter before the lender can file foreclosure. Many times lenders fail to do this or they fail to include this letter in their complaint for foreclosure and it can cause them problems when attempting to foreclose on the loan.
Do I have to move out of my home during the foreclosure process in Florida?
In Florida, a judicial foreclosure state, you don’t have to move out your house until the sheriff shows up and orders you to be evicted. That doesn’t happen until very late into the process. In Florida a judge has to make the decision to evict you from your home. So when the lender files foreclosures you have at least six months and sometimes as much as two or three years before the eviction will actually occur.
I. What is foreclosure?
Foreclosures a lawsuit filed by the lender to collect on a mortgage that they gave you, alone that they gave you, which is secured by a mortgage. The note says that you’re borrowing this money and agree to pay it back under the terms of the note. Every single month for example, for thirty years. The mortgage says if you fail to pay those payments as scheduled, then the lender has the right to foreclose on that mortgage and that note and take the property from you and sell it in order to get the money back that they lent to you.
II. What are the alternatives to foreclosure in Florida?
III. What are the steps in the foreclosure process in Florida?
IV. How will I know when a foreclosure has started?
V. If my house has a homestead exemption, can I still lose my house in a foreclosure?
VI. What is the foreclosure process and how long does it take?
VII. How long does the foreclosure process usually take in Florida?
VIII. How many payments do I need to miss before I lose my home?
IX. What happens to my mortgage if my house is foreclosed in Florida?
X. What happens to my credit line if my house is foreclosed?
XI. How are most foreclosure cases settled in Florida?
I. How can I defend a foreclosure action in Florida and keep my home?
II. Who can foreclosure on my home in Florida?
III. Who pays the foreclosure fees in Florida?
IV. What will happen in court for my foreclosure in Florida?
V. Will I have to go to court for my foreclosure in Florida?
VI. What will happen if I do not do anything, but ignore the summons and foreclosure complaint?
VII. Do banks have to maintain the original paperwork on my mortgage to foreclose on my property in Florida?
VIII. What are allowed affirmative defenses to a foreclosure in Florida?
IX. Why are affirmative defenses to a foreclosure different than just an answer with denials?
X. Are foreclosure laws different from county to county in Florida?
XI. Are foreclosure laws different from state to state?
XII. What will happen to my foreclosure if I file bankruptcy?
XIII. What is a partial claim?
XIV. I have lots of other questions about my foreclosure. Can I call the judge or the court for advice?
I. What remedies do I have in Florida against a condominium foreclosure or mechanic’s lien foreclosure?
I. If a foreclosure judgment enters, will there be a public auction?
II. What does it mean when debts merge?
I. Do I have the right to reinstate my mortgage in Florida?
II. How do I cure or reinstate the default on my mortgage in Florida?
III. Can I be allowed to pay the arrearage on my Florida mortgage after a foreclosure has started?
IV. If I bring my loan current, does that stop the foreclosure process?
V. Is there any special redemption period after the foreclosure during which I could buy the house back?
I. What should I do to avoid a foreclosure sale in Florida?
II. What happens at the actual foreclosure sale in Florida?
III. Can I bid at my own foreclosure auction in Florida?
IV. What if nobody bids on my Florida property at auction?
V. Will I get any of the sales proceeds if the court clerk sells my Florida property in foreclosure?
VI. At the foreclosure sale in Florida, will the attorneys and potential bidders have to come inside the house?
VII. What happens when a property is auctioned in Florida subject to a first mortgage?
VIII. In a foreclosure in Florida, can the mortgage lender go after my other assets?
I. What is the eviction process in Florida?
II. What is an eviction period?
III. What will happen if I do not get out of my home after a foreclosure sale takes place?
I. Can I be foreclosed upon for delinquent taxes?
II. Are there any federal income tax issues involved with the mortgage delinquency process?
III. Are there tax consequences on a short sale?
BUYING ANOTHER HOME
I. When will I be able to get another mortgage and buy another house after a foreclosure?
I. How do I get the lender to stop calling my home at all hours?
II. Can the Fair Credit Reporting Act help me?
III. Can the Real Estate Settlement Procedures Act help me?
lawsuit against a lender or to counter sues if they file foreclosure against you from the closing date of your loan under this federal law. The Real Estate Settlement and Procedures act has as its philosophy the disclosure of not only the terms of your loan, but also the fees and the commissions and other services that are being charged at your closing. This is so the consumer can take a look at those fees and commissions and determine whether or not they can get a better deal elsewhere. So without these disclosures your lender may be liable for a lawsuit.