What’s the first thing you should do if your property’s going to go into foreclosure? Well, the first thing that I suggest you do is contact an attorney who specializes in foreclosure defense. He should be able to tell you the foreclosure process and tell you what your potential liability is for the bank coming after your other assets. Also, he can give you some idea as to how long it will take the bank to foreclose on your property, give you some kind of timeline.
You also have various options, one of which is to try and do a mortgage modification, which many people try and do before they ever contact an attorney and come in very, very frustrated. But my suggestion to you is to continue to send to the lender your financial information in order to try and do a mortgage modification. I will say that the lenders have not, in my experience, reduced your principal amount. What they try and do if they do a modification is to reduce the amount of your monthly payment rather than your principal balance. Depending on who your lender is and who the owner of your loan is, you may or may not be successful.
One of the other options is a deed in lieu of foreclosure. Chase Bank does have a program – it’s called Cash for Keys – where they may agree to give you relocation money if you deed your property over to them rather than them having to go through a foreclosure action. That program was available several months ago. I haven’t seen too much activity lately, but I know that Chase did have that program. It’s a problem if you have a second mortgage because you have to be able to transfer your property to them without a second mortgage.
The other process or option you have, which the banks really encourage, is to do a short sale, meaning that you sell the property to someone for less than the amount of money that is owed and then negotiate with the lender as to whether or not they’ll approve the sale and agree to release you from any responsibility for the remaining money that’s owed under your loan. The problem with a short sale is, you need to have some place to move once you sell your property because when you sell it – well, you no longer have a house. And so, that is something you must consider.
So, I suggest you contact a knowledgeable foreclosure defense lawyer and he will explain your various options, what your timeline is and even answer your questions as to whether or not bankruptcy is an option. If you have any more questions, give me a call and I’ll be glad to try and answer them for you. The number is (727) 847-2288.
When is the best time to let your house go under foreclosure? Well, that’s a very subjective question, and a lot depends upon your facts and circumstances. Many people find themselves not having the option as to whether or not to let their property go into foreclosure or not, and that if they don’t have the money to make their mortgage payments – well, it’s inevitable that it will go into foreclosure.
When is the best time to do it? You need to understand the various alternatives and the consequences of a foreclosure action; or the alternative of a short sale; or the alternative of a possible deed in lieu of a foreclosure; or even attempting to do a mortgage modification. So, the answer as to when’s the best time to let your house go into foreclosure is one that depends upon your individual circumstances. If you’re unable to make your payments because you lost your job and you’ve been unable to modify your mortgage – well, you probably want to go through a foreclosure process because of the time it takes the bank to foreclose. And you may even want to research some defenses so that you can remain in your home as long as possible.
The foreclosure process, without defense, usually runs nine months to a year. If you hire an attorney to defend you in a mortgage foreclosure, that time period can be anywhere from a year to two years, or possibly longer. Of course, there’s no guarantee, and so you should consult with an attorney whenever you’re facing a problem with your property, whether the mortgage is more than the market value and you think it’s a bad investment or whether you can’t make your payments and it looks like they’re going to be foreclosing on you. So, if you’d like to discuss the mortgage foreclosure process and your various options, give me a call at (727) 847-2288. I’ll be glad to discuss those with you. Thank you.
Like any other lawsuit, a foreclosure begins with a summons. The party who was served has 20 days to respond to the summons. Attached to the summons is a complaint stating that you have failed to make payments in accord with the terms of your mortgage, and a Lis Pendens, notice of pending action that has been filed.
If you do not respond to the complaint, you will receive a notice of default, and the allegations against you are presumed to have been admitted. After several pleadings, a Motion for Summary Judgment will be filed stating that all the facts are undisputed. The court then sets a hearing with a judge. When a Summary Final Judgment for Foreclosure has been entered, a sale date is set for the property (roughly 30-45 days later). Your property will be sold in an auction for a cash sale. The mortgage holder can bid as much as the amount owed.
Approximately 14 days later, a certificate of title is issued to the purchaser. At this point, the purchaser has the right to request a Writ of Possession which is served on anyone residing in the property. This allows 24 hours to vacate the property, after which the Sheriff can remove the old tenants from the property.
Currently it takes about 1 year to foreclose a mortgage. Some may be pending for 18 months, 2 years, or more depending on the parties involved. If you are in danger of foreclosure, Waller & Mitchell would be happy to provide guidance and will likely be able to extend the length of the foreclosure for you. Please give us a call at (727) 847-2288.
A short sale occurs when the buyer of a property gets behind on payments and, rather than enter the foreclosure process, he attempts to sell the property for less than the amount owed. “Short” refers to the difference between the sale price and the amount owed on the mortgage(s). Many properties are being sold as short sales now because of the recent dip in home values. MLS listings usually indicate when a property is a short sale. The lender must agree to the sale price of the property and agree to negotiate with the original buyer as to whether the debt will be given or there will still be a debt. The process can take a very long time to negotiate a sale price and terms that the lender, the borrower, and the new buyer can agree on.
A short sale itself will not have as much of an effect on your credit as will the period leading up to the short sale. Every late payment on your mortgage will have a detrimental effect on your credit score. A higher credit score will drop more quickly.
Currently, lenders are not inclined to begin negotiating a short sale until the borrower is at least two months late. The short sale process takes 3 to 4 months or longer to complete, so by the time it is complete you will likely have at least 5 or 6 instances of 30-day late payments which will hurt your credit score.
When a short sale is completed, the loan may show “paid as agreed” or “paid off.” Waller & Mitchell is not qualified to advise you as to the effect on your credit score at that time. Another factor affecting your credit is whether you are paying your other debts in a timely fashion.
After selling your house by short sale, you will be unable to obtain a mortgage from a federally insured lending institution for at least two years. In some cases, it may take as long as 4 years. However, if the property is foreclosed rather than sold in a short sale, the minimum time before you may be able to obtain a mortgage from a federally insured lending institution is 4 years.
If you have questions about short selling your house, please call us at (727) 847-2288.